Construction Law

It is oft said that “hard cases make bad law”. The Canadian approach to contractual notice of delay claims reflects this aphorism. Such clauses are ubiquitous; rarely is a construction contract silent as to the requirement to give notice of a delay claim. One could be forgiven for thinking the issue has already been settled by our Supreme Court in 1982, on the basis that compliance with a contractual notice provision was henceforth a condition precedent to a claim. Over the last 36 years, the courts have been hesitant to treat compliance with such requirements as determinative of a delay claim. The cases are often driven by the facts, and there are conflicting approaches, not just between various provinces, but sometimes even within the same province.

A reason for this disparity is likely founded in a desire to “do right” by the parties. It looks unfair when a party is deprived of an opportunity to pursue an otherwise meritorious claim over a missed deadline, when their contracting partner has ample opportunity to mitigate, was always aware of the project delay, and that an ensuing claim would be advanced. Likewise, it is unfair that a party should be caught by surprise, and prejudiced by an “after the fact” delay claim.

Given the construction industry’s prominent position in the Canadian market, there is a public interest in a fair and consistent application of the legal principles governing notice of delay claims. Nonetheless, it remains uncertain whether conventional technical breaches of notice provisions will receive the same treatment as blatant, egregious breaches. In view of this background we seek to prove that recent case law suggests that notice of apparent lack of compliance is not always determinative of a construction delay claim. We propose, based on recent case law in Ontario, and on drawing parallels with other provincial courts, that the judiciary is increasingly taking an approach of equity rather than strict compliance.

Ultimately, we believe it will be of benefit for the Supreme Court of Canada to determine whether this trend should continue. Should a purposive or a technical approach be taken in respect of this national issue? If the approach is to be purposive, should the Supreme Court establish national guidelines for when strict compliance is to be disposed with? For example, should strict compliance in terms of contractual requirements of form and timing of the notice be the starting point, one which may be overcome by way of: (a) conduct which would evidence that the parties have dispensed with or renounced strict compliance with the contract; (b) actual knowledge of a claim and a lack of prejudice to the recipient; or (c) unconscionability?

CORPEX (1977) AND ITS APPLICATION IN DOYLE CONSTRUCTION

The Supreme Court of Canada’s seminal decision in Corpex (1977) Inc. v. Canada1 established that notice clauses in construction contracts represent a condition precedent to a claim.

Doyle Construction Co. v. Carling O’Keefe Breweries of Canada Ltd.2 was the first application of Corpex—strict compliance was, and remained the test; however, the introduction of the “prejudice” component, which at the time seemed to be more of an afterthought, rather than the core of the legal analysis, added another layer of scrutiny into the relationship between the contractor and the owner.

Recently, the adoption of prejudice in the analysis of notice of delay claims has created opposing “trajectories”3 in the case law, not only inter-provincially, but within Ontario courts as well. In both Corpex and Doyle, prejudice was not, explicitly, a requirement to determine whether a notice provision barred a contractor from claiming additional funds in relation to construction delays. Nevertheless, given its implicit mention in these influential decisions, certain courts have not shied away from adopting it in their reasons. On that note, lack of prejudice is not the only factor some courts have considered in refusing to enforce strict compliance; some have gone even further and looked at the issue from the contractor’s perspective in addressing whether it would be unconscionable to deny the claim. While we do not favour one approach over the other, we strongly believe that the proliferation of these underlying theories has caused uncertainty in the law.

1. Jurisprudence in Ontario

Ontario is a special case in itself; its jurisprudence not only diverges from that of other provinces, it also diverges within its own intra-provincial interpretation. Detailing all the cases that have applied Corpex in Ontario would be quite a Herculean task, and beyond the scope of this article; however, we have selected a number of relatively recent decisions, including: Bemar Construction4 ; Technicore5 ; Ross-Clair6 ; Limen7 ; and Clearway8.

