In even the most well-thought out construction contracts, there is almost always the need for parties to deviate in some way from the timelines and scope of work. When the parties fail to fully contract for these eventualities or fail to alter their contract to account for extras and delays, it may fall on the court to sort out the legal consequences in such instances. Such was the case in the recent decision of Diamond 11 Excavating and Demolition Ltd. v Dhunna, 2018 BCSC 2230 (CanLII).
The Plaintiff sought payment for unpaid work and extras by filing a lien over two properties and commencing an action. The Defendant resisted on the basis that the Plaintiff did not complete its work before it was terminated for delay, that some of the claimed work related to the Plaintiff remediating its own errors and that other claimed work was the result of the Plaintiff’s actions. The Defendant also counterclaimed for certain costs it paid as extras, carrying costs of the properties, charges to plans, extra costs and completion costs.
The Court helpfully cited the law with respect to extras as was summarized in Kei-Ron Holdings Ltd. v. Coquihalla Motor Inn Ltd., [1996] B.C.J. No. 1237 (S.C.). The issues a court must consider when determining a claim for extras are:
- whether the extra work was work which fell outside the ambit of scope or work originally contemplated;
- if so, did the owners give express or implied instructions to perform the extra work;
- were the owners aware the extra work would increase costs; and
- were any provisions requiring change orders fulfilled or did the owners otherwise acquiesce in ignoring such provisions; and
- if all the previous elements may be answered in the affirmative, the defendant is liable to make payment on extras.
The Court went on to cite the standard for how to quantify extras as was held in Infinity Steel Inc. v. B& C Steel Erectors Inc., 2011 BCCA 215 (CanLII):
…where the parties to a valid contract have agreed for the provision of goods or services, clearly intended to be paid for, but have failed to provide for the terms of remuneration, then they may be presumed to have intended a reasonable price and, on that basis, a contractual term to pay a reasonable price may be implied. As the cases cited by the trial judge indicate, there is clearly no room for this doctrine, or for such an implication, where the contract explicitly provides for the amount of remuneration, or for the method for determining the same.
On the basis that there was a lack of detail and substance, certain of the claims for extras were rejected. There was also a lack of written confirmation that certain claimed extras were to be charged as extras which further grounded the rejection of certain claims. In conclusion, the Court rejected claims for extras as not actually being extra to the contract price, there being insufficient evidence of amounts expended to ground any claim for extra and there being invoices presented without any personal knowledge by the Plaintiff and including claims for work in relation to unrelated properties.
With respect to delay, the Court held that, even when a contract is silent on a completion date, a reasonable time to finish work may be implied. What constitutes reasonable time requires a contextual analysis. The Court cited from Hallatt Estate v. Paulsen, 2009 BCSC 1266 (CanLII) for the following material principles:
- the absence of a completion date does not invalidate an agreement if a court can imply a completion date; and
- where no completion date is specified, the law implies a completion date of “within a reasonable time”.
The Court found in all the circumstances that there was no unreasonable delay given that the circumstances did not support the completion date argued by the Defendant.
The Plaintiff was entitled to compensation for work it completed to the time of its termination less additional amounts the Defendant paid to complete the Plaintiff’s work.
Diamond 11 Excavating and Demolition Ltd. v Dhunna is a useful read for contractors or contracting parties who find themselves arguing over the consequences of failing to reach agreements with respect to extras and completion dates or when circumstances required extras or for completion to be delayed but where the parties failed to reach an agreement about the timing and compensation owing for same. It is a reminder that no party gets to unilaterally determine such issues after the fact in the absence of a prior agreement and that the Court seeks to impose rationality and reason to either party’s claims.