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Indexes to the Journal of the Canadian College of Construction Lawyers

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SUMMARY TABLE OF CONTENTS

Preface .................................................................................... iiiTable of Cases ......................................................................... xiii

Expert Evidence: Legislation, Law & Practice in Canada– Report of the Experts & Website Committee ............................... 1

Construction Risk in Public-Private Partnerships in Canada– Report of the Construction Documents Committee ...................... 63

“Covered for What?”: Faulty Materials and WorkmanshipCoverage under Canadian Construction Insurance Policies– Report of the Insurance & Surety Committee .............................. 101

Construction Litigation Before Quebec Courts– Therese Rousseau-Houle ......................................................... 175

Les litiges de construction: que decideront les juges au Quebec– Therese Rousseau-Houle ......................................................... 187

Concurrent Delay: A Modest Proposal– R.B. Reynolds and S.G. Revay .................................................. 199

The Law of Tendering – The Canadian Advantage– W. Donald Goodfellow. Q.C. ................................................... 227

Index ...................................................................................... 281

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Preface ................................................................................... iiiTable of Cases ......................................................................... xiii

Expert Evidence: Legislation, Law & Practice in Canada– Report of the Experts Committee .............................................. 11. Expert Evidence in General ................................................ 3

1.1 Historical Overview .................................................. 31.2 Who is an Expert? .................................................... 51.3 Admissibility of Expert Evidence ................................ 61.4 Relevance and Necessity ............................................ 61.5 Exclusionary Rule .................................................... 101.6 Properly Qualified Objective Expert ............................ 13

2. Computer Generated Expert Evidence ................................. 153. Legal Requirements for Admissibility of Expert Reports and

Evidence ......................................................................... 183.1 Quebec .................................................................... 183.2 Common Law Provinces ............................................ 21

4. The Use of Common Law Decisions in the Interpretation of theLaw on Evidence under the Civil Code of Quebec ................. 224.1 The Law on Evidence ................................................ 224.2 Civil Code of Quebec ................................................ 244.3 Conclusion .............................................................. 28

5. Expert Evidence – Up to Trial: Draft Reports ........................ 285.1 Access to the Expert’s File, Including Draft Response .... 285.2 Destruction of Draft Reports ....................................... 355.3 Preparation of the Report Itself ................................... 385.4 When are the Expert’s File and Drafts Producible? ........ 40

6. Challenging Expert Evidence Prior to Trial .......................... 406.1 Common Law Providences and Federal Court ............... 40

6.1.1 Governing Legislation ................................... 406.1.2 Jurisprudence ............................................... 41

6.2 Quebec .................................................................... 447. Undermining the Expert of the Opposite Party ...................... 45

7.1 Introduction ............................................................. 457.2 Partisan Advocacy .................................................... 467.3 Evidence Beyond the Expert’s Field of Expertise .......... 497.4 Failure to Prove Assumptions, Lack of Factual Familiarity

and the Expert’s Distorted Presentation of the Facts ....... 507.5 Lack of Scientific Rigour ........................................... 50

Annex A Preparing an Expert’s Report ........................................ 53Annex B ................................................................................. 56

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Construction Risk in Public-Private Partnerships in Canada– Report of the Construction Documents Committee ...................... 631. Public-Private Partnership: An Overview ............................. 66

1.1. What is Public-Private Partnership? ............................. 661.2. Quebec Legislation ................................................... 681.3. Underlying Rationale and Objectives of the Public Sector

in Entering into P3 Arrangements ............................... 691.3.1. Public Demand ............................................. 691.3.2. Financial Constraint ...................................... 691.3.3. Improving Efficiency and Improving Quality

Standards and Service Levels ......................... 701.3.4. Allow a Greater Possibility for Access to Exper-

tise and Innovative Approaches and Cost Savings................................................................... 70

1.4. Key criteria for a Successful P3 .................................. 711.4.1. Governmental Support ................................... 711.4.2. Recognition of Differences ............................. 711.4.3. Commitment to Life-Cycle Costing ................. 711.4.4. Realistic Allocation of Risk ............................ 72

1.5. Common structures of P3 arrangements ....................... 721.5.1. Build-Finance .............................................. 721.5.2. Build-Lease or Own-Operate .......................... 721.5.3. Design-Build-Maintain .................................. 721.5.4. Design-Build-Operate-Maintain ...................... 731.5.5. Design-Build-Finance-Maintain ...................... 731.5.6. Design-Build-Finance-Operate ....................... 73

2. Risk Allocation Issues Involved in P3 Arrangements ............. 732.1. Assumption of Increased Financial Risk by the Private

Sector Team ............................................................. 742.2. Duration of the Relationship ....................................... 742.3. Build-Finance Risk Allocation .................................... 742.4. Design-Build-Finance-Maintain Risk Allocation ........... 76

3. Specific Construction Concerns in Drafting the Project Agree-ments .............................................................................. 783.1. Prescribing Standards and Performance Guarantees Dur-

ing Operating Period and at Transfer Back to the PublicSector ..................................................................... 793.1.1. Formulating the Standards .............................. 79793.1.2. Remedies ..................................................... 80

3.2 Warranties ............................................................... 80

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3.2.1. Allocating Contractual Obligations within thePrivate Sector Team ...................................... 81

3.3. Project Interference and Security ................................. 823.4. Delegation of Rights, Powers and Functions ................. 823.5 Intellectual Property .................................................. 833.6 Changes of Team Members ........................................ 84

3.6.1. Considerations for the Private Sector Team ...... 84

3.7 Insurance and Bonding .............................................. 853.7.1. Considerations for the Private Sector Team ...... 86

3.8. Termination Provisions .............................................. 873.8.1. Termination for Cause – Default of Public Sector

................................................................... 873.8.2. Termination for Cause – Default of Private Sector

Team .......................................................... 873.8.3. Materiality and Incurability of Default ............. 883.8.4. Termination for Convenience ......................... 893.8.5. Other Termination Provisions ......................... 893.8.6. Termination for Force Majeure ....................... 903.8.7. Compensation upon Termination .................... 903.8.8. Role of Lender and Step-in Rights ................... 92

3.9. Changes in Law ........................................................ 923.9.1. Changes in General Law ................................ 933.9.2. Discriminatory Changes in Law ...................... 93

3.10. Confidentiality and Disclosure .................................... 943.10.1. Freedom of Information Legislation ................ 943.10.2. The RFP Stage ............................................. 953.10.3. Confidentiality Provisions .............................. 96

3.11. Dispute Resolution ................................................... 97

4. Select Bibliography .......................................................... 99

“Covered for What?”: Faulty Materials and Workmanship Cov-erage under Canadian Construction Insurance Policies– Report of the Insurance & Surety Committee .............................. 1011. Introduction ..................................................................... 1042. Early Case Law in Canada ................................................. 105

2.1 Introduction ............................................................. 1052.2 Review of the Case Law ............................................ 1062.3 Conclusion .............................................................. 119

3. The Quebec Situation ........................................................ 1203.1 Introduction ............................................................. 120

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3.2 Decisions of the Quebec Court of Appeal ..................... 1213.3 Decisions of the Superior Court of Quebec ................... 1263.4 Conclusions ............................................................. 130

4. Architects’ & Engineers’ Liability ....................................... 1304.1 Liability .................................................................. 1304.2 Insurance Coverage ................................................... 135

5. Case Studies .................................................................... 1365.1 Case Study A: British Columbia Leaky Condos ............ 1365.2 Case Study B: Ontario Hydroelectric Dam ................... 145

6. Conclusion ...................................................................... 150Appendix A ........................................................................... 153Appendix B ........................................................................... 163

Construction Litigation Before Quebec Courts– Therese Rousseau-Houle ......................................................... 1751. Introduction ..................................................................... 1762. The Principle of Good Faith ............................................... 1783. Offer and Acceptance ........................................................ 1824. Conclusion ...................................................................... 185

Les litiges de construction: que decideront les juges au Quebec– Therese Rousseau-Houle ......................................................... 1871. Introduction ..................................................................... 1872. Le principe de bonne foi .................................................... 1903. Le mecanisme de l’offre et de l’acceptation .......................... 1944. Conclusion ...................................................................... 197

Concurrent Delay: A Modest Proposal– R.B. Reynolds and S.G. Revay .................................................. 1991. Introduction ..................................................................... 1992. Analytical Approaches to Solving the Concurrency Dilemma

....................................................................................... 2022.1 The Snapshot Method ................................................ 2032.2 The Dominant Cause Approach .................................. 204

2.2.1 Collapsed As-Built Schedule Method .............. 2053. The General Canadian Rule of Assessing Damages ............... 2054. Apportionment of Liability ................................................ 2085. Concurrent Liability in Tort and Contract ............................. 2176. Summary ......................................................................... 220

The Law of Tendering – The Canadian Advantage– W. Donald Goodfellow. Q.C. ................................................... 2271. The Canadian Advantage ................................................... 2282. Tender Principles Apply to all Areas of Commerce ............... 229

TABLE OF CONTENTS xi

3. Law Prior to Ron Engineering ............................................ 2304. The Ron Engineering Case ................................................. 2315. What is the Obligation of the Person Calling for Tenders ........ 234

5.1 The M.J.B. Case ....................................................... 2345.2 Issues Before the Supreme Court of Canada ................. 2355.3 Facts in M.J.B. ......................................................... 2355.4 The Judgment of the Supreme Court of Canada in M.J.B.

............................................................................... 2376. The Supreme Court of Canada Always had an Opportunity to

Take a Second “Kick at the Cat” ......................................... 2387. What if no Criteria for Tender Elevation Contained in the Invi-

tation to Tender ................................................................ 2408. Obligation of the Subcontractor to the Contractor .................. 2419. Obligation of the Contractor to the Subcontractor .................. 24310. Liability to Non-privity Party ............................................. 24811. What Damages are Available to a Wronged Tenderer? ........... 25212. Can One Contract out of the Right to Claim Gross Profits as

Damages for Breach of Contract A? .................................... 25513. The Privilege Clause Really Does Mean Something ............... 25814. When is Compliance Compliance? ...................................... 25915. Bid Shopping ................................................................... 262


Preface .................................................................................... iiiTable of Cases ......................................................................... xi

Control of Experts: When Theory Clashes with Reality– John H. Hinchey .................................................................... 1

Party Appointed Expert Witnesses in International Arbitration– Doug Jones ........................................................................... 13

Principles and Methods of Calculation of Impact Damages: TheAustralian Position– Doug Jones ........................................................................... 39

Force Majeure Clauses in Construction Contracts– Lowell A. Westersund ............................................................. 67

Allocating Risks of Terrorism and Pandemic Pestilence: ForceMajeure for an Unfriendly World– Patrick J. O’Connor ............................................................... 87

Product Liability in Quebec: Good Faith and the Presumption ofKnowledge– Gregory B. Bordan ................................................................. 125

La responsabilite pour les produits defectueux au Quebec : labonne foi et la presomption de connaissance– Gregory B. Bordan ................................................................. 137

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Control of Experts: When Theory Clashes with Reality .................. 11. Introduction ..................................................................... 22. Real Science vs. Junk Science ............................................ 43. The Scooter Libby Trial ..................................................... 64. The English Concept of Experts’ Role ................................. 75. The U.S. Concept of Experts’ Role ...................................... 96. The Canadian Concept of Experts’ Role ............................... 107. Questions for Consideration ............................................... 11

Party Appointed Expert Witnesses in International Arbitration ........ 131. Introduction ..................................................................... 152. The Woolf Report ............................................................. 15

2.1 Post Woolf: Reform in the U.K. .................................. 162.2 Reform in Australia .................................................. 17

3. The Independence of Experts ............................................. 173.1 Federal and Supreme Courts ....................................... 193.2 The IBA Rules on Evidence ....................................... 213.3 The Chartered Institute of Arbitrators Draft Protocol ...... 21

4. Limiting the Differences .................................................... 234.1 Exchange of Draft Reports ......................................... 234.2 Joint Conferences ..................................................... 244.3 Application to Arbitration .......................................... 26

5. Methods of Giving Evidence .............................................. 286. Potential Areas for Reform ................................................. 30

6.1 Evidence by Leave .................................................... 306.2 A Clear Statement of Independence ............................. 326.3 Weight .................................................................... 336.4 Transparency ........................................................... 346.5 Processes for Conformance of Views ........................... 356.6 Single and Court Appointed Experts ............................ 35

7. Conclusion ...................................................................... 37

Principles and Methods of Calculation of Impact Damages: TheAustralian Position ................................................................... 391. Introduction ..................................................................... 422. Basis of Entitlement to Damages ......................................... 43

2.1 Specific Contractual Provisions .................................. 432.1.1 The Australian Standard Forms of Contract ...... 44

(a) AS 2124-1992 and AS 4300-1995 ............... 44(b) PC-1-1998 ............................................... 44(c) Defence Head Contract .............................. 45

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(d) FIDIC General Conditions of Contract 1999............................................................... 45

2.1.2 The Significance of the Words Used in the Con-tract ............................................................ 46

2.1.3 Security of Payment Legislation ...................... 472.2 General Law of Contract ............................................ 482.3 Tortious and Statutory Claims .................................... 50

3. Quantification of Claims .................................................... 523.1 Formulae ................................................................. 533.2 Methods of Delay Analysis ........................................ 56

3.2.1 Theoretical-Based Methods ............................ 573.2.2 Actual-Based Methods .................................. 57