1.1 Bemar Construction (Ontario) Inc. v. Mississauga (City)

Bemar Construction concerned the renovation and conversion of the Cawthra Elliot Estate House into a conference centre. The lower court applied a very narrow interpretation in holding that Bemar, the contractor, failed to provide its written notice within the required 14 days. By rejecting the contractor’s argument that it would include the claims for delay at the end of the contract, the judge looked at the approach the contractor took with respect to another project, whereby its damages were included in his costs of extras and in change orders. Additionally, given the deteriorating relationship between the parties, it was unreasonable that the municipality would have instructed the contractor to proceed with additional work, and to wait until the end of the project in order to determine the final costs—it was highly unlikely the parties maintained such discussions. Although there was no explicit reference to the prejudice incurred by the municipality, the Court directly relied on, and affirmed the principles enunciated in Doyle at the centre of its analysis.

1.2 Technicore Underground Inc. v. Toronto (City)

Technicore has been cited as the start of the “modern period in Ontario’s notice jurisprudence.”9 This case concerned the building of a water main for which the City of Toronto (“City”) contracted Clearway Construction Inc. (“Clearway”). Clearway, in turn, subcontracted with the claimant, Technicore Underground Inc. (“Technicore”), to perform the underground tunnelling work using a boring machine. Technicore claimed against Clearway for damages arising from a February 2007 flood and, in March 2007, Clearway submitted its claim to the City to cover the costs incurred as a result of the flood. Clearway also “reserved” its right to claim for extras not included in the 2007 claim.

During the course of Technicore’s main action against the City for damages resulting from the flood, the City issued a third party claim against Clearway, which Clearway subsequently defended and counterclaimed, claiming, in 2010, damages additional to those included in its 2007 claim.

The matter culminated when the City was successful on it motion for partial summary judgment, dismissing Clearway’s counterclaim in excess of the March 2007 claim. The Court of Appeal unanimously dismissed Clearway’s appeal and found that the Notice Provision did not need to include a “'failing which' clause in order for it to bar the August 2010 claim.”10

A second point of contention in Technicore was the absence of prejudice to the City. The Court of Appeal found, rather categorically, that Corpex did not “stipulate that prejudice must be proven in order for an owner to rely on a notice provision.”11 Similarly, Doyle and Bemar did not “stand for the proposition that the owner [had] to show prejudice in order to rely on a notice provision.”12 Speaking for the Court, Justice Gillese determined there was “no onus on the City to lead evidence of prejudice,” but that as the owner “the City [was] assumed to have been prejudiced by a multimillion dollar claim being made years after the Contract permitted and long after the City could consider its position and take steps to protect its financial interest.”13 While the result in Technicore was based on strict compliance, the Ontario Court of Appeal showed it was open to undertake a more fact based analysis, and that the interpretation of notice requirements was not purely black and white.

1.3 Ross-Clair v. Canada (Attorney General)

In 2016, the Ontario Court of Appeal assessed the situation from a new perspective—it approached the matter taking into account the factual matrix surrounding the parties’ dealings.

At trial level, the issue was whether the Engineer had been given “sufficient” details to make a determination on the claims adduced.

For the Court, Justice Epstein found the trial judge had erred in interpreting the relevant provision in isolation, and further, that the judge should have taken into account the “context of rest of the Contract.”14

This case built “on the important precedent of [Technicore]. It firmly [entrenched], in Ontario law, the principle that contractual notice requirements, including requirements to give detailed accounts of claims, are enforceable, and ought to be taken seriously.”15 The Court of Appeal went even further by looking outside the notices provided by the contractor, at informal communications about the claim in determining whether Ross-Clair complied with the strict requirements, and also whether Ross-Clair provided the Engineer with sufficient information to make a determination.

1.4 Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Ltd.

A lower court decision from 2017 reflects an openness to a more liberal approach in Ontario, at least on a summary judgment motion. Limen, the subcontractor in a project concerning the construction of an office tower in Toronto, incurred project delay due to a decision by Brookfield, the general contractor. Limen issued a series of written communications from May 2013 to September 2013 as contractual delay notices; it also sent further documents between October and November 2013 with the same purpose.

