COURT OF APPEAL FOR ONTARIO

CITATION: Technicore Underground Inc. v. Toronto (City), 2012 ONCA 597

DATE: 20120912

DOCKET: C54801

Gillese, Juriansz and Epstein JJ.A.

BETWEEN

Technicore Underground Inc.

Plaintiff

and

City of Toronto

Defendant (Respondent)

and

Clearway Construction Inc.

Third Party (Appellant)

Christos Papadopoulos, for the appellant

Darrel A. Smith, for the respondent

Heard: June 20, 2012

On appeal from the judgment of Justice Beth Allen of the Superior Court of Justice, dated December 5, 2011.

Gillese J.A.:

[1] The City of Toronto (the “City”) successfully disposed of the bulk of a multimillion dollar construction claim against it, by means of a partial summary judgment motion. The claimant says that the matter requires a trial and should not have been decided by way of summary judgment.

[2] Is the claimant correct? In my view, it is not. As I will explain, this appeal should be dismissed.

OVERVIEW

[3] Clearway Construction Inc. (“Clearway”) entered into a construction contract with the City in which it agreed to construct a water main 5.88 kilometres in length (the “Contract”). The water main ran under a number of roads in Toronto, including Leslie Street (the “Leslie Street Project”).

[4] Clearway subcontracted with Technicore Underground Inc. (“Technicore”) to do the underground tunnelling, which it did through a tunnel boring machine.

[5] Technicore excavated the tunnel under Leslie Street. During the evening of August 2 - 3, 2006, there was a flood in that tunnel. It is the flood that led to these legal proceedings.

[6] As a result of the flood, Technicore’s tunnel boring machine was trapped under Leslie Street. After rescuing and refurbishing the boring machine, Technicore completed the tunnelling by December 22, 2006.

[7] The Contract work affected by the flood was completed at the end of December 2006.

[8] By letter dated February 9, 2007, Technicore made a claim against Clearway for approximately $800,000 plus G.S.T. for damages arising from the flood (the “Technicore claim”).

[9] On March 6, 2007, Clearway submitted a claim to the City for additional payment under the Contract to cover costs incurred as a result of the flood (the “March 2007 Claim”). In the March 2007 Claim, Clearway sought approximately $1,270,000, comprised of indemnity for the Technicore claim plus a claim for approximately $400,000 of its own costs incurred as a result of the flood. In the March 2007 Claim, Clearway noted the possibility that “some costs have not yet been identified” and “reserve[d] the right to claim payment for work(s) not specifically mentioned herein”.

[10] By letter dated April 4, 2007, the City denied the March 2007 Claim.

[11] Technicore started the main action in these proceedings on July 30, 2008. It claimed solely against the City for damages suffered as a result of the flood.

[12] The City defended and started a third party claim against Clearway for contribution and indemnity, and additional damages.

[13] Clearway defended the City’s third party claim and counterclaimed against the City. In its initial defence and counterclaim, served on the City in March 2010, Clearway sought indemnity for the Technicore claim, plus damages of $1,000,000.

[14] In August of 2010, Clearway sent the City a claim in which it repeated the amounts sought in the March 2007 Claim and added new claims in excess of $3,000,000 (the “August 2010 Claim”).

[15] In an amended defence and counterclaim dated June 23, 2011 (the “Counterclaim”), Clearway continued to seek indemnity for the Technicore claim but increased its damages claim to just over $3,400,000.

[16] In a companion construction lien action, Technicore sues Clearway for damages arising out of the Leslie Street flood and for certain other claims. The lien action has been ordered to be tried together with this proceeding.

[17] The City brought a motion for partial summary judgment, seeking a dismissal of those parts of the Counterclaim that were in excess of the March 2007 Claim. The focus of the motion was paragraph GC 3.14.03.03 of the General Conditions that were included as part of the Contract (the “Notice Provision”). The Notice Provision sets out specific requirements for the filing of claims under the Contract. It reads as follows:

The Contractor shall submit detailed claims as soon as reasonably possible and in any event no later than 30 Days after completion of the work affected by the situation. The detailed claim shall:

a) identify the item or items in respect of which the claim arises;

b) state the grounds, contractual or otherwise, upon which the claim is made; and

c) include the Records maintained by the Contractor supporting such claim.

[18] The full text of GC 3.14 can be found as appendix A to these reasons.

[19] The motion judge concluded that Clearway was limited to the March 2007 Claim. By judgment dated December 5, 2011, she granted partial summary judgment (the “Judgment”).

[20] Clearway appeals. It contends that the portions of its Counterclaim that the Judgment has the effect of dismissing raise genuine issues requiring a trial. It asks that the Judgment be set aside.

[21] In my view, the motion judge correctly decided this matter. I would dismiss the appeal.