3.3 Global Claims .......................................................... 593.4 Agreed Damages Provisions: A Solution? .................... 64

4. Conclusion ...................................................................... 65

Force Majeure Clauses in Construction Contracts ......................... 671. Introduction ..................................................................... 682. Purpose of Force Majeure Clauses ...................................... 693. Present Force Majeure Clause Usage .................................. 724. Requirements for Force Majeure ........................................ 795. Triggering Events ............................................................. 806. Duration/Mitigation .......................................................... 807. Notice ............................................................................. 838. Effect on Contractual Obligations ....................................... 849. Conclusion ...................................................................... 85

Allocating Risks of Terrorism and Pandemic Pestilence: ForceMajeure for an Unfriendly World ................................................ 871. Introduction ..................................................................... 892. What is Terrorism? ........................................................... 913. Differing Risk Allocation Responses to the Events of September

11, 2001 .......................................................................... 934. Assessing the Risks of Terrorism and Pandemic Events .......... 96

4.1 Terrorism in Perspective: Some Statistics ..................... 964.2 How are Terrorism/Pandemic Risks Most Likely to

Disrupt Infrastructure Development? ........................... 994.3 How Real is the Threat of a Highly Disruptive Terrorist

or Pandemic Event? .................................................. 1025. Insuring Against Terrorism ................................................ 1096. Common Law Allocation of Terrorism Risk ......................... 1117. Is Terrorism a Force Majeure Event? .................................. 1188. Allocating Terrorism Risk Through Force Majeure Clauses ... 120

TABLE OF CONTENTS ix

Product Liability in Quebec: Good Faith and the Presumption ofKnowledge .............................................................................. 1251. Introduction ..................................................................... 1272. Factual Background .......................................................... 1273. The Validity of Limitation of Liability Clauses in the Civil Law

....................................................................................... 1294. Good Faith in Quebec’s Law of Contracts ............................ 1315. Conclusion ...................................................................... 134

La Responsabilite Pour les Produits Defectueux au Quebec: La BonneFoi et la Presomption De Connaissance ........................................ 1371. Introduction ..................................................................... 1372. Les Faits ......................................................................... 1383. La Validite des Clauses Limitatives de Responsabilite en Droit

Civil ............................................................................... 1394. La Bonne Foi et le Droit Civil Quebecois des Obligations

Contractuelles .................................................................. 1425. Conclusion ...................................................................... 145


Preface ..................................................................................... vTable of Contents ........................................................................ ixTable of Cases ............................................................................ xxiii

Adjudication and Mandatory Payment Requirements: “GoodPractice” or “Good Riddance”? .................................................... 1– Stephen Dennison, Q.C. and Zulfikar Khayum

Design Professionals’ Liability for Field Services .............................. 35– Bryan S. Shapiro, Q.C.

Global Engineering and Construction ADR: Meeting anIndustry’s Demand for Specialized Expertise, Innovation andEfficiency ................................................................................. 69– Philip L. Bruner

Securing Payment and Performance on International Projects ........... 83– Matthew R. Alter and Ian J. Houston

Construction Liens Across Canada: An Updated 2009 Survey ............ 121– Harvey J. Kirsh, W. Donald Goodfellow, Christopher J. O’Connor,Michael A. Skene, Betty A. Johnstone, George W. MacDonald, Q.C., JohnKulik, Q.C., Patrick Windle, John V. O’Dea, Joel Richler, Kevin Kiley,Tamzin Gillis, David H. Kauffman, Robert H. McKercher, Q.C., Collin K.Hirschfield

Book Review—International Construction Arbitration Handbook ...... 229– Reviewed by Duncan W. Glaholt and Harvey J. Kirsh

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Adjudication and Mandatory Payment Requirements: “GoodPractice” or “Good Riddance”?1. The Right to Payment and the Right to Have It Now ..................... 4

1.1 Introduction ............................................................... 41.2 The Scheme of Statutory Adjudication .............................. 81.3 The Payment Framework Established by the Act .................. 101.4 Standardising the Payment Provisions ............................... 12

1.4.1 Introduction ................................................... 121.4.2 Establishing the Legal Entitlement ....................... 121.4.3 The Sum Due Under the Contract ........................ 151.4.4 The Date for Final Payment ............................... 171.4.5 The Payment Notice ......................................... 19

1.5 Withholding Against a Sum Due ..................................... 202. Reform of the Right to Payment .............................................. 24

2.1 Introduction ............................................................... 242.2 The Proposals for Payment Notices .................................. 262.3 The Proposals for Withholding Notices ............................. 282.4 The Potential Significance of the Changes .......................... 30

3. Conclusions ....................................................................... 32

Design Professionals’ Liability for Field Services1. Field Services—The Problem ................................................. 372. Field Services—The Definition ............................................... 383. Field Services—Why So Many Claims? .................................... 394. Field Services—The Claims Analysis ....................................... 40

4.1 Inappropriate Definition of Field Services .......................... 414.2 Contractor’s Construction Methods .................................. 434.3 Inappropriate Field Service Fees ...................................... 484.4 Delayed Identification and Quantification of Contract

Deviations ................................................................. 485. Field Services—The A/E as Certifier ........................................ 506. Field Services—The Professional and Construction Contracts ......... 517. Conclusions ....................................................................... 54Appendix “A”—A/E Loss Control and Risk Management Checklist ......... 57Appendix “B”—The A/E’s Lament .................................................. 67

Global Engineering and Construction ADR: Meeting an Industry’sDemand for Specialized Expertise, Innovation and Efficiency1. Introduction ....................................................................... 722. The Ten ADR Options .......................................................... 74

2.1 Informal Discussions: The “Hot Tub” Approach .................. 742.2 Structured Negotiations ................................................. 752.3 Mediation ................................................................. 762.4 Conciliation ............................................................... 772.5 Standing Project Neutral ............................................... 78

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2.6 Standing Dispute Review Board ...................................... 782.7 Expert Determination ................................................... 792.8 Adjudication .............................................................. 792.9 Mini-Trials/Mini-Arbitrations ......................................... 802.10 Arbitration ................................................................ 803. Conclusion ................................................................ 81

Securing Payment and Performance on International Projects1. Introduction ....................................................................... 862. Discussion ......................................................................... 87

2.1 Letters of Credit .......................................................... 872.1.1 Introduction ................................................... 872.1.2 Terminology .................................................. 882.1.3 Theoretical Foundation ..................................... 892.1.4 Stand-By Letters of Credit ................................. 892.1.5 Clean/First Demand Letters of Credit .................... 902.1.6 Documentary Letters of Credit ............................ 912.1.7 The Principles of Independence (or Autonomy) and

Strict Compliance ............................................ 912.1.8 The Fraud Exception ........................................ 922.1.9 Uniform Rules for Letters of Credit ...................... 94

2.2 Bonds ...................................................................... 952.2.1 Use of Surety Bonds on International Construction

Projects ........................................................ 952.2.2 Types of Surety Bonds ...................................... 972.2.3 Bond Provisions .............................................. 992.2.4 Surety’s Right to Investigate ............................... 100

2.3 Surety Bond or Stand-By Letter of Credit? ......................... 1002.4 Retainage .................................................................. 103

2.4.1 Introduction ................................................... 1032.4.2 Common Practice ............................................ 1042.4.3 Warranty Retainage ......................................... 1052.4.4 Release of Retainage ........................................ 1052.4.5 Benefits ........................................................ 1062.4.6 Opposition to Retainage .................................... 1062.4.7 Variations to Retainage ..................................... 107

2.5 Lien Laws ................................................................. 1082.6 Parent Company Guarantees .......................................... 110

2.6.1 What are They and When are They Used? .............. 1102.6.2 Common Provisions Contained in Parent Company

Guarantees .................................................... 1112.6.3 Enforcement of Parent Company Guarantees .......... 111

2.7 Subcontractor Default Insurance ...................................... 1132.7.1 Introduction ................................................... 1132.7.2 Typical Coverage ............................................ 1132.7.3 Comparison of SDI and Surety Bonds ................... 1142.7.4 Advantages and Disadvantages of SDI .................. 116

3. Conclusion ........................................................................ 118

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Construction Liens Across Canada: An Updated 2009 Survey1. Introduction ....................................................................... 125

Alberta ..................................................................................... 1281. What is the name of the lien legislation in Alberta? ............... 1282. Who is entitled to claim a lien? ....................................... 1283. Does the Act bind the provincial Crown? ........................... 1284. Is there a minimum amount for which a lien may be claimed?

............................................................................... 1295. Is there a lien for interest? .............................................. 1296. Are there circumstances for which a lien claim may not be

available? .................................................................. 1297. What is the holdback amount? ........................................ 1308. How is the holdback calculated? ...................................... 1309. Who must retain a holdback, and specifically how is this done?

............................................................................... 13110. For how long must the holdback be retained? ...................... 13111. Is set-off against holdback permitted? ............................... 13412. How long does a lien claimant have to preserve a lien? .......... 13513. What is a “prevenient arrangement”, and how does it affect

lien rights? ................................................................ 13514. What is the procedure for preserving/registering a lien? ......... 13615. How long does a lien claimant have to commence a lien action,

and what procedural steps must be taken? .......................... 13616. What may be included in a lien action, and what may not be

included? .................................................................. 13717. How does a lien action differ from any other court action? ...... 13718. What about priorities? .................................................. 13819. What about trust funds? ................................................ 13920. Are there any limitation periods to be concerned about with

respect to trust fund claims? ........................................... 13921. Is a set-off against trust funds permitted? ........................... 13922. Does the lien legislation deal with the consolidation of a

number of lien actions? ................................................. 14023. What rights of information are available to lien claimants, trust

fund claimants, owners and mortgagees? ........................... 14024. Where a lien attaches to a property that is destroyed (e.g., by

fire), how does the Act deal with insurance proceeds? ........... 14125. Is a lien claimant entitled to assign his/her lien rights? ........... 14126. In general terms, what is the practice and procedure for

enforcing a lien claim, from the commencement of a lienaction to trial? ............................................................ 141

27. In which court, and before which judicial officer, are lien trialsusually held? .............................................................. 142

28. What “extraordinary remedies” may be available under theAct? ........................................................................ 142

xii CCCL JOURNAL 2009

29. How does the existence of a labour and material payment bondaffect lien rights? ........................................................ 143

30. How does an arbitration clause in a contract affect lien rights?............................................................................... 143

British Columbia ......................................................................... 1451. What is the name of the lien legislation in British Columbia? .. 1452. Who is entitled to claim a lien? ....................................... 1453. Does the Act bind the provincial Crown? ........................... 1464. Is there a minimum amount for which a lien may be claimed?



............................................................................... 14710. For how long must the holdback be retained? ...................... 14711. Is set-off against holdback permitted? ............................... 14812. How long does a claimant have to preserve/register a lien? ..... 14813. What is a “prevenient arrangement”, and how does it affect

lien rights? ................................................................ 14814. What is the procedure for preserving/registering a lien? ......... 14915. How long does a claimant have to commence a lien action, and

what procedural steps must be taken? ................................ 14916. What may be included in a lien action, and what may not be


respect to trust fund claims? ........................................... 15221. Is a set-off against trust funds permitted? ........................... 15222. Does the Act deal with the consolidation of a number of lien

actions? .................................................................... 15223. What rights of information are available to lien claimants, trust


fire), how does the Act deal with insurance proceeds? ........... 15325. Is a lien claimant entitled to assign its lien rights? ................. 15426. In general terms, what is the practice and procedure for




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Manitoba .................................................................................. 1561. What is the name of the lien legislation in Manitoba? ............ 1562. Who is entitled to claim a lien? ....................................... 1563. Does the Act bind the provincial Crown? ........................... 1564. Is there a minimum amount for which a lien may be claimed?














xiv CCCL JOURNAL 2009



New Brunswick .......................................................................... 1631. What is the name of the lien legislation in New Brunswick? .... 1632. Who is entitled to claim a lien? ....................................... 1633. Does the Act bind the provincial Crown? ........................... 1634. Is there a minimum amount for which a lien may be claimed?

............................................................................... 1635. Is there lien for interest? ................................................ 1636. Are there circumstances for which a lien may not be available?

............................................................................... 1637. What is the holdback amount? ........................................ 1648. How is the holdback calculated? ...................................... 1649. Who must maintain a holdback, and specifically how is this

done? ....................................................................... 16410. For how long must the holdback be retained? ...................... 16411. Is a set off against holdback permitted? ............................. 16412. How long does a claimant have to preserve/register a lien? ..... 16413. What is a “prevenient arrangement”, and how does it affect

lien rights? ................................................................ 16514. What is the procedure for preserving/registering a lien? ......... 16515. How long does a claimant have to commence a lien action and

what procedural steps must be taken? ................................ 16516. What may be included in a lien action and what may not be


respect to trust fund claims? ........................................... 16721. Is a set off against trust funds permitted? ........................... 16722. Does the lien legislation deal with the consolidation of a




enforcing a lien clam from the commencement of a lien actionto trial? ..................................................................... 168

27. In which court and before which judicial officer are lien trialsusually held? .............................................................. 168


TABLE OF CONTENTS xv



Newfoundland and Labrador .......................................................... 1691. What is the name of the lien legislation in Newfoundland? ..... 1692. Who is entitled to claim a lien? ....................................... 1693. Does the Act bind the provincial Crown? ........................... 1694. Is there a minimum amount for which a lien may be claimed?