Master Albert dismissed Brookfield’s motion for summary judgment on grounds there was a genuine issue for trial with respect to Brookfield’s knowledge of delay and its response to the delay. Master Albert was satisfied that Brookfield was aware of the delays it caused to Limen’s performance; the issue for trial would become whether this knowledge, absent a technically compliant notice, would suffice to allow Limen to advance its claim for delay.

1.5 Clearway Construction Inc. v. The City of Toronto

In Clearway, the City of Toronto’s (“City”) motion for summary judgment to dismiss the contractor’s action for payment of additional compensation was dismissed since the court found a triable issue arose as to whether the City was disentitled from asserting strict compliance with the notice provision on basis of a pattern of conduct analogous to a deviation from strict compliance with the notice clause. The motion judge was persuaded by the discovery issues that arose from a consideration of the parties’ meeting minutes and by an underlying inquiry as to the City’s knowledge of subsurface conditions giving rise to the delay claim.

2. Jurisprudence in Western Canada: Alberta and British Columbia

In Ontario we have noted a trend of strict compliance at the Court of Appeal level, followed by a more comprehensive, fact based analysis in motions for summary judgments. By contrast, the Western provinces have been rather consistent in their interpretations, whether in upholding the strict compliance test or in adopting other considerations such as in British Columbia, where a assessment of whether the owner was prejudiced had a profound impact on the development of its caselaw.

2.1. British Columbia

2.1.1 First City Development Corp v. Stevenson Construction Co.16

In this early 1980s BC decision, the notice clause stipulated that a delay claim may be made within a reasonable time following the first observance of damage, and not later than the issuance of the final certificate. On a preliminary determination of whether the contractor was entitled to proceed with it its claim for damages for delay actions, Meredith J. found the timing of the claim to be “reasonable because the delay, if any, and the timing thereof [did] not prejudice the [owner] in the least.”17 The trial judge also concluded that the owner was not misled and was “well aware that completion of the contract was delayed. It had every reason to believe that a claim would be advanced.” Even before Doyle, prejudice was a contemplation for the courts in BC. The owner’s appeal was dismissed.

2.1.2 W.A. Stephenson Construction Western Ltd. v Metro Canada Ltd.18

The contract in W.A. Stephenson concerned the building of the Advanced Light Railway Transit System in Vancouver. The contractor claimed it was delayed or forced to accelerate construction, while not being given adequate access to the construction site. In his judgment, Locke J. made reference to the many minutes of meetings, “…consider[ed] them to be notice”19 , and determined that claims not covered by specific notices were covered by these minutes. In other words, “the owner had actual or constructive knowledge of the claims through various communications and minutes of meetings…”20

2.1.3 Foundations Co. of Canada Ltd. v. United Grain Growers Ltd.21

United Grain was another BC Court of Appeal decision to the effect that there was sufficient evidence, based on a reading of letters and minutes of site meetings—many of which complained about the delay to the work—to establish constructive notice. In respect of notice of delay claims, the BC Court of Appeal upheld the lower court’s determination that not only did the lack of notice not reflect the outcome of a delay claim, but moreover, the form of the notice did not have any impact whatsoever on the true purpose of the notice itself.22 This test of sufficiency is significantly different from Ontario’s, which, while adding an element extrinsic to mere strict compliance with the relevant notice clauses, still relied on the accompanying contractual provisions.

2.2 Alberta

2.2.1 Banister Pipeline Construction Co. v. TransCanada Pipelines Ltd.23

While in Dilcon24, the Alberta Court of Appeal firmly adopted strict compliance, a trial decision issued just three years later took a very different approach. In Banister, Justice Hawco found that where the owner was always aware of the claim, it would be unconscionable to dismiss the contractor’s claim for extras for work outside contractual provisions as result of a “technical” non-compliance.25

3.Québec

Having analyzed the common law jurisprudence, it is appropriate to briefly explore case law from Québec. As it is governed by civil law, many Québec decisions will rely on the provisions of the Québec Civil Code (“Code”), rather than on precedent; that is not to say, however, that the Québec courts have been blind to the Corpex decision or its developments. Rather, the distinction goes to show that there is a hierarchy in the analysis of Québec courts, one which must be disclosed prior to the examination of the case law.