A PRELIMINARY MATTER

[22] The focus of the motion below was on the timing of the August 2010 Claim, as it had been made years after the time required by the Notice Provision. However, the motion judge struck two other parts of the August 2010 Claim for reasons other than the timing of its delivery.

[23] First, she struck those parts of the August 2010 Claim that pre-dated, and were unrelated to, the Leslie Street Project, noting that they failed to raise a genuine issue requiring a trial in respect of the City’s liability.

[24] Second, she struck the parts in which Clearway sought reimbursement for the claims that Technicore made against it (Clearway) in the related lien action that had not been made against the City. These other Technicore claims against Clearway were unrelated to the flood or the work under Leslie Street (“the non-Leslie Street Claims”).

[25] Before the motion judge, the parties agreed that the non-Leslie Street Claims were not properly asserted against the City and should be dismissed, but they disagreed on the procedure that should be followed for their dismissal. The motion judge was satisfied that partial summary judgment was an appropriate method by which to dispose of the non-Leslie Street claims.

[26] I do not understand Clearway’s appeal to extend to these two other parts of the August 2010 Claim, even though Clearway purports to seek to have the entire Judgment set aside. However, even if Clearway did intend to appeal the dismissal of these parts of the Counterclaim, it is readily apparent that the appeal fails in respect of these items. For the reasons given by the motion judge, they raise no genuine issue requiring a trial in respect of the City.

THE ISSUES

[27] Clearway submits that the motion judge erred in:

1. her interpretation of the Notice Provision;

2. granting the motion despite the absence of evidence of prejudice to the City;

3. allowing the City to rely on the Notice Provision when it had failed to comply with GC 3.14.04;

4. failing to recognize and find that items 7 and 8 in Part 1 of the August 2010 Claim are the same as items 3 and 6 of the March 2007 Claim; and

5. allowing the City to rely on the Notice Provision when it has raised no complaint in respect of the date of delivery of the March 2007 Claim.

ANALYSIS

Issue 1: Interpreting the Notice Provision

[28] Based on the jurisprudence, the motion judge concluded that the Notice Provision operated as a condition precedent that served to bar the August 2010 Claim because Clearway failed to deliver it (the August 2010 Claim) before the expiry of the time limit. Clearway submits that the motion judge erred in her interpretation of the Notice Provision. It argues that had the motion judge reviewed GC 3.14 in its entirety, she would have seen that the Notice Provision in GC 3.14.03 simply sets out a procedure to identify, and provide details of, any claims that are to be subsequently negotiated and possibly mediated pursuant to GC 3.14.04 and 3.14.05. As none of these provisions contains a “failing which” clause, Clearway submits that the Contract does not contain the clear language necessary to deprive it of the right to proceed with its full counterclaim against the City.

[29] I do not accept this submission. The Notice Provision sets out a mandatory procedure for the filing of claims under the Contract, including the requirement that detailed claims are to be submitted no later than 30 days after completion of the work affected by the situation.[^1] The Notice Provision need not include a “failing which” clause in order for it to bar the August 2010 Claim. This conclusion flows inexorably from the decision of the Supreme Court of Canada in Corpex (1977) Inc. v. Canada, 1982 CanLII 213 (SCC), [1982] 2 S.C.R. 643.

[30] In Corpex, the plaintiff contractor had a contract with the federal government to build a dam across a river. The first stage of the contract required the river to be dewatered. The contractor based his estimate of the pumping costs on incorrect information about the nature of the soil contained in the plans and specifications. After a fortnight of pumping, it became obvious that the pumping equipment was not equal to the task. Additional pumps had to be installed. The contractor did not give written notice to the government that it would claim for the additional costs occasioned by the mistake as to the soil conditions.

[31] Notice of the claim was required by clause 12 of the General Conditions to the contract. Clause 12 provided:

12. (1) No payment shall be made by Her Majesty to the Contractor in addition to the payment expressly promised by the contract on account of any extra expense, loss or damage incurred or sustained by the contractor for any reason, including a misunderstanding on the part of the Contractor as to any fact, whether or not such misunderstanding is attributable directly or indirectly to Her Majesty or any of Her Majesty's agents or servants (whether or not any negligence or fraud on the part of Her Majesty's agents or servants is involved) unless, in the opinion of the Engineer, the extra expense, loss or damage is directly attributable to

(a) a substantial difference between information relating to soil conditions at the work site, or a reasonable assumption of fact based thereon, in the plans and specifications or other documents or material communicated by Her Majesty to the Contractor for his use in preparing his bid and the actual soil conditions encountered at the work site by the Contractor when performing the work, …

in which case, if the Contractor has given the Engineer written notice of his claim before the expiry of thirty days after encountering the soil conditions giving rise to the claim [...] Her Majesty shall pay to the Contractor in respect of the additional expense, loss or damage incurred or sustained by reason of that difference [...] an amount equal to the cost, calculated in accordance with clauses 44 to 47 of the General Conditions, of the additional plant, labour and materials necessarily involved. [Emphasis added.]