............................................................................... 1695. Is there a lien for interest? .............................................. 1696. Are the circumstances for which a lien claim may not be

available? .................................................................. 1707. What is the holdback amount? ........................................ 1708. How is the holdback calculated? ...................................... 1709. Who must maintain a holdback, and specifically how is this

done? ....................................................................... 17010. For how long must the holdback be retained? ...................... 17011. Is set-off against holdback permitted? ............................... 17012. How long does a claimant have to preserve/register a lien? ..... 17013. What is a “prevenient arrangement” and how does it affect lien

rights? ...................................................................... 17114. What is the procedure for preserving/registering a lien? ......... 17115. How long does a claimant have to commence a lien action, and

what procedural steps must be taken? ................................ 17116. What may be included in a lien action and what may not be


respect to trust fund claims? ........................................... 17221. Is a set-off against trust funds permissible ? ........................ 17222. Does the lien legislation deal with the consolidation of a

number of lien actions? ................................................. 17323. What rights of information are available to lien claimants,

owners and mortgagees? ............................................... 17324. Where a lien attaches to a property that is destroyed (e.g., by





xvi CCCL JOURNAL 2009



Nova Scotia ............................................................................... 1751. What is the name of the lien legislation in Nova Scotia? ......... 1752. Who is entitled to claim a lien? ....................................... 1753. Does the Act bind the provincial Crown? ........................... 1754. Is there a minimum amount for which a lien may be claimed?



............................................................................... 17610. For how long must the holdback be retained? ...................... 17711. Is a set off against holdback permitted? ............................. 17712. How long does a claimant have to preserve/register the lien? ... 17713. What is a “prevenient arrangement”, and how does it affect

lien rights? ................................................................ 17814. What is the procedure for preserving/registering the lien? ....... 17815. How long does a lien claimant have to commence a lien action,


included? .................................................................. 17917. How does a lien action differ from any other court action? ...... 17918. What about priorities? .................................................. 17919. What about trust funds? ................................................ 18020. Are there any limitation periods to be concerned with respect

to trust fund claims? ..................................................... 18021. Is a set off against trust funds permitted? ........................... 18022. Does the lien legislation deal with the consolidation of a


fund claimants, owners and mortgagees? ........................... 18124. When a lien attaches to a property that is destroyed (e.g., by

fire), how does the Act deal with insurance proceeds? ........... 18125. Is a lien claimant entitled to assign his/her rights? ................ 18126. In general terms, what is the practice and procedure for


27. In which court and before which judicial officer are lien trialsusually held? .............................................................. 182


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Ontario ..................................................................................... 1831. What is the name of the lien legislation in Ontario? .............. 1832. Who is entitled to claim a lien? ....................................... 1833. Does the Act bind the provincial Crown? ........................... 1834. Is there a minimum amount for which a lien may be claimed?


available? .................................................................. 1847. What is the holdback amount? ........................................ 1848. How is the holdback calculated? ...................................... 1849. Who must retain a holdback and, specifically, how is this

done? ....................................................................... 18410. For how long must the holdback be retained? ...................... 18511. How long does a lien claimant have to preserve a lien? .......... 18512. Is set-off against holdback permitted? ............................... 18613. What is a “prevenient arrangement”, and how does it affect











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Prince Edward Island ................................................................... 1961. What is the name of the lien legislation in Prince Edward

Island? ..................................................................... 1962. Who is entitled to claim a lien? ....................................... 1963. Does the Act bind the provincial Crown? ........................... 1964. Is there a minimum amount for which a lien may be claimed?

............................................................................... 1965. Is there a lien for interest? .............................................. 1966. Are the circumstances for which a lien claim may not be

available? .................................................................. 1977. What is the holdback amount? ........................................ 1978. How is the holdback calculated? ...................................... 1979. Who must maintain a holdback, and specifically how is this

done? ....................................................................... 19710. For how long must the holdback be retained? ...................... 19811. Is a set off against holdback permitted? ............................. 19812. How long does a claimant have to preserve a lien? ............... 19813. What is a “prevenient arrangement”, and how does it affect

lien rights? ................................................................ 19914. What is the procedure for preserving/registering a lien? ......... 19915. How long does a claimant have to commence a lien action, and

what procedural steps must be taken? ................................ 20016. What may be included in a lien action, and what may not be







27. In which court, and before which judicial office, are lien trialsusually held? .............................................................. 207

TABLE OF CONTENTS xix




Quebec ..................................................................................... 2091. What is the name of the lien legislation in Quebec? .............. 2092. Who is entitled to claim a lien? ....................................... 2093. Does the Act bind the provincial Crown? ........................... 2094. Is there a minimum amount for which a lien may be claimed?













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Saskatchewan ............................................................................ 2191. What is the name of the lien legislation in Saskatchewan? ...... 2192. Who is entitled to claim a lien? ....................................... 2193. Does the Act bind the provincial Crown? ........................... 2194. Is there a minimum amount for which a lien may be claimed?













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Book Review—International Construction Arbitration Handbook ............ 229

Summary Table of Contents

Preface ..................................................................................... vTable of Contents ........................................................................ xiTable of Cases ............................................................................ xvii

Concurrency Causation Common Sense and Compensation– Andrew Stephenson and Ian Bailey ................................................ 1

Progressive Homes versus Bridgewood: A B.C. Perspective on the Battlefor Coverage in Construction Claims under Comprehensive GeneralLiability Insurance Policies– Kerry A. Short and Douglas G. Morrison ........................................ 71

Construction Defects and Completed Operations Liability Insurance:What the Supreme Court of Canada Ought to Decide in ProgressiveHomes Ltd. v. Lombard General Insurance Co. of Canada– Donald C.I. Lucky ..................................................................... 93

Consequential Damages: Are Exclusions of Consequential DamagesInconsequential?– E. Jane Sidnell ......................................................................... 109

“A Time for Every Matter Under Heaven”: Construction DefectClaims, Shorter Limitation Periods and Discoverability– Kenneth Crofoot ....................................................................... 131

Qui Paie Qui, Quand, Comment et Pourquoi? L’Ordre de Priorite desCreanciers de la Faillite, Selon L’Arret Daltech Architectural Inc.– Dominique Zaurrini ................................................................... 165

Reflections on the Evolution of Fairness in Public Procurement– Glenn W. Ackerley .................................................................... 187

A Review of the Quebec Act Respecting Contracting by Public Bodies,and its Regulation Respecting Construction Contracts of Public Bodies– Bernard P. Quinn ..................................................................... 235

The Construction Procurement Act: A Draft Bill– Christopher Wu ........................................................................ 251

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Concurrency Causation Common Sense and Compensation

Editor’s Note ............................................................................. 1Concurrency Causation Common Sense and Compensation — Part 1 ........ 41. INTRODUCTION ............................................................... 42. OBLIGATION TO COMPLETE BY A PARTICULAR DATE ....... 53. PROPERLY DRAWN CONSTRUCTION CONTRACTS MUST

GIVE CONTRACTOR RIGHT TO EXTENSION OF TIME .......... 54. RIGHT OF CONTRACTOR TO COMPLETE EARLY ................ 6

(a) General Law Rights of the Contractor to Complete Early ....... 6(b) PC-1 ........................................................................ 8(c) FIDIC Contracts — DBO .............................................. 9(d) JCTSBC ................................................................... 10(e) PSSCOC ................................................................... 10

5. IF CONTRACTOR PLANNED TO COMPLETE EARLY ANDCAN STILL DO SO, IF DELAYED BY EXCUSABLE DELAY, ISIT ENTITLED TO EXTENSION OF TIME? ............................. 11(a) Right to Extension of Time Where Contractor’s Program

Anticipates Early Completion or Shows Float ..................... 12(b) PC-1 ........................................................................ 13(c) FIDIC — DBO ........................................................... 14(d) JCTSBC ................................................................... 14(e) PSSCOC ................................................................... 15(f) Methods of Assessing Delay to Completion ........................ 16

6. CONFLICT BETWEEN BROMPTON HOSPITAL ANDCITY INN .......................................................................... 20

7. TYPES OF CONCURRENCY ............................................... 24(a) Contemporaneously Concurrent Causes of Delay ................. 25(b) Non-Contemporaneously Concurrent ................................ 27

8. COMMON LAW APPROACH TO CAUSATION ....................... 309. APPLICATION OF CONTRIBUTORY NEGLIGENCE

LEGISLATION .................................................................. 3710. CONSTRUCTION CASES DEALING WITH CONCURRENT

CAUSES OF DELAY .......................................................... 3811. APPORTIONING BETWEEN CONCURRENT CAUSES ............. 4312. CONCLUSION .................................................................. 44Concurrency Causation Common Sense and Compensation — Part 2 ........ 4613. ENTITLEMENT TO AND ASSESSMENT OF COMPENSATION

FOR DELAY TO COMPLETION ........................................... 4614. PRESUMED GENERAL CONTRACTUAL INTENTION AND

RISK ALLOCATION .......................................................... 48(a) As to Owner’s Interests ................................................. 48(b) As to Contractor’s Interests ............................................ 49(c) Interrelationship and Term ............................................. 50

15. DAMAGES FOR LATE COMPLETION—UNDERLYINGUNCERTAINTIES .............................................................. 51


(a) Loss of Liquidated Damages as a Consequence ofPrevention ................................................................. 51

(b) Operation of Time Bars and Prevention ............................. 5316. REMEDY AND CAUSATION-BASED ANALYSIS OF

COMPENSATION FOR DELAY ........................................... 5517. CONCLUSION .................................................................. 58Attachment 1 — Clause 10 PC-1 ..................................................... 59Attachment 2 — DBO 8.3 ............................................................. 63Attachment 3 — PSSLOC 9.1 ........................................................ 64Attachment 4 — DBO 9.2 ............................................................. 65Attachment 5 — DBO 9.3 ............................................................. 65Attachment 6 — JCT 2.9 ............................................................... 66Attachment 7 — JCT 2.26 ............................................................. 66Attachment 8 — JCT 2.27 ............................................................. 67Attachment 9 — JCT 2.28 ............................................................. 67Attachment 10 — JCT 2.29 ........................................................... 68Attachment 11 — JCT 2.31 ........................................................... 68Attachment 12 — Clause 14.1 (PSSCOC) .......................................... 69Attachment 13 — Clause 14.2 (PSSCOC) .......................................... 69Attachment 14 — PSSCOC 9.2 ....................................................... 70

Progressive Homes vs. Bridgewood: A B.C. Perspective on the Battle forCoverage in Construction Claims under Comprehensive GeneralLiability Insurance Policies

Editor’s Note ............................................................................. 711. INTRODUCTION ............................................................... 722. NATURE OF THE UNDERLYING CLAIMS ............................ 73

(a) Nature of Damage Arising from Construction Defects ........... 73(b) Usual Form of Pleadings in Relation to the Nature of the

Damage .................................................................... 73(c) Usual Policy Wording .................................................. 75

3. GENERAL PRINCIPLES OF INTERPRETATION OFINSURANCE PROVISIONS ................................................. 75

4. APPLICATION OF INTERPRETATION PRINCIPLES IN THEAUTHORITIES .................................................................. 77(a) The Purpose of CGL Policies and Policy Interpretation .......... 78(b) The “Complex Structure Theory” .................................... 81(c) Approach to the Consideration of Coverage ........................ 84(d) Redundancy ............................................................... 86(e) Cost of Repair and the Insuring Agreement ........................ 87

(i) “Economic Loss” and “Property Damage” ............ 88(ii) Cases Applying the “Nature of the Claim” Analysis .. 89(iii) Cases Applying the “Extrinsic Act” Analysis .......... 90(iv) Accident or Occurrence .................................... 91(v) Summary of B.C. Law on the Insuring Agreement ..... 91

5. CONCLUSION .................................................................. 91


Construction Defects and Completed Operations Liability Insurance:What the Supreme Court of Canada Ought to Decide in ProgressiveHomes Ltd. v. Lombard General Insurance Co. of Canada

Editor’s Note ............................................................................. 931. INTRODUCTION ............................................................... 942. PROGRESSIVE HOMES LTD. v. LOMBARD GENERAL

INSURANCE CO. OF CANADA .............................................. 96(a) Basic Facts ................................................................ 96(b) The Relevant Policy Language ........................................ 96

3. IMPORTANT CASE LAW FROM OUTSIDE BRITISHCOLUMBIA ...................................................................... 97(a) Saskatchewan ............................................................. 97(b) Ontario ..................................................................... 98(c) Nova Scotia ............................................................... 100

4. PRE-PROGRESSIVE HOMES CASELAW FROM BRITISHCOLUMBIA ...................................................................... 101(a) F.W. Hearn/Actes—A Joint Venture Ltd. v. Commonwealth

Insurance Co ............................................................. 101(b) Swagger Construction v. ING Insurance Company ............... 101

5. PROGRESSIVE HOMES LTD. v. LOMBARD GENERALINSURANCE CO. OF CANADA .............................................. 102(a) Decision of British Columbia Supreme Court ...................... 102(b) Decision of British Columbia Court of Appeal .................... 102

(i) Correct Statement of Principles ........................... 102(ii) Disagreement Respecting Application of the

Principles to the CGL Policies at Issue .................. 1046. CONCLUSION .................................................................. 106

Consequential Damages: Are Exclusions of Consequential DamagesInconsequential?

Editor’s Note ............................................................................. 1091. INTRODUCTION ............................................................... 1092. ORIGINS OF THE RULE ..................................................... 1103. APPLICATION OF THE RULE AND THE DETERMINATION OF

DIRECT VS. INDIRECT DAMAGES ...................................... 1134. A NEW APPROACH ........................................................... 122

(a) Limitation of Foreseeable Damages .................................. 122(b) A Move to Revert to the Commonly Understood Meaning of

“Consequential Damages” ............................................. 1255. PITFALLS IN DRAFTING ................................................... 1276. CONCLUSION .................................................................. 129

“A Time for Every Matter Under Heaven”: Construction DefectClaims, Shorter Limitation Periods and Discoverability

Editor’s Note ............................................................................. 1311. INTRODUCTION ............................................................... 132


2. LIMITATION PERIODS AND DISCOVERABILITY ................. 1323. CONTRACTS AND DISCOVERABILITY ............................... 137

(a) CCDC Contracts ......................................................... 138(b) Contract Limitation Periods and Discoverability .................. 140

4. REVIEW OF SOME ISSUES THAT ARISE IN CONSIDERINGDISCOVERABILITY .......................................................... 142(a) Multiple Claims and Discoverability ................................. 143(b) Reasonable Dilligence By Whom — Subjective or Objective

Assessment? .............................................................. 145(c) Reasonable Diligence — Identifying Defendants ................. 148(d) Reasonable Diligence — Assessing the Merits of the

Prospective Proceeding ................................................. 149(e) Reasonable Diligence — Consulting Experts ...................... 150(f) Due Diligence and Continuous Deterioration ...................... 152

5. CONCLUSION .................................................................. 154Appendix “A” — Canadian Limitations Statues — Selected Excerpts ........ 156

Qui Paie Qui, Quand, Comment et Pourquoi? L’Ordre de Priorite desCreanciers de la Faillite, Selon L’Arret Daltech Architectural Inc.

Reviewer’s Note ......................................................................... 1651. INTRODUCTION ............................................................... 1682. L’ORIGINE DU LITIGE ...................................................... 168

(a) Les faits .................................................................... 168(b) Les procedures en premiere instance ................................. 170

3. LE JUGEMENT DE LA COUR SUPERIEURE .......................... 1704. LES POSITIONS DES PARTIES DEVANT LA COUR

D’APPEL : ........................................................................ 172(a) Position du Syndic ....................................................... 173(b) Position de l’entrepreneur general .................................... 175(c) Position de l’Association de la construction du Quebec .......... 179(d) Position du Centre Hospitalier Pierre-Boucher .................... 180(e) Position de Portronik A.T., mise en cause forcee .................. 180

5. LA DECISION DE LA COUR D’APPEL .................................. 1816. CONCLUSION .................................................................. 185

Reflections on the Evolution of Fairness in Public Procurement

Editor’s Note ............................................................................. 1871. INTRODUCTION ............................................................... 1882. THE NATURE OF THE PROBLEM ....................................... 1893. EXAMPLES OF UNCERTAINTY .......................................... 190

(a) The “Eye of the Beholder” ............................................. 190(b) The “Chicken or the Egg” .............................................. 192(c) “Do as I Say, Not as I Do” ............................................. 194

4. “Fairness” as a Contractual Term ............................................. 196(a) Ron Engineering ......................................................... 196(b) Fairness and the Privilege Clause ..................................... 197(c) Fairness and Non-Compliance ........................................ 202


(d) Fairness and Double N Earthmovers ................................. 208(e) Fairness and Tercon ..................................................... 210(f) Fairness as an Implied Term ........................................... 213

5. FAIRNESS IN REQUEST FOR PROPOSALS ........................... 2166. FAIRNESS AS A TORT DUTY ............................................. 2207. FAIRNESS AND JUDICIAL REVIEW .................................... 2238. CONCLUSION .................................................................. 230Author’s Note ............................................................................ 232

A Review of the Quebec Act Respecting Contracting by Public Bodies,and its Regulation Respecting Construction Contracts of Public Bodies

Editor’s Note ............................................................................. 2351. INTRODUCTION ............................................................... 2352. LEGISLATIVE HISTORY .................................................... 2363. UNDERLYING OBJECTIVE OF THE ACT AND PURVIEW ....... 2364. CITIES AND TOWNS: A PRESENT SHORTCOMING ............... 2385. ADOPTION OF A POLICY BY THE RESPONSIBLE MINISTER

AND OF AN INTERNAL IMPLEMENTATION POLICY BY THEPUBLIC BODY ................................................................. 239

6. FUNDAMENTAL PRINCIPLES OF THE LAW OF TENDERINGIN QUEBEC ...................................................................... 239

7. CONTRACT AWARD MECHANISMS ................................... 242(a) Public Calls for Tenders ................................................ 242(b) Emergencies and Other Exceptions to the Requirement of a

Public Call for Tenders ................................................. 245(c) Contracts Involving Expenditure Below the Public Tender

Threshold .................................................................. 2458. JOINT CALLS FOR TENDERS BY PUBLIC BODIES UNDER

SECTIONS 15 AND 16 ........................................................ 2469. OTHER PROVISIONS ......................................................... 24710. SE@O ............................................................................. 24711. JUDICIAL CONTROL OF THE TENDERING PROCESS IN

SPECIAL CASES: A NEW LEGAL AVENUE? ......................... 248

The Construction Procurement Act: A Draft Bill

Editor’s Note ............................................................................. 251INTRODUCTION AND GENERAL COMMENTS ............................. 251PART I — FORMATION OF THE CONSTRUCTION BIDCONTRACT ............................................................................. 252PART II — EVALUATION OF THE CONSTRUCTION BIDCONTRACT ............................................................................. 254CONCLUDING COMMENTS ....................................................... 256

Index ....................................................................................... 257

Table of Contents

Problems with Liens

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1371. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1382. TYPES OF MISTAKES ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

(a) Failure to Preserve Lien in Time ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139(b) Failure to Perfect Lien in Time ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142(c) Defect in Claim for Lien .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

(i) Failing to Name a Necessary Party .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145(ii) Claiming the Wrong Amount .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147(iii) Erroneous Date of Last Supply .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149(iv) Error in Legal Description .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

(d) Defective Affidavit of Verification .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151(e) Liening the Wrong Lands .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155(f) Registration—Land Titles vs. Registry .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158(g) Technical Electronic Registration Error .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159(h) Commencement of Lien Action in Wrong County .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 162(i) Defective Statement of Claim ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

(i) Limitation on Kinds of Claims ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163(ii) Failure to Name Owner .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

(j) Failure to Set Action Down for Trial in Time ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167(k) Making a Mortgage Advance in the Face of a Lien .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 176(l) Making an Imprudent Decision Regarding the Posting of Security .. . . . . . . . . 179

3. CONCLUSION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Index ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357

Nicholas

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JCCL - 2011


Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Table of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Judicial Dispute Resolution Advocacy

– Robert A. Graesser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Statutory Intervention into the Common Construction Law of Australia —Progress or Regress?

– Dr. Donald Charrett & Matthew Bell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Hey, I thought we had a deal! — The Unilateral Resiliation of a ConstructionContract in Quebec Law

– Yvan Houle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Public Private Partnerships: A Procurement Panacea?

– Doug Sanders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

The Best Defence is a Good Offence — How can a Scrutiny of the Owner’s Actionsbe Used as a Sword in the Defence of an Owner’s Claim Against a Contractor’s Mis-taken Bid?

– Murray R. Sawatzky, Q.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Liening Airport Lands

– Harvey J. Kirsh & Matthew R. Alter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Contractor/Subcontractor Default Insurance

– Helmut K. Johannsen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Nicholas

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x CCCL JOURNAL 2012

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Table of Contents

Judicial Dispute Resolution Advocacy

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. DIFFERENCES BETWEEN TRIAL ADVOCACY AND JDR ADVOCACY

.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33. STARTING POINT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44. DETERMINE WHAT KIND OF JDR YOU WANT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45. SELECT THE RIGHT JUDGE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56. PRE-JDR PROCESS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57. TRY SETTLING THE CASE BEFORE THE JDR ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68. PREPARATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

8.1 Briefs .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.2 BATNA and WATNA .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

9. PREPARING THE CLIENT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 810. PREPARING YOURSELF ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811. ADVOCACY AT THE JDR ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

11.1 Evaluative—Mini-Trial Process .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911.2 Facilitative—Mediation Process .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

12. SUMMARY .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013. CONCLUSION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Statutory Intervention into the Common Construction Law of Australia—Progress or Regress?

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122. AUSTRALIA’S LEGAL ENVIRONMENT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1 Constitutional Structure .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.2 Federal Division of Legislative Powers .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.3 The Legacy of Colonial-Era Divisions .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3. THE COMMON LAW OF AUSTRALIA ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163.1 Australian Court System ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163.2 Possibility of Inconsistent Approaches .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

4. CONSTRUCTION LAW IN AUSTRALIA ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185. FAIR TRADING LEGISLATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

5.1 Background ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205.2 Misleading or Deceptive Conduct .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215.3 Actions for Damages .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245.4 Other Remedial Orders .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255.5 Australian Consumer Law ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265.6 Changes Implemented in the ACL ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

6. SECURITY OF PAYMENT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296.1 Background ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29


6.2 Conceptual and Detailed Differences .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296.3 Are the Legislative Objects being Achieved? .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

7. PROPORTIONATE LIABILITY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327.1 Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327.2 Proportionate Liability for Building Actions .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337.3 General Proportionate Liability Legislation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347.4 Impact of Proportionate Liability Legislation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

8. CONCLUSIONS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Hey, I Thought We Had a Deal! — The Unilateral Resiliation of aConstruction Contract in Quebec Law

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422. THE NATURE OF THE CONSTRUCTION CONTRACT ... . . . . . . . . . . . . . . . . . . . . . . 423. THE RESILIATION OF THE CONTRACT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

3.1 The Quebec Civil Code Provisions .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423.2 The Owner’s Right to Resiliate the Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443.3 Abusive Exercise by the Client of his or her Right .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 443.4 The Waiver of the Right .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473.5 The Owner’s Obligation following the Contract’s Resiliation .. . . . . . . . . . . . . . . 48

4. CONCLUSION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Public Private Partnerships: A Procurement Panacea?

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531. THE PRINCIPLES ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

1.1 Public-Private Partnerships for Projects .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541.2 The Government Agencies .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551.3 The Infrastructure Sectors .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

2. THE PPP CONCEPT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562.1 Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562.2 Potential Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

3. THE PLAYERS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.1 The Public Owner .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.2 The Project Company ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593.3 The Lenders .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593.4 The Construction Contractor .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593.5 The Services Contractor .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

4. PRE-CONTRACT CONSIDERATIONS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604.1 Commercial Viability .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604.2 Risk-Allocation Feasibility .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604.3 What is the Public Entity—Does it have Authority? .. . . . . . . . . . . . . . . . . . . . . . . . . . 614.4 Procurement Process .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

4.4.1 Request for Qualifications (RFQ) ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634.4.2 Request for Proposals (RFP) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634.4.3 Preferred Proponent Stage .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

5. PPP RISK-ALLOCATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635.1 Introduction to Risk-Allocation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635.2 Typical Risk Allocations in PPP Projects Today ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

5.2.1 Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645.2.2 Demand Risks .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665.2.3 Site Acquisition .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66


5.2.4 Baseline Geotechnical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665.2.5 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665.2.6 Change in Law ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675.2.7 Cost Overruns, Delays and Change Events .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675.2.8 Permits .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675.2.9 Warranty Items and Latent Defects .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685.2.10 Dispute Risks .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685.2.11 Operational Difficulties .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695.2.12 Project Revenue ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695.2.13 Set-Off .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695.2.14 Third-Party Defaults .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695.2.15 Defaults .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

6. THE FUTURE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

The Best Defence is a Good Offence: How can a Scrutiny of the Owner’s

Actions be Used as a Sword in the Defence of an Owner’s Claim Against a

Contractor’s Mistaken Bid?

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722. EARLY APPROACHES TO THE SCRUTINY OF THE OWNER’S

ACTIONS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742.1 Aztec Construction Ltd. v. Frocan Industrial Contractors Ltd. . . . . . . . . . . . . . . . 742.2 Ottawa (City) Non-Profit Housing Corp. v. Canvar Construction (1991)

Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752.2.1 Decision of the Lower Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762.2.2 Decision of the Court of Appeal .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

3. THE OWNER’S ACTIONS UNDER SCRUTINY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783.1 Derby Holdings Ltd. v. Wright Construction Western Inc. . . . . . . . . . . . . . . . . . . . . 783.2 Graham Industrial Services Ltd. v. Greater Vancouver Water District . . . . . . 83

4. THE AMERICAN EXPERIENCE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865. CANADIAN LEGISLATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916. THE ISSUE OF WAIVER OF COMPLIANCE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927. CONCLUSION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Liening Airport Lands

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95LESTER B. PEARSON INTERNATIONAL AIRPORT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97THE GREATER TORONTO AIRPORTS AUTHORITY (“GTAA”) .. . . . . . . . . . . . . . . . 97THE LEGAL ISSUES ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 971. THE SUBJECT-MATTER OF THE CONSTRUCTION LIEN ACT . . . . . . . . . . . . . . . 982. INAPPLICABILITY OF PROVINCIAL LIEN LEGISLATION TO FEDERAL

PROPERTY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003. IS GTAA’S LEASEHOLD INTEREST LIENABLE? ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1014. THE RIGHTS OF THE GTAA UNDER THE GROUND LEASE ... . . . . . . . . . . . . . . 1025. GTAA AND THE NATIONAL AIRPORTS POLICY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . 1056. SALE OF AIRPORT AGAINST PUBLIC POLICY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1067. AERONAUTICS AND FEDERAL UNDERTAKINGS: SS. 91 AND 92(10)(A)

.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1068. APPLICABILITY OF THE TRUST PROVISIONS OF THE CONSTRUCTION

LIEN ACT TO AIRPORT IMPROVEMENTS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110CONCLUSION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114


Contractor/Subcontractor Default Insurance

Editor’s Note .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1151. INTRODUCTION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1162. OVERVIEW OF BONDS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1173. CONTRACTOR DEFAULT INSURANCE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

3.1 Overview of Contractor Default Insurance .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1203.2 Structure and Function .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1213.3 General Insurance Issues .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

4. MISCELLANEOUS ISSUES ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234.1 Policy Wording .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234.2 Scope of Coverage .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1254.3 Obtaining and Maintaining Coverage .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1274.4 Term and Termination .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1294.5 Triggering Events .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1304.6 Making a Claim ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1304.7 Insurer’s Defences .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1324.8 Subrogation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1324.9 Default Insurance v. Payment Bonds .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1334.10 Implementing a Contractor or Subcontractor Default Insurance Program ... 1334.11 Suitability for all Contractors/Subcontractors .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

5. HYBRID BONDS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1356. OWNER-CONTROLLED SURETY PROGRAM .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1367. SUMMARY .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Index ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139


Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Table of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Public Contracts in Quebec: A Question of Integrity

The New Integrity in Public Contracts Act

Ian Gosselin and Antoine Pellerin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Les contrats publics au Quebec : une question d’integrite

La nouvelle Loi sur l’integrite en matiere de contrats publics

Ian Gosselin et Antoine Pellerin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A Bought Magistrate: The Conundrum of the Consultant

Jeffrey D. Vallis, Q.C., FCIArb. and Erin Berry . . . . . . . . . . . . . . . . . . . . . . . . . 29

Green Tsunami — Sustainable Construction

Karen Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Termination American Style: Handling the Acutely Troubled Construction

Project

Stephen A. Hess, Esq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

The Law of Estimates and Quantum Meruit in Canadian Small-Scale

Building Contracts

Muharem Kianieff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Ontario’s Construction Lien Act: Examining Preservation and Perfection

Deadlines in Geographical, Inter-Jurisdictional, and Commercial Contexts

Mark Adrian de Jong, J.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Nicholas

Typewritten Text

JCCL - 2013

Nicholas

Typewritten Text

Table of Contents

Public Contracts in Quebec: A Question of Integrity — The New Integrity in PublicContracts Act

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. WHAT IS THE AMF? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35. THE ENTERPRISES CONCERNED . . . . . . . . . . . . . . . . . . . . . . . . . . . 46. AT WHAT POINT IS THE AUTHORIZATION REQUIRED? . . . . . . . . . 57. WHICH PUBLIC BODIES ARE CONCERNED? . . . . . . . . . . . . . . . . . . 58. CONTRACTS SUBJECT TO THE INTEGRITY ACT . . . . . . . . . . . . . . . 59. THE PROCESS FOR THE ISSUE OF AUTHORIZATIONS . . . . . . . . . . 610. THE AMF’S DECISION-MAKING PROCESS . . . . . . . . . . . . . . . . . . . . 7. 10.1 Automatic Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

10.2 Discretionary Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 810.3 The Right to Present Authorizations . . . . . . . . . . . . . . . . . . . . . . . 10

11. THE WITHDRAWAL OF AN AUTHORIZATION DURING THEPERFORMANCE OF A CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . 10

12. PENALTIES IN THE EVENT OF OFFENCES UNDER THE INTEGRITYACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

13. REGISTER OF ENTERPRISES INELIGIBLE FOR PUBLICCONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

14. THE ROLE OF THE UNITE PERMANENTE ANTICORRUPTION(UPAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

15. ABOLITION OF THE RESTRICTED LICENCE REGIME UNDER THEBUILDING ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

16. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Les contrats publics au Quebec : une question d’integrite — La nouvelle Loisur l’integrite en matiere de contrats publics

1. PREAMBULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153. MISE EN CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164. QUI EST L’AMF? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175. LES ENTREPRISES VISEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186. LE MOMENT REQUIS POUR DETENIR SON AUTORISATION . . . . . . 197. LES ORGANISMES PUBLICS VISES . . . . . . . . . . . . . . . . . . . . . . . . . . 198. LES CONTRATS VISES PAR LA LOI SUR L’INTEGRITE . . . . . . . . . . 19


9. LE PROCESSUS DE DELIVRANCE DES AUTORISATIONS . . . . . . . . 2010. LE PROCESSUS DECISIONNEL DE L’AMF . . . . . . . . . . . . . . . . . . . . 21

10.1 Le refus automatique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2110.2 Le refus discretionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2310.3 Le droit de presenter des observations . . . . . . . . . . . . . . . . . . . . . 25

11. LE RETRAIT D’UNE AUTORISATION LORSQU’UN CONTRAT ESTEN COURS D’EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

12. LES PENALITE S EN CAS D’INFRACTIONS A LA LOI SURL’INTEGRITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

13. LE REGISTRE DES ENTREPRISES NON ADMISSIBLES AUXCONTRATS PUBLICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

14. LE ROLE DE L’UNITE PERMANENTE ANTICORRUPTION(UPAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

15. L’ABOLITION DU REGIME DE LA LICENCE RESTREINTE PREVUEA LA LOI SUR LE BATIMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

16. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

A Bought Magistrate: The Conundrum of the Consultant

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302. THE CONSULTANT’S CONUNDRUM IN CANADA . . . . . . . . . . . . . . 333. THE CANADIAN RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394. AN AMERICAN RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405. AN INTERNATIONAL RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 416. THE UNRESOLVED CONUNDRUM . . . . . . . . . . . . . . . . . . . . . . . . . . 427. CAN THE CONUNDRUM BE RESOLVED? . . . . . . . . . . . . . . . . . . . . . 438. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Green Tsunami — Sustainable Construction

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472. OVERVIEW OF LEED CANADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483. GREEN BUILDING LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

3.1 U.S. Green Building Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 513.2 Canadian Green Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

4 ISSUES RELATING TO LEED CERTIFICATION . . . . . . . . . . . . . . . . . 585. ISSUES FOR DESIGN PROFESSIONALS . . . . . . . . . . . . . . . . . . . . . . . 586. ISSUES FOR CONTRACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61


Termination American Style: Handling the Acutely Troubled Construction Project

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642. ANTICIPATORY REPUDIATION: AN OVERVIEW . . . . . . . . . . . . . . . 65

2.1 What Constitutes an Anticipatory Repudiation? . . . . . . . . . . . . . . . 662.1.1 Overt Repudiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672.1.2 Implicit Repudiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692.1.3 Repudiation Arising from Difference in Contract

Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702.1.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

2.2 Demanding Adequate Assurance of Performance . . . . . . . . . . . . . . 732.2.1 Demand for Adequate Assurance of Performance . . . . . . . 732.2.2 Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

2.3 Retraction of Repudiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

2.4.1 Suspension of Performance . . . . . . . . . . . . . . . . . . . . . . . 762.4.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762.4.3 Claim for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762.4.4 Nonbreaching Party’s Obligation to Mitigate . . . . . . . . . . . 77

2.5 Related Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772.5.1 Effect of Notice and Demand for Cure Clause . . . . . . . . . . 772.5.2 Clause Requiring Performance Pending Dispute Resolution 792.5.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802.5.4 Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

2.6 Summary of Anticipatory Repudiation . . . . . . . . . . . . . . . . . . . . . 823. TERMINATION — AN OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

3.1 Basic Legal Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833.1.1 Sufficiency of Grounds for Termination . . . . . . . . . . . . . . 833.1.2 Cumulative Effects of Several Breaches . . . . . . . . . . . . . . 853.1.3 Cardinal Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853.1.4 Insecurity and Anticipatory Repudiation . . . . . . . . . . . . . . 863.1.5 Waiver and Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

3.2 The Economic Consequences of Termination Decisions . . . . . . . . . 883.2.1 Owner’s Damages — Termination Justified . . . . . . . . . . . . 883.2.2 Owner’s Liability — Termination Improper . . . . . . . . . . . . 893.2.3 Contractor’s Damages — Termination Justified . . . . . . . . . 903.2.4 Contractor’s Liability — Termination Improper . . . . . . . . . 913.2.5 Attorneys’ Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 923.2.6 Alternative — Performing in the Face of Breach and

Reserving Rights to Claim Damages . . . . . . . . . . . . . . . . 923.3 Modeling the Economics of Termination . . . . . . . . . . . . . . . . . . . 92

3.3.1 Probability of Success on a Claim for Material Breach . . . . 933.3.2 Value of Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 933.3.3 Probability of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94


3.3.4 Cost of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943.3.5 Value of Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . 943.3.6 Attorneys’ Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953.3.7 Finalizing the Economic Model . . . . . . . . . . . . . . . . . . . . 963.3.8 Limitations on Use of the Economic Model . . . . . . . . . . . 98

3.4 Investigating the Model’s Assumptions . . . . . . . . . . . . . . . . . . . . . 983.4.1 Economic Balancing is the Key to Any Termination

Decision, as the Only Factors Are Quantifiable EconomicFactors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

3.4.2 Liability Estimates Are Reasonably Certain . . . . . . . . . . . . 993.4.3 Prospective Damage Figures Are Reasonably Certain . . . . . 1003.4.4 The Owner and Contractor Have an Infinite Amount of

Money to Pay a Judgment . . . . . . . . . . . . . . . . . . . . . . . . 1003.4.5 The Contractor Can Finance the Remainder of Construction 1003.4.6 The Contractor Cannot Otherwise Employ its Crew . . . . . . 1013.4.7 Not Everyone Has the Same Level of Risk Aversion . . . . . 1013.4.8 The Surety’s Assumption of the Contract Will Mitigate the

Owner’s Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1023.4.9 A Completion Contractor Will Be Easy to Find . . . . . . . . . 102

3.5 Contractor-Subcontractor Terminations . . . . . . . . . . . . . . . . . . . . . 1023.5.1 Alternative to Terminations . . . . . . . . . . . . . . . . . . . . . . . 1023.5.2 Contractor’s Termination of Subcontractors Necessitated by

Termination of General Contracts . . . . . . . . . . . . . . . . . . 1034. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

The Law of Estimates and Quantum Meruit in Canadian Small-Scale Building Contracts

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1062. THE HISTORICAL DEVELOPMENT OF THE LAW OF ESTIMATES

AND QUANTUM MERUIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1082.1 Business Realities in Building Contracts . . . . . . . . . . . . . . . . . . . . 1082,2 The Action for Quantum Meruit . . . . . . . . . . . . . . . . . . . . . . . . . 1102.3 Quantum Meruit and the Unjust Enrichment Principle . . . . . . . . . . 112

3. CURRENT PRACTICES IN THE CONSTRUCTION INDUSTRY ASTHEY RELATE TO THE USE OF CONTRACTS AND CLAIMS FORQUANTUM MERUIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1163.1 Contractual Variations and Risk Allocation . . . . . . . . . . . . . . . . . . 116

3.1.1 Fixed Price / Lump Sum Contracts . . . . . . . . . . . . . . . . . 1163.1.2 Unit Price Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1163.1.3 Cost-Plus Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

3.2 The Definition and Nature of “Extras” in a Building Contract . . . . . 1173.3 The General Law of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . 120


4. RECENT CANADIAN JUDICIAL DECISIONS THAT PERTAIN TOTHE ROLE OF ESTIMATES IN BUILDING CONTRACTS . . . . . . . . . . 1234.1 Pre-2006 Jurisprudence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234.2 Post-2006 Jurisprudence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1254.3 Estimates and the Claim in Quantum Meruit . . . . . . . . . . . . . . . . . 126

5. THE NEED FOR A NEW BRIGHT LINE RULE . . . . . . . . . . . . . . . . . . 1286. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Ontario’s Construction Lien Act: Examining Preservation and PerfectionDeadlines in Geographical, Inter-Jurisdictional, and Commercial Contexts-TheCase for Extended Deadlines

Editor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1331. INTRODUCTION AND ABSTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

1.1 Preliminary Note: How Legislation in Various Jurisdictions Will BeUsed and Cited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

2. BACKGROUND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1352.1 The Construction Lien: A Working Definition . . . . . . . . . . . . . . . . 1362.2 Enforcing the Lien: Procedural Hurdles . . . . . . . . . . . . . . . . . . . . 1362.3 Time Limits for Enforcing a Construction Lien: The Concepts of

Preservation and Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1362.3.1 Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1372.3.2 Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

2.4 A Summary of the Process: Lien Arises; Preservation; Perfection 1383. THE ISSUE: ONTARIO’S PRESERVATION AND PERFECTION TIME

LIMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1394. THE CURRENT STATE OF AFFAIRS: CONSTRUCTION LIEN TIMING

IN ONTARIO AND NORTH AMERICA . . . . . . . . . . . . . . . . . . . . . . . . 1394.1 The Raw Data: Preservation and Perfection Periods in Canada and

the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1394.2 Observations on the Data: Trends in Preservation and Perfection

Time Limits in North America . . . . . . . . . . . . . . . . . . . . . . . . . . 1554.2.1 The Preservation Time Period Across North America . . . . . 1564.2.2 The Perfection Time Period Across North America . . . . . . 1584.2.3 The Maximum Time Period for Preservation and Perfection

Across North America . . . . . . . . . . . . . . . . . . . . . . . . . . 1594.2.4 A Note on the Spatial Autocorrelation of Lien Deadlines in

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1604.2.5 Localized Trends: Ontario and its Neighbours . . . . . . . . . . 161

4.3 Interim Conclusions: What Does the Data Tell Us? Ontario’sDeadlines in Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162


5. ONTARIO’S CONSTRUCTION LIEN DEADLINES IN THECOMMERCIAL CONTEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1635.1 Lien Deadlines, Standard Payment Periods, and “Pay-When-Paid”

Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1635.2 Lien Deadlines and Professional Relationships . . . . . . . . . . . . . . . 164

6. CONCLUSIONS: RECOMMENDING INCREASED PRESERVATIONAND PERFECTION TIME PERIODS . . . . . . . . . . . . . . . . . . . . . . . . . . 165

Appendix 1 — List of Provincial and Territorial Construction Lien Statutes . . . . 166


Preface ........................................................................................................ vTable of Contents..................................................................................... xiTable of Cases ....................................................................................... xvii

Directors’ and Officers’ Liability Insurance: A Tool for ManagingPersonal and Corporate Risk in Construction Activities

D. Geoffrey Machum, Q.C., and Tipper McEwan ................................ 1

Where Dispute Resolution Boards Do Not Work

Harvey J. Kirsh ....................................................................................... 25

Mary Carter and Pierringer Agreements: Characteristics, Differences, andPitfalls

Brian Samuels .......................................................................................... 43

Anti-Corruption Legislation In the United States (An Introduction)

Douglas S. Oles ....................................................................................... 67

Integrated Project Delivery Agreement—A Lawyer’s Perspective

Howard W. Ashcraft, Jr ....................................................................... 105

Les regles de l’art en droit de la construction: l’obligation d’agir en s’yconformant et revue de 20 ans d’application de l’article 2100 du Code civildu Quebec

Me Bernard P. Quinn............................................................................ 157

Index....................................................................................................... 181

Nicholas

Typewritten Text

JCCL - 2014

Table of Contents

Directors’ and Officers’ Liability Insurance: A Tool for ManagingPersonal and Corporate Risk in Construction Activities

Editor’s Note ............................................................................................. 1

1. INTRODUCTION........................................................................... 2

2. A RECAP ON D&O LIABILITY ................................................. 3

3. AN OVERVIEW OF THE USE AND STRUCTURE OFD&O INSURANCE POLICIES..................................................... 6

4. A CLOSER LOOK AT EXCLUSIONS IN D&OPOLICIES....................................................................................... 11

4.1 Bodily Injury Exclusion ........................................................ 12

4.2 Prior Act Exclusion............................................................... 17

4.3 Pollution Exclusion ............................................................... 18

4.4 Insured v. Insured Exclusion ................................................ 20

5. OTHER DEVELOPING TOPICS ............................................... 21

5.1 Self-insured retentions, insolvency, and coverage ............... 21

5.2 D&O Trusts ........................................................................... 22

6. CONCLUSION.............................................................................. 23

Where Dispute Resolution Boards Do Not Work

Editor’s Note ........................................................................................... 25

1. SUCCESS OF DISPUTE RESOLUTION BOARDS INTHE CONSTRUCTION INDUSTRY........................................ 27

2. CORNERSTONE VALUES OF DRBs ...................................... 29

3. ARE THE REPORTS ABOUT DRBS UNIFORMLYPOSITIVE? ..................................................................................... 29

4. CASE STUDY OF A CURRENT SUBWAYCONSTRUCTION AND TUNNELING PROJECT ................ 30

5. SELECTION OF DRB PANEL FOR SUBWAYPROJECT ....................................................................................... 30

6. INITIAL ORGANIZATION OF THE DRB............................. 32

7. THE HEARING PROCESS......................................................... 33

8. THE DRB’S FINDINGS AND RECOMMENDATIONS....... 35

9. AN ANECDOTAL CASE STUDY REGARDINGADMISSIBILITY .......................................................................... 38

10. EPILOGUE: THE COMMERCIAL CONSEQUENCES OFTHE DRB PROCESS.................................................................... 40

Mary Carter and Pierringer Agreements: Characteristics, Differences, andPitfalls

Editor’s Note ........................................................................................... 43

1. INTRODUCTION......................................................................... 44

2. MARY CARTER AGREEMENTS ............................................ 45

3. PIERRINGER AND BC FERRIES AGREEMENTS.............. 45

4. THE DISCLOSURE RULE......................................................... 46

5. THE MISCHIEF BEHIND THE RULE.................................... 47

6. EXAMPLES INVOLVING JURIES........................................... 52

7. WHY MARY CARTER AGREEMENTS ARESOMETIMES NECESSARY ....................................................... 53

8. A TRAP FOR THE UNWARY: RELEASE VERSUSCOVENANT NOT TO SUE........................................................ 55

9. PIERRINGER AGREEMENTS IN PRACTICE...................... 55

10. SAMPLE TERMS OF A PIERRINGER / BC FERRIESAGREEMENT............................................................................... 57

11. PROFESSIONAL CODES OF CONDUCT............................... 59

12. THE DANGER OF DOUBLE RECOVERY ............................ 61

13. DISCLOSURE ORDERED PURSUANT TOSUBROGATION RIGHTS .......................................................... 63

14. RELEVANCE AND MATERIALITY ....................................... 64

15. CONCLUSION.............................................................................. 66


Anti-Corruption Legislation In the United States (An Introduction)

Editor’s Note ........................................................................................... 67

1. INTRODUCTION......................................................................... 68

2. HISTORY OF ANTI-CORRUPTION LEGISLATION INTHE UNITED STATES ............................................................... 69

3. MAJOR PROSECUTIONS.......................................................... 74

4. CASE LAW.................................................................................... 76

5. NEW INDUSTRIES ..................................................................... 78

6. MORALITY................................................................................... 79

7. THE FOREIGN CORRUPT PRACTICES ACT........................ 79

Integrated Project Delivery Agreement—A Lawyer’s Perspective

Editor’s Note ......................................................................................... 105

1. INTRODUCTION....................................................................... 106

2. APPROACHING IPD NEGOTIATION.................................. 107

2.1 Collaborative Negotiation .................................................. 107

2.2 Changing Mindset ............................................................... 110

3. KEY ELEMENTS OF INTEGRATED PROJECTDELIVERY AGREEMENTS .................................................... 112

3.1 IPD Contract Objectives..................................................... 112

3.2 The New Business Model ................................................... 113

3.3 The New Contract Model................................................... 117

3.4 Five Micro-framework Elements (and why) ..................... 126

4. PRINCIPAL NEGOTIATION ISSUES.................................... 130

4.1 Project Dimensions.............................................................. 131

4.2 Project Scope ....................................................................... 134

4.3 Management and Decision Making................................... 136

4.4 Compensation ...................................................................... 137

4.5 Target Setting ...................................................................... 141

4.6 Contingencies and Adjustments to Targets ....................... 145


4.7 Allowable Costs and Profit................................................. 148

4.8 Measuring Performance ...................................................... 150

4.9 Risk Allocation.................................................................... 151

5. SUBSIDIARY NEGOTIATION ISSUES................................. 153

5.1 Subcontractors, Consultants, and Joining Agreements .... 153

5.2 Document Ownership.......................................................... 154

5.3 Building Information Modeling ......................................... 155

5.4 Dispute Resolution.............................................................. 155

6. CURRENT IPD CONTRACTS ................................................ 155

7. CONCLUSION............................................................................ 156

“Les regles de l’art en droit de la construction: l’obligation d’agir en s’yconformant et revue de 20 ans d’application de l’article 2100 du Code civildu Quebec

Editor’s Note ......................................................................................... 157

1. INTRODUCTION....................................................................... 159

2. DEFINITION DES REGLES DE L’ART ............................... 160

3. LES EFFETS JURIDIQUES DES REGLES DE L’ART ...... 160

4. OBLIGATION DE RESULTAT ............................................... 166

5. LE MANQUEMENT A L’OBLIGATION DE SECONFORMER AUX REGLES DE L’ART COMMEFONDEMENT CONTRACTUEL DISTINCT D’UNDROIT D’ACTION .................................................................... 167

6. LE CARACTERE EVOLUTIF DES REGLES DE L’ARTET LA DETERMINATION DES REGLES DE L’ARTAPPLICABLES SELON L’EPOQUE DE LA CONCEPTIONET DE LA CONSTRUCTION.................................................. 168

7. LES FACTEURS CLIMATIQUES OU LOCAUX DANSL’APPLICATION DES REGLES DE L’ART......................... 170

8. LES SOURCES DES REGLES DE L’ART ET LESMOYENS DE PREUVE............................................................. 171


8.1 Les instructions ou guides fournis par les fabricantsd’equipements ou materiaux entrant dans la constructiondes immeubles...................................................................... 172

8.2 Les normes ou standards publies par les organismes denormalization....................................................................... 172

8.3 Le Code de construction, les lois et les reglementscontenant des prescriptions obligatoires eu egard al’ouvrage a construire.......................................................... 173

8.4 Le Code national du batiment — Canada CNB .............. 176

8.5 Les publications scientifiques ou techniques utilisees ades fins d’enseignement des professions ou metiers ouservant a la dissemination du savoir le plus recent .......... 177

9. CERTAINES DECISIONS TRAITANT DE L’OBLIGATIONDE SE CONFORMER AUX REGLES DE L’ART............... 177

10. CONCLUSION............................................................................ 179



Preface ........................................................................................................ vTable of Contents..................................................................................... xiTable of Cases ........................................................................................ xix

The Law of Privilege and In-house Counsel

Dan Levert.................................................................................................. 1

Contractors’ Performance Review Under Quebec’s Public ProcurementRegime

Yvan Houle............................................................................................... 33

Responsibility for Site Conditions in the Context of Owners’ Disclosure ofInformation: Contractors’ Risks and Rights

J. Marc MacEwing .................................................................................. 43

Comstock Canada Ltd., Re, A Model of Efficiency

John Margie ............................................................................................. 63

The Obligation to Cooperate in the Context of Construction Contracts inQuebec

John Murphy ............................................................................................ 99

Total Cost Claims: Canada’s Five-Part Test

Steven Richards ....................................................................................... 121

Understanding Construction Warranties in Canada

Phillip J. Scheibel................................................................................... 137

Dual Track Proceedings and Consolidation Orders Arising FromArbitration and Litigation Streams: The U.S. Experience

Philip L. Bruner ..................................................................................... 175

Nicholas

Typewritten Text

JCCL - 2015

The Liability of Construction Professionals Arising From WorkSupervision Duties in Quebec: A Liability in Constant Evolution

Mario Welsh and Benedicte St-Gelais................................................... 191

La responsabilite des professionnels de la construction decoulant d’unmandat de surveillance des travaux au Quebec : une responsabilite enconstante evolution

Mario Welsh and Benedicte St-Gelais................................................... 207

Index....................................................................................................... 223

x CCCL JOURNAL 2015

Table of Contents

The Law of Privilege and In-house Counsel

Editor’s Note ............................................................................................. 1

1. INTRODUCTION........................................................................... 1

2. THE STATE OF SOLICITOR-CLIENT PRIVILEGE INCANADA......................................................................................... 2

2.1 The S.C.C. and the Five Privlege Cases From 1999 to 2002(the “Quintology”)................................................................... 5

2.2 Solicitor-Client Privilege in Quebec ..................................... 10

2.3 Privilege and Confidentiality ................................................ 11

3. SOLICITOR-CLIENT PRIVILEGE AND IN-HOUSECOUNSEL...................................................................................... 12

4. LITIGATION PRIVILEGE ......................................................... 15

5. INTERNAL INVESTIGATIONS................................................ 17

5.1 Investigations and Solicitor-Client Privilege........................ 18

5.2 Investigations and Litigation Privilege ................................ 24

5.3 Guidelines............................................................................... 29

6. CONCLUSION.............................................................................. 30

Contractors’ Performance Review Under Quebec’s Public ProcurementRegime

Editor’s Note ........................................................................................... 33

1. INTRODUCTION......................................................................... 34

2. THE PUBLIC PROCUREMENT REGIME ............................. 34

3. JUDICIAL REVIEW OF A NEGATIVE EVALUATION...... 37

4. TIMING OF THE ISSUANCE OF THE UNSATISFACTORYEVALUATION.............................................................................. 39

5. CONCLUSION.............................................................................. 40

Responsibility for Site Conditions in the Context of Owners’ Disclosure ofInformation: Contractors’ Risks and Rights

Editor’s Note ........................................................................................... 43

1. INTRODUCTION......................................................................... 44

2. CHANGED SITE CONDITIONS CLAIMS GENERALLY... 49

3. CHANGED SITE CONDITIONS CLAIMS WITHFRAUDULENT NON-DISCLOSURE ...................................... 53

4. CHANGED SITE CONDITIONS WITH NEGLIGENTNON-DISCLOSURE .................................................................... 54

Comstock Canada Ltd., Re, A Model of Efficiency

Editor’s Note ........................................................................................... 63

1. INTRODUCTION......................................................................... 65

2. STATISTICAL ANALYSIS OF INSOLVENCIES INCANADA....................................................................................... 66

3. ORDINARY COURSE DEFAULT............................................ 69

3.1 Owner Defaults...................................................................... 69

3.2 Contractor Defaults .............................................................. 70

3.3 Subcontractor Defaults ......................................................... 72

3.4 Expectations........................................................................... 72

4. ESTABLISHED PRINCIPLES.................................................... 73

4.1 The Purpose of Insolvency Law is to AvoidBankruptcy............................................................................. 73

4.2 Initial Orders Provide for a Stay of all Proceedings Againstthe Insolvent Debtor ............................................................. 74

4.3 The Stay of Proceedings in the Initial Order May be Lifted toAllow the Preservation and Perfection of Rights ............... 76

4.4 The Model Initial Order ....................................................... 78

5. COMSTOCK’S CCAA PROCEEDING ..................................... 80

6. TRUST CLAIMS AND INSOLVENCY PROCEEDINGS ..... 86

7. ALTERNATIVE APPROACH.................................................... 95


8. CONCLUSION.............................................................................. 96

The Obligation to Cooperate in the Context of Construction Contracts inQuebec

Editor’s Note ........................................................................................... 99

1. INTRODUCTION....................................................................... 100

2. THE OBLIGATION TO COOPERATE................................... 101

3. EMERGENCE OF THE OBLIGATION TO ACT IN GOODFAITH .......................................................................................... 101

4. COMPONENTS AND REQUIREMENTS OF THEOBLIGATION OF COOPERATION ....................................... 106

4.1 The Duty to Inform ............................................................ 106

4.2 Behaving in a Proactive Manner........................................ 108

5. IMPORTANCE IN THE CONTEXT OF CONSTRUCTIONCONTRACTS .............................................................................. 110

6. JURISPRUDENTIAL ANALYSIS........................................... 110

6.1 Walsh & Brais inc. c. Montreal (Communaute urbaine)....... 111

6.2 Danny’s Construction Co. c. Birdair inc............................... 115

7. CONCLUSION............................................................................ 119

Total Cost Claims: Canada’s Five-Part Test

Editor’s Note ......................................................................................... 121

1. INTRODUCTION....................................................................... 122

1.1 Damages............................................................................... 122

1.1.1 Generally............................................................................... 122

1.1.2 Total Cost Damages ............................................................ 123

1.2 U.S. History......................................................................... 124

1.3 Current Standing in U.S. .................................................... 127

2. CANADIAN CONTEXT ........................................................... 128

2.1 Case Law.............................................................................. 128

2.2 Current Canadian Standing................................................ 133


3. GOING FORWARD .................................................................. 134

Understanding Construction Warranties in Canada

Editor’s Note ......................................................................................... 137

1. INTRODUCTION....................................................................... 138

2. OVERVIEW OF WARRANTIES ............................................. 139

2.1 What is a Warranty? ........................................................... 139

2.2 Warranties in Commercial Agreements ............................. 139

2.3 Construction Warranties..................................................... 140

3. IMPLIED WARRANTIES......................................................... 141

3.1 Overview of Implied Warranties ........................................ 141

3.2 Materials .............................................................................. 142

3.3 Workmanship ...................................................................... 143

3.4 Reasonably Fit for the Purpose ......................................... 145

4. STATUTORY WARRANTIES ................................................. 147

4.1 New Home Warranty.......................................................... 147

4.2 Sale of Goods ...................................................................... 148

5. EXPRESS WARRANTIES ........................................................ 150

5.1 Overview............................................................................... 150

5.2 Contractor Supplied Materials and Equipment................ 150

5.3 Vendor Warranties .............................................................. 151

5.4 Work or Services ................................................................. 152

6. REMEDIES FOR BREACH OF WARRANTY..................... 155

6.1 Pre-Completion versus Post-Completion........................... 155

6.2 Measure of Damages........................................................... 157

6.3 Callback Remedy................................................................. 160

7. SPECIAL WARRANTY ISSUES.............................................. 162

7.1 Owner Specifications ........................................................... 162

7.2 Exclusion of Liability.......................................................... 164


7.2.1 Overview ............................................................................... 164

7.2.2 Implied and Statutory Warranties ....................................... 165

7.2.3 Contractual and Common Law Duties ................................ 167

7.2.4 Express Exclusion Clauses................................................... 168

7.2.5 Sole and Exclusive Remedy Provisions ............................... 170

8. CONCLUSION............................................................................ 173

Dual Track Proceedings and Consolidation Orders Arising FromArbitration and Litigation Streams: The U.S. Experience

Editor’s Note ......................................................................................... 175

1. INTRODUCTION....................................................................... 177

2. THE DISPUTE RESOLUTION PERIL OF “DOUBLEJEOPARDY” ............................................................................... 178

3. JOINDER OF NON-CONTRACT CLAIMS WITHCONTRACT CLAIMS IN ARBITRATION ........................... 181

4. CONSOLIDATION OF SEPARATE PENDINGARBITRATIONS ........................................................................ 183

5. JOINDER OF NON-SIGNATORY PARTIES IN THEARBITRATION .......................................................................... 184

6. BINDING NON-SIGNATORIES TO FACTUALDETERMINAIONS IN ARBITARION AWARD ................. 187

7. APPELLATE REVIEW OF ARBITRATION AWARDS...... 187

8. CONCLUSION............................................................................ 189

The Liability of Construction Professionals Arising From Work Super-vision Duties in Quebec: A Liability in Constant Evolution

Editor’s Note ......................................................................................... 191

1. INTRODUCTION....................................................................... 192

2. NATURE OF WORK SUPERVISION DUTIES ANDRESPONSIBILITIES .................................................................. 192

3. LEGAL LIABILITY ARISING FROM ARTICLES 2118 ETSEQ. OF THE CIVIL CODE OF QUEBEC ................................. 194


3.1 Presumptions of Liability.................................................... 194

3.2 Means of Exemptions From the Presumption of Liability ofProfessionals Carrying Out Work Supervision Duties ..... 196

4. PARTIAL SUPERVISION, ONSITE SUPERVISION ANDTYPES OF UNDEFINED SUPERVISION............................. 200

4.1 Partial Supervision (Formerly Called GeneralSupervision) ......................................................................... 200

4.2 Onsite (Permanent) Supervisory Duties............................. 202

4.3 Unspecified Work Supervision Duties ............................... 203

5. PROFESSIONALS’ RECOURSE AGAINST THECONTRACTOR .......................................................................... 205

6. CONCLUSION............................................................................ 206

La responsabilite des professionnels de la construction decoulant d’unmandat de surveillance des travaux au Quebec : une responsabilite enconstante evolution

1. INTRODUCTION....................................................................... 207

2. LA NATURE DU MANDAT DE SURVEILLANCE DESTRAVAUX................................................................................... 207

3. LE REGIME DE RESPONSABILITE LEGALE DECOULANTDES ARTICLES 2118 ET SUIVANTS DU CODE CIVIL DUQUEBEC ........................................................................................ 210

3.1 Presomptions de responsabilite .......................................... 210

3.2 Moyens d’exoneration de la presomption de responsabilitedes professionnels qui ont effectues la surveillance destravaux ................................................................................. 211

4. SURVEILLANCE PARTIELLE, SURVEILLANCE ENRESIDENCE ET TYPE DE SURVEILLANCENON-DEFINI .............................................................................. 215

4.1 Surveillance partielle (anciennement appelee surveillancegenerale) ............................................................................... 215

4.2 Surveillance en residence (permanete)................................ 218

4.3 Type de surveillance non-specifie ....................................... 218


5. RECOURS DES PROFESSIONNELS CONTREL’ENTREPRENEUR.................................................................. 220

6. CONCLUSION............................................................................ 222

Index ....................................................................................................... 223


JOURNAL OF THE

CANADIAN COLLEGE OF CONSTRUCTION

LAWYERS

2016

Cited as (2016) I J.C.C.C.L.

..... ffff: THOMSON REUTERS® .... ~~:.•;• .....


Preface ........................................................................................................ v Table of Contents ..................................................................................... xi Table of Cases ....................................................................................... xvii

Quebec's Voluntary Reimbursement Program: Looking for a Few Volunteers

Yvan Houle ................................................................................................. l

The Evolution of Builder's Risk Insurance in Canada: A Brave New World for Resulting Damages?

Sharon Vogel ............................................................................................ 11

Autopsy of a Default Situation: A Review of Recent Quebec Case Law Evaluating Decisions to Terminate or Not to Terminate a Construction Project Following a Default of a Party to the Contract

Nicolas Gagnon ........................................................................................ 43

Winnipeg Condo ,,. Bird Construction - Two Decades of Flightless Claims Since Bird

David I. Marr and Amhre K. Anjouhau/t ............................................... 63

Construction Delay Claims in Canada: A Survey of the use of Delay Experts and Analysis Methods

Christopher J. 0 'Connor and Lauren E. Kristjanson ............................. 71

Arbitrator Questioning: Sphinx or Skeptic?

Duncan W. Glaholt and Markus Rotterdam .............................................. 81

Advanced Tendering

W. Donald Good.fel!oll' ........................................................................... l 05

x CCCL JOURNAL 2016

Dead or Alive? The Future of Entire Agreement Clauses in Construction Disputes

Nicholas Reynolds .................................................................................. I 55

Index ....................................................................................................... 179

Table of Contents

Quebec's Voluntary Reimbursement Program: Looking for a Few Volunteers

Editor's Note ............................................................................................. l

l. INTRODUCTION ........................................................................... 2

2. THE REIMBURSEMENT PROGRAM ....................................... 3

3. CIVIL RECOURSE ......................................................................... 8

4. CONCLUSION .............................................................................. 10

The Evolution of Builder's Risk Insurance in Canada: A Brave New World for Resulting Damages?

Editor's Note ........................................................................................... 11

1. INTRODUCTION ......................................................................... 11

2. BACKGROUND ........................................................................... 13

2.1 IBC Wording ......................................................................... 13

2.2 Interpretation in Canadian National Railway ...................... 13

2.3 Resulting Damage Under the IBC Wording ....................... 17

3. A CHANGE IN EXCLUSIONARY CLAUSE WORDINGS: THE UK WORDINGS ................................................................. 22

3.1 "DE" Clauses ......................................................................... 23

3.2 The "LEG" Clauses .............................................................. 24

3.3 "Defective Condition" ................. .......................................... 25

3.4 Blackwell - DE3 Clause ...................................................... 25

3.5 Acciona - LEG2 Clause .......................................... ......... ... 27

3.6 Divisibility .............................................................................. 29

3.7 Ledcor and the "Connected" Approach .............................. 30

3.8 PCL Constructors and the "Divisible" Approach ............... 33

3.9 Divisible or Connected? The Importance of Wording ....... 35

x11 CCCL JOURNAL 2016

4. CONCLUSION .............................................................................. 37

APPENDIX "A" ............................................................................ 38

APPENDIX "B" ............................................................................ 40

Autopsy of a Default Situation: A Review of Recent Quebec Case Law Evaluating Decisions to Terminate or Not to Terminate a Construction Project Following a Default of a Party to the Contract

Editor's Note ........................................................................................... 43

1. INTRODUCTION ......................................................................... 43

2. THE RIGHT TO TERMINATE A CONTRACT FOR DEFAULT ..................................................................................... 44

3. AN UNJUSTIFIED TERMINATION OF A SUBCONTRACT BY A CONTRACTOR ................................................................. 46

4. AN UNJUSTIFIED TERMINATION OF A CONTRACT BY AN OWNER .................................................................................. 50

5. AN UNJUSTIFIED DECISION BY A CONTRACTOR TO ABANDON ITS CONTRACT UPON AN ALLEGED BREACH OF CONTRACT BY THE OWNER .......................................... 54

6. A DECISION BY THE OWNER TO SUPPORT AN AILING CONTRCTOR ............................................................................... 57

7. ALTERNATIVE SOLUTION IN CASE OF A DISPUTE ARISING DURING AN ONGOING PROJECT ..................... 59

8. CONCLUSION .............................................................................. 62

Wi11nipeg Condo ••. Bird Co11str11ction - Two Decades of Flightless Claims Since Bird

Editor's Note ........................................................................................... 63

l. INTRODUCTION ......................................................................... 63

2. DOES THE REAL AND SUBSTANTIAL DANGER HAVE TO BE IMMINENT? ........................................................................... 64

3. WHAT IS REQUIRED TO MEET THE THRESHOLD OF "REAL AND SUBSTANTIAL DANGER"? ............................. 64

4. DOES BIRD RESTRICT THE RECOVERY OF ECONOMIC LOSSES ARISING FROM THE NEGLIGENT SUPPLY OF


SHODDY GOODS OR STRUCTURES STRICTLY TO LOSSES INCURRED WITH RESPECT TO DEFECTS WHICH ARE DANGEROUS IN NATURE? ..... ..... ....... ........ .. ... ... ..... ... .. 65

5. ARE ECONOMIC LOSSES INCURRED IN RELATION TO NON-DANGEROUS DEFECTS CAUSED BY THE NEGLIGENT SUPPLY OF GOODS OR STRUCTURES RECOVERABLE IN CANADIAN TORT LAW ............ ... ....... 65

6. WHAT ARE THE POLICY REASONS FOR WHICH CANADIAN COURTS HAVE CHOSEN TO PRECLUDE RECOVERY OF ECONOMIC LOSSES ARISING OUT OF NON-DANGEROUS DEFECTS ........... .. ........ .. ........................ . 67

7. CONCLUSION ....................... .. ................ ..................................... 68

Construction Delay Claims in Canada: A Survey of the use of Delay Experts and Analysis Methods

Editor's Note .. ......... ... ........... .. ... .... ... ... ... .... ... ...... .. ... ...... .. ... ... .. ... .. .. .... .. . 71

l. INTRODUCTION .... ........ .......................................... .. ........ ......... 71

2. PARTICIPANTS IN THE SURVEY ................................. ......... 72

3. SCHEDULE CONSULTANTS AND METHODOLOGY .... ... 73

3.1 Time Impact Analysis ..... ...... .... ....... .... ...... .. ....... .. ................ 74

3.2 Collapsed As-Built ........... .. ...... .................. ............................ 74

3.3 As-Built Critical Path ..... .................. .. ...... .................... ......... 75

3.4 Impacted As-Planned ..... .. ........ ... .............. ... ..... .. ...... ... .... ..... 75

3.5 As-Planned Versus As-Built/Total Time .. .... .... .. .... ............ . 76

4. COMMENTS ON SCHEDULE CONSULTANTS ................ ... 76

4.1 Consultants and Methods Used ....... ................ .. ........ ........ .. 76

4.2 Costs of Schedule Consultants and Overall Satisfaction .... 77

4.3 Acceptance by the Trier of Fact ........ .. ... ..... .... .... ... ......... .... 78

5. CONCLUSION ... .. ... ....... .. .. .............. ...... ... ... ..... ... ..... ... ..... ... ...... .. . 78

Arbitrator Questioning: Sphinx or Skeptic?

Editor's Note .... ........ ........ ........ .. ........................................ .... ............. .... 81


I. INTRODUCTION ......................................................................... 82

2. JUDICIAL QUESTIONING ........................................................ 82

3. ARBITRATOR QUESTIONING ................................................ 94

4. IS IT SAFER FOR AN ARBITRAL TRIBUNAL TO LEA VE RELEVANT QUESTIONS UNASKED? ................................. 101

5. WHAT IF LEGITIMATE TRIBUNAL QUESTIONING RAISES NEW ISSUES? .............................................................. IOI

6. WOULD PARTY-APPROVED WITNESS CONFERENCING CHANGE THIS ANALYSIS? ................................................... 103

7. CONCLUSION ............................................................................ 104

Advanced Tendering

Editor's Note ......................................................................................... 105

l. THE LAW OF TENDERING APPLIES TO ALL AREAS OF COMMERCE ............................................................................... 105

2. INTEGRITY OF THE TENDERING SYSTEM .................... 107

3. DUTY OF FAIRNESS ............................................................... 116

4. DAMAGES .................................................................................. 120

5. MISTAKE .................................................................................... 125

6. BID SHOPPING .......................................................................... 131

7. WHAT IF THE LOWEST TENDER IS OVER-BUDGET ... 141

8. DUTY TO INVESTIGATE ........................................................ 144

9. GENERAL SUMMARY OF OBLIGATIONS AND RIGHTS UNDER THE TENDERING PROCESS ................................. 151

Dead or Alive? The Future of Entire Agreement Clauses in Construction Disputes

Editor's Note ......................................................................................... I 55

I. INTRODUCTION ....................................................................... 155

2. A BRIEF HISTORY OF ENTIRE AGREEMENT CLAUSES IN CANADA ............................................................................... 157

3. BHAS!N AND THE DUTY OF GOOD FAITH .................... 159


4. SATTVA AND SURROUNDING CIRCUMSTANCES ....... 162

5. ENTIRE AGREEMENT CLAUSES AND RETROSPECTIVE SCOPE .................. ... ..................................................................... 165

6. COLLATERAL AGREEMENTS .............................................. 168

7. TERCON AND TESTING EXCLUSIONARY CLAUSES ..................................................................................... 170

8. CONCLUSION ........ ... ................................................................. 173

Index .............................. ....... .................................................................. 179

Table of Contents

Contractual Indemnities in Construction Contracts: A Contractor’sPerspective

Editor’s Note ............................................................................................. 1

1. INTRODUCTION........................................................................... 2

2. INDEMNIFICATION PROVISIONS IN CANADIANCONSTRUCTION CONTRACTS: A HISTORY ....................... 4

2.1 CCDC Provisions: 1974-2008 ................................................. 5

2.2 Today ....................................................................................... 7

3. THE BACKGROUND: RELEVANT COMMON LAWPRINCIPLES ................................................................................... 8

3.1 Damages for Breach of Contract ........................................... 9

3.2 The Expansion of Tort Law (in particular pure economicloss torts)................................................................................ 16

3.2.1 Negligent misrepresentation ................................................... 20

3.2.2 Negligent performance of a service ....................................... 21

3.2.3 An indemnification provision compared against the tortlaw background....................................................................... 23

3.3 Concurrent Liability.............................................................. 28

3.4 Privity of Contract ................................................................ 31

3.5 Relevant Statutory Considerations ...................................... 37

3.5.1 Statutes of limitation.............................................................. 37

3.5.2 Workers compensation ........................................................... 39

3.5.3 Contributory negligence statutes............................................ 46

4. WHY INCLUDE AN INDEMNIFICATION PROVISION? .. 48

4.1 To Explain the “Background” ............................................. 48

4.2 To Deviate From the “Background”................................... 49

5. CONCLUSION.............................................................................. 52

JCCL - 2017

The Intersection between Construction Law and First NationsConsultation

Editor’s Note ........................................................................................... 53

1. THE GENERAL DUTY OF CONSULTATION...................... 54

1.1 The Origins and Basis of the Duty ...................................... 54

1.2 The Content of the Duty to Consult ................................... 57

2. UNDERSTANDING THE TRIGGERS OF CONSULT-ATION IN THE CONTEXT OF A CONSTRUCTIONPROJECT ....................................................................................... 59

2.1 The Type of Conduct that Can Trigger a Duty ................. 59

2.2 What Authorities May be Subject to the Duty................... 61

3. THE IMPLICATIONS OF THE DUTY OF CONSULT-ATION FOR THE CONSTRUCTION SECTOR..................... 63

3.1 The Uncertainty of the Process ............................................ 64

3.2 Ongoing Duty of Consultation ............................................ 67

4. CONCLUSION.............................................................................. 71

Impact Cost Claims Related to Delays and to Acceleration of Work UnderQuebec Construction Law

Editor’s Note ........................................................................................... 73

1. INTRODUCTION......................................................................... 74

2. SUMMARY OVERVIEW OF LIABILITY RESULTINGFROM DELAYS........................................................................... 77

2.1 The Burden of Proof and its Reversal................................. 77

2.2 Compensable Delays and Acceleration................................ 79

2.3 Disruption .............................................................................. 80

3. DELAYS AND ACCELERATION: AN INVENTORY OFDAMAGE-RELATED JARGON ............................................... 80

3.1 The Three (3) Categories of Construction ContractCosts ....................................................................................... 80

3.1.1 Direct costs............................................................................. 81

3.1.2 General worksite costs............................................................ 81


3.1.3 Head office costs .................................................................... 81

3.1.4 Only three (3) categories of costs exist................................ 82

3.2 Impact Costs: Moving Toward a Definition....................... 84

3.2.1 Definitions related to the meaning of the word “impact”..... 84

3.2.2 Definitions related to the number of events having causedadditional costs/Definitions related to the specific natureof the analysis of causality..................................................... 86

3.2.3 Definitions relating to the nature of incidents that havecaused additional costs ........................................................... 87

3.2.4 Definition related to the nature of damages.......................... 88

3.2.5 Definition proposed by the author in 2012 ............................ 89

3.2.6 Use of the term “loss of productivity” .................................. 90

3.2.7 Definition retained by the Court of Appeal .......................... 91

3.3 Conclusion: The Use of Two Different TerminologiesMakes Overlap Possible........................................................ 92

4. THE PARTICULARITIES OF GRANTING AND CALCU-LATING DAMAGES IN CLAIMS FOR IMPACTCOSTS RESULTING FROM DELAYS OR ACCELER-ATION............................................................................................ 93

4.1 Notices, Change Orders and Releases ................................. 95

4.2 Apportionment of Risk Provisions Related to Delays..... 100

5. CONCLUSION............................................................................ 101

Show Me the Money: Early Release of Holdbacks in Canada

Editor’s Note ......................................................................................... 103

1. INTRODUCTION....................................................................... 103

1.1 Overview of Lien Legislation, Holdbacks and EarlyRelease.................................................................................. 104

2. PART I: PROCEDURAL FEATURES OF EARLYRELEASE LEGISLATION IN CANADA .............................. 108

2.1 Overview............................................................................... 108


2.2 Eastern Provinces: Newfoundland and Labrador, PrinceEdward Island, New Brunswick......................................... 111

2.3 Ontario and Nova Scotia.................................................... 114

2.4 Prairie Provinces: Manitoba, Saskatchewan, Alberta....... 115

2.5 British Columbia ................................................................. 118

3. PART II: PRACTICAL APPLICATION OF EARLYRELEASE PROCEDURES........................................................ 124

3.1 Overview............................................................................... 124

3.2 Advantages and Disadvantages.......................................... 124

3.3 Practical Application and Case Law.................................. 127

4. CONCLUSION............................................................................ 133

REFERENCES ............................................................................ 133

Liquidated Damages: Canadian Adoption, Divergence and the Necessityfor Restatement

Editor’s Note ......................................................................................... 139

1. INTRODUCTION....................................................................... 140

2. THE DEVELOPMENT OF THE LAW OF STIPULATEDDAMAGES .................................................................................. 141

2.1 Origin of the Penalty Rule.................................................. 141

2.2 Canadian Adoption of Dunlop ........................................... 144

2.3 Canadian Divergence from English Doctrine ................... 145

2.3.1 Thermidaire .......................................................................... 145

2.3.2 Elsley and the rise of unconscionability............................... 146

3. SHOULD THE PENALTY RULE REMAIN OPERABLEIN CANADIAN LAW? .............................................................. 147

3.1 Freedom of Contract .......................................................... 148

3.1.1 Freedom of contract is not absolute .................................... 149

3.1.2 Freedom of contract is a legal fiction.................................. 149

3.2 Penalties as an Improvident Bargain ................................. 151

3.3 Unconscionability Applied to Stipulated Damages .......... 152


3.3.1 An incorrect interpretation of Elsley ................................... 152

3.3.2 The meaning of oppression................................................... 152

3.3.3 Improper application of unconscionability........................... 154

3.3.4 Should unconscionability replace the penalty rule? ............. 155

3.3.5 Unconscionability not displaced by the penalty rule ........... 159

4. THE DECISION OF THE UKSC IN CAVENDISH.............. 160

4.1 Introduction ......................................................................... 160

4.2 Background.......................................................................... 160

4.3 Distillation of Cavendish ..................................................... 161

4.3.1 Dismantling of the classic approach .................................... 161

4.3.2 Framing the question with the penalty rule ......................... 162

4.3.3 What constitutes a penalty? ................................................. 162

4.3.4 What constitutes a legitimate interest?................................ 163

4.3.5 The relationship between the parties ................................... 165

4.3.6 Summarizing the Cavendish approach ................................. 165

5. WHAT PATH SHOULD CANADIAN COURTS TAKE?.... 165

5.1 Clarity is Required .............................................................. 165

5.2 Recommendations for the Path Forward.......................... 166

5.2.1 Should the penalty rule remain operative?........................... 166

5.2.2 The role of unconscionability in the stipulated damagesanalysis ................................................................................. 167

5.2.3 Recasting the penalty rule.................................................... 168

6. CONCLUSION............................................................................ 169

Fiduciary Duties in Construction Projects: Much Higher Than Good Faith

Editor’s Note ......................................................................................... 171

1. INTRODUCTION....................................................................... 171

2. EVOLUTION OF CONSTRUCTION PROJECT STRUC-TURES.......................................................................................... 172


3. GOOD FAITH DISTINGUISHED FROM FIDUCIARYDUTIES........................................................................................ 174

4. OVERVIEW OF FIDUCIARY DUTIES................................. 177

5. THREE CASES TO ADDRESS FIDUCIARY DUTIES....... 178

5A. CARMEL PHARMACY v. TRI CITY .................................... 179

5B. REICHMANN v. VERED ......................................................... 187

5C. ADI v. WCI.................................................................................. 197

6. SOME CONCLUSIONS ABOUT FIDUCIARY DUTIESIN CONSTRUCTION PROJECTS........................................... 205

Zen and the Art of Geotechnical Risk Allocation

Editor’s Note ......................................................................................... 207

1. INTRODUCTION....................................................................... 207

2. THE OWNER’S PERSPECTIVE: ............................................. 208

3. THE CONTRACTOR’S PERSPECTIVE: ................................ 208

4. THE SOLUTION?....................................................................... 209

5. A BETTER APPROACH?.......................................................... 211

6. CONCLUSION............................................................................ 214

Modernizing Construction Trusts: An Analytical Review of the Efficacyof Statutory Deemed Construction Trusts

Editor’s Note ......................................................................................... 215

1. INTRODUCTION....................................................................... 215

2. THE PURPOSE OF TRUST PROVISIONS IN THECONSTRUCTION LIEN ACT................................................... 216

2.1 What Benefits are Provided by the Statutory TrustProvisions? ........................................................................... 218

3. THE EFFICACY OF CONSTRUCTION TRUSTS............... 218

3.1 Construction Trusts in a Bankruptcy Proceeding............. 219

3.2 Co-Mingling of Trust Assets .............................................. 223

3.3 Improving the Construction Lien Act................................. 224


4. CONCLUSION............................................................................ 225

Index ....................................................................................................... 227


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