It was almost trite law in Québec, following the judgment in Morin Inc.26 , which came only a few years after Corpex, that failure to give notice on time is fatal to a claim; and more recently, where the Québec Court of Appeal recalled “the imperative character of the procedure which [forced] the contractor to respect the letter of the formalities foreseen by the necessity to submit a notice for extra costs.”27

3.1 Paul Savard, entrepreneur électricien inc.. c. Construction Infrabec inc.28

The contractor and the Québec Ministry of Transportation entered into an agreement for the redevelopment and installation of a road lighting system on a highway. The contractor, in turn, subcontracted with Paul Savard’s company. The subcontractor gave notice to the contractor29 , but the contractor failed to notify the owner of its corresponding claim, as required by the contract. The Court of Appeal held that “formalities must be respected to give rise to the contract’s right of action. If these formalities are not respected, we cannot say that the right of action was extinguished because this right of action was never 'born'”30. Having held this, the Court went on to find, based on Corpex and the previous Québec Court of Appeal decisions in Morin and in Industries Falmec, that the owner never received a detailed claim consistent with the requirements of the clause, and furthermore, that the owner certainly had responsibility to remind the contractor of its duty to give notice. Having been put on notice by the subcontractor when it submitted its claim, the contractor had the sole obligation to notify the owner of its own corresponding delay claim, which it failed to do.

3.2 Danny’s Construction Co. c. Birdair Inc.31

It is interesting that notwithstanding the predominance of strict compliance with contractual notice of delay claims in Québec, there is scope for departure from this standard in appropriate circumstances. Significantly, the Québec Court of Appeal has departed from strict compliance, but only where the Code provided for such a departure.

Birdair, next in the line of Québec litigation, concerned the renovation of the roof of Montréal’s Olympic stadium. In respect of the claim arising from the delays incurred, the court cited Corpex and made it clear that compliance with the formalities stipulated in the contract determined whether a contractor’s claim for delays would be allowed.32 However, the court also recognized the parties’ right to renounce strict contractual formalism. The Court of Appeal upheld the trial judge’ determination that through their relationship and their interaction, the parties relaxed the terms and conditions of the subcontracting agreement.33 In other words, renunciation could be implied. This may be another way of rephrasing what the courts in Ontario and BC have been saying lately: that non-contractual factors can be considered in determining whether a delay claim can proceed.

However, departure from strict compliance is the exception, not the rule, since the Québec Court of Appeal required that the parties must come to an “unequivocal”34 agreement that they are renouncing the clause requiring notice, which would not go as far as allowing one party to disregard notice provisions and still claim delay.

3.3 Dawcoelectric Inc. c. Hydro-Quebec35 and Construction Kiewit Cie.c. Hydro-Quebec36

In a saga of cases arising from the construction of a power generating station and a hydroelectric dam, Hydro-Québec was involved in two Québec Court of Appeal decisions that were handed down concurrently.

In Dawco, several problems arose on the construction site, resulting in over 400 change orders being issued by the owner, and substantial delays to the project. The contractor’s claim for damages was allowed in part. The trial judge dismissed the contractor’s claim for the impact damages suffered by Solimec (a subcontractor), on basis that the contractor’s claim covered the impacts costs and subsequent consequences. In respect of Solimec’s action, the trial judge concluded there was no contractual relationship between Solimec and the owner, and Solimec could not apply the prescription provided for in article 2116 of the Code. With respect to whether there was a formal notice, the Québec Court of Appeal held that submitting a claim did not constitute submitting a notice to be followed by a detailed claim.

In Kiewit, the trial judge found that the notice provision (which was the same as that in Dawco) imposed a duty upon the contractor to give written notice to Hydro-Québec  and a detailed, accompanying, written statement of claim, as soon as possible. The Court of Appeal determined that a letter accompanying the request for compensation and mediation did not constitute notice under the contract and was not sufficient to trigger the applicability of articles 1600, 1617 and 1618 of the Code, entitling the creditor to interest and indemnity from the date of notice. However, as in Dawco, the case ultimately did not turn on the requirement of notice; in other words, the issue of notice in delay clauses was not the driving contention on appeal.

3.4 Catalogna & Frères ltée c. Construction DJL Inc.37

This recent Québec Superior Court case held that the Québec “Court of Appeal has repeatedly stated that the formalities of the construction complaint system must be strictly observed in order for the contractor to be able to rely on [them]…”38 However, the judge also recognized that the parties may waive these formalities so long as the waiver, which although implied, is unequivocal as to the intention to acquiesce or renounce the notice provision.39

In Québec, strict compliance is law, as long as the parties have not reached an unambiguous and unmistakable agreement that they are willing to renounce the provisions of the notice clause. In making this determination the court will look at communication between parties and at the circumstances—even if the ultimate renunciation was implied. In spite of this possibility, the Québec courts have not proceeded to add an extra layer of analysis to the strict compliance approach recently adopted in Ontario.

A Modest Proposal

The Courts across Canada stand divided on the subject of strict compliance with notice of delay clauses. Even in Québec, the province with the strongest strict compliance regime, the fact that there are possibilities for parties to renounce such a clause demonstrates the necessity for the Supreme Court to conclusively rule on an issue that has produced several decades of conflicting litigation. Clarity is needed.

Earlier in the paper, we alluded to the idea of a purposive interpretation, and in this section we modestly undertake to outline how such a test would develop under this methodology. The starting point would always be the Corpex strict compliance test. While it would be open to the Supreme Court to end its analysis there, that would effectively render years of case law in multiple jurisdictions across the nation difficult to reconcile, and risk continuing the trend of inconsistent results. As a practical matter, these are often “hard cases”. Simply put, the problems that arise in these situations do not seem, and cannot be, satisfactorily resolved through a “black and white” application of a contractual notice clause.

We can draw an analogy to Tercon40 , a seminal 2010 Supreme Court decision on tendering, where use of exclusion clauses in calls for tender was upheld by the majority. Although the minority would have ended it there, the majority articulated a purposive test for when an exclusion clause would not be enforced to defeat a claim by an aggrieved bidder.

Hence, we propose that, while the Court might start with Corpex and commence their analysis with strict compliance of contractual notice requirements as the standard in assessing if a delay claim should be allowed to proceed (this would involve a determination of whether the notice was on time, sufficient, and adequately detailed), the Court should then proceed to consider the following:

    1. whether there was conduct evidencing an agreement, even if implied, to dispense with strict compliance of contractual procedures;
    2. whether the claimant can establish actual knowledge of the claim, and absence of prejudice on the part of the other party; and
    3. whether, ultimately, it would be unconscionable to disallow the claim to proceed.

The proposed test is nothing more than that—a proposal, and a modest one, at most. We merely seek to underline a set of possible parameters which the Supreme Court might wish to rely on, should it decide to rule on the status of the strict compliance test in Canada. These parameters would uphold the Corpex strict compliance, but would provide a rational and predictable set of factors which Canadian judges have already considered in making their determinations. On the whole, this modest proposal is more aligned with the BC approach than with Ontario’s inconsistent interpretations; additionally, in the civil law context, it application would require necessary modification. However, as demonstrated by our review of the cases, all of the provinces we have reviewed have gone beyond strict compliance in varying degrees. What is missing is a uniform national standard to bring order to this body of caselaw.


Special acknowledgement and thanks to Madalina Sontrop Student-at-Law Glaholt LLP for her valuable assistance in preparing this article.
  1. [1982] 2 S.C.R. 643. 
  2.   [1988] B.C.J. No. 832.
  3.   Cited from Yonni Fushman, “Ontario’s New Trajectory In The Law Of Notice For Delay Claims” (2018) Construction Law Letter, Vol. 36, No. 6. 
  4.   Bemar Construction (Ontario) Inc. v. Mississauga (City), [2004] O.J. No.235, affirmed 2007 ONCA 685. 
  5.   Technicore Underground Inc. v. Toronto (City), 2012 ONCA 597.
  6.   Ross-Clair v. Canada (Attorney General), 2016 ONCA 205. 
  7.   Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Ltd., 2017 ONSC 5071.
  8.   Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736.
  9.   Cited from Yonni Fushman, “Ontario’s New Trajectory In the Law Of Notice For Delay Claims” (2018) 34 Construction Law Letter 6.
  10.   Technicore, para. 29.
  11.   Ibid, para. 47.
  12.   Ibid, para. 48.
  13.   Ibid, para. 51. 
  14.   Ross-Clair (2016), para. 58. Earlier in the decision, at para. 48, the Ontario Court of Appeal quoted two well known Supreme Court decisions on contractual interpretation: Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 633; and Tercon Contractors Ltd. v. British Columbia (Minister of Transportation & Highways) [2010] 1 S.C.R. 69. We draw an analogy to Tercon later in this paper, in proposing, modestly, a legal test that the Supreme Court of Canada might consider, should it be seized of considering the law on notice of delay claims.
  15.   Cited from Jay Nathwani “Do Not Skimp on the Details: Court of Appeal Throws Out Contractor’s Claim due to Insufficient Backup” (2016) Construction Law Letter, Vol. 32, No. 5. 
  16.  [1984] B.C.W.L.D. 1887.
  17.   Ibid, para 7.
  18.   [1987] B.C.W.L.D. 3729. 
  19.   Ibid, para. 175.
  20.   Cited from Yonni Fushman, “Deconstructing Delay Claims” (2014) 27 C.L.R. (4th) 181.
  21.   [1997] B.C.J. No. 969. 
  22.   Foundations Co. of Canada Ltd. v. United Grain Growers Ltd., [1995] B.C.W.L.D., paras. 515-519. While this case was mostly reversed on several grounds of appeal, most outside the scope of this article, with respect to whether the general contractor complied with its obligation to provide a claim in writing, “within a reasonable time”, Benner J.’s determination was incontestably upheld on appeal.
  23.   2003 ABQB 599.
  24.   Dilcon Constructons Ltd. v. ANC Developments Inc., 2000 ABCA 223. 
  25.   Banister, para. 123. It is worthy to note that Banister is not a case of notice in context of delay claims; it dealt with a situation whereby the contract did not include a provision for the particular work ultimately performed by the contractor. In light of this distinguishing factor, nonetheless, we think it important to observe that the lower courts in Alberta were not prepared to disallow the contractor’s claim for extras particularly where the owner was aware of what the contractor did, benefitted from the work, and signed off on its completion.
  26.   Morin Inc. c. Québec (Procureur général) [1986] R.J. 104, para. 35 [our translation].
  27.   Industries Falmec inc. c. Société de Cogénération de St-Félicien, société en commandite/St-Félicien Cogeneration Ltd. Partnership, 2005 QCCA 469, para. 82 [our translation]. 
  28.   2012 QCCA 2304.
  29.   In Savard, the notice given by the subcontractor arose in context of a theft at the construction site. The subcontractor was ordered to remove lampposts from their base, something which was not part of his subcontract specifications; the subcontractor proceeded with the work, but left the lampposts in a ditch, without assuming any responsibility for breakage and thefts. The trial judge found that the subcontractor was not responsible for the theft of the lampposts, and ordered the contractor to cover his expenses [our translation]. 
  30.   Savard, para. 56.
  31.   2013 QCCA 580.
  32.   Ibid, para. 194 [our translation].
  33.   Ibid, para. 90 [our translation].
  34.   Ibid.
  35.   2014 QCCA 948 [2014 CarswellQue 14527 for Publisher’s Translation]. 
  36.   2014 QCCA 947 [2014 CarswellQue 14256 for Publisher’s Translation]. 
  37.   2018 QCCS 1918.
  38.   Ibid, para 81 [our translation].
  39.   Ibid, para 82 [our translation]. 
  40.   Tercon Contractors Ltd. v. British Columbia (Minister of Transportation & Highways), [2010] 1 S.C.R. 69.

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