[32] Corpex sued the government for, among other things, the additional costs arising from the mistake as to the soil conditions. The trial judge allowed this part of Corpex’s claim based on considerations of equity rather than on a “technical application of certain clauses in the General Conditions”.[^2]

[33] The Federal Court of Appeal overturned the trial decision on this point because Corpex had failed to give notice as required by clause 12 of the General Conditions.

[34] The Supreme Court upheld the decision of the Federal Court of Appeal. In paras. 59 and 60 of Corpex, Beetz J., writing for the court, explains that a clause such as clause 12 of the General Conditions is of benefit to both the contractor and the owner.

The contractor is practically certain of being compensated for additional costs either during the work or later, if he complies with the provisions of clause 12, and in particular, if he gives the notice provided for in that clause. …

An owner who is thus informed of a mistake as to the nature of the soil knows that the contractor will probably not drop his claim, and he is enabled to reconsider his position. He can in practice be assured that the work will go forward if he wishes … . He may conclude another agreement with the same contractor or some other. If he prefers for the work to continue under the new circumstances, he may make arrangements to monitor quantities and costs of additional work so that the payments due the contractor ... can be made.

[35] In para. 62, Beetz J. explains why compliance with a notice provision is a condition precedent to legal proceedings:

However, once the work is complete, a contractor cannot claim in a court of law benefits similar to those which clause 12 would have guaranteed if he has not himself observed that clause and given the notice for which the clause provides. Otherwise, he would be depriving the owner of the benefits which he is guaranteed by clause 12.

[36] There was no “failing which” provision in Corpex. Nonetheless, the contractor was barred from asserting this part of its claim because it had failed to give notice as required by clause 12.

[37] Nor was there a “failing which” provision in Doyle Construction Co. v. Carling O’Keefe Breweries of Canada Ltd. (1988), 1988 CanLII 2844 (BC CA), 27 B.C.L.R. (2d) 89 (C.A.). In Doyle, the plaintiff contractor was engaged to construct an expansion of the defendant’s brewery. The tender documents did not contain a clear statement that certain items of equipment would be installed by the defendant during the construction. The contractor contracted on the assumption that the equipment would not be installed until after the construction was complete. When the mistake was discovered a new construction schedule had to be drawn up. After the work was completed, the contractor submitted a claim for the extra costs incurred because of delay.

[38] The trial judge held that the defendant had not breached the contract but, in any event, the contractor’s claim could not proceed because the contractor had failed to give notice as required by the contract. He noted that had the contractor given proper notice, the defendant could have addressed cost reduction measures, insisted on the institution of a cost control system and taken steps to see that all records were preserved. The contractor’s failure to comply with the notice provisions deprived the defendant of these rights.

[39] The British Columbia Court of Appeal dismissed the contractor’s appeal, holding that compliance with the notice provision in the contract was a condition precedent to the contractor’s claim.

[40] In Bemar Construction (Ontario) Inc. v. Mississauga (City of) (2004), 30 C.L.R. (3d) 169 (On. S.C.), Fragomeni J. considered Doyle at length and applied the principles set out in it. At para. 194, Fragomeni J. concluded that the contractor could not advance its claims as it had failed to properly comply with the notice provisions in the contract. On appeal, this court approved the trial decision: see Bemar Construction (Ontario) Inc. v. Mississauga (City of) 2007 ONCA 685, 63 C.L.R. (3d) 161.

[41] Again, there was no “failing which” provision in Bemar.

[42] I acknowledge that at para. 6 of First City Development Corp. Ltd. v. Stevenson Construction Co. Ltd. (1985), 14 C.L.R. 250, the British Columbia Court of Appeal stated:

I approach the construction of art. 36 with the proposition established by the decided cases in mind: if a party to a building contract is to be deprived of a cause of action, this is only to be done by clear words.

[43] However, as the motion judge explained, there are significant factual distinctions between First City and this case. In First City, there was no express time requirement. Article 36 of the construction contract provided that a claim was to be made in writing “within a reasonable time after the first observance of such damage and not later than the time of final certificate”. The plaintiff commenced an action one year after completion. As no final certificate of completion had ever been issued, the claim was permitted to proceed.

[44] Two additional points must be made in respect of the decision in First City. First, the court makes no mention of Corpex in its judgment. Second, Doyle was decided after First City. The British Columbia Court of Appeal was fully aware of its decision in First City when it rendered its decision in Doