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McLennan Ross
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Damage claims against contractors for delays in completion |
| 24-Jul-06 |
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A Construction Law Update
In the current construction boom, missed deadlines on major building projects are increasingly common due to labour, supply, and organizational problems faced by many contractors. However, a recent case of the Alberta Court of Queen’s Bench is a warning for contractors who commit to work they are unable to complete on time.
In H & H Stucco & Siding Ltd. v. Westcorp Inc. (2006 ABQB 181), the plaintiff contractor was hired by Westcorp, the developer, to stucco the exterior of a residential apartment tower in Edmonton. H & H started work late and quickly fell behind schedule. Although the work was to have been completed by August 2000, at Christmas the job was still 10 days short of completion. H & H knew that tenants were moving into the building. Nonetheless, H & H decided to break for the holiday, ignoring Westcorp’s notice to remain on site.
On January 3, 2001, Westcorp sent H & H a default notice pursuant to the contract requiring it to return to the site within three days. H & H ignored the notice, let the deadline lapse, and then sued Westcorp for the unpaid amount of the contract. Westcorp counter-sued for the cost of completing the work and remedying deficiencies.
At trial, the Court found that H & H had abandoned the contract when it fell behind in its work and then left the worksite for Christmas vacation, ignoring Westcorp’s notice. From this point forward, H & H had no further rights under the contract. H & H’s claim was dismissed. The Court also held that, once H & H abandoned the contract, Westcorp had no obligation to ask H & H to return and rectify the deficiencies.
With respect to Westcorp’s counter-claim, the Court granted the developer judgment of $335,355 for its costs in repairing and finishing the stucco work. Westcorp had claimed for $567,000, but H & H was given credit for work not replaced by Westcorp, and Westcorp was not able to recover increased costs it incurred by its delay in making repairs.
The early identification of potential labour and supply issues, a good understanding of work capacity, and planning for contingencies are all critical for contractors to ensure effective performance. These efforts also limit the potential for damage claims arising from unreasonable delay, unresponsiveness, or other contractual breaches.
This update is a general overview of the subject matter and cannot be regarded as legal advice. Please contact Corbin Devlin at cdevlin@mross.com or any member of our Construction Law Practice Group for legal advice on this or any other construction law topic. |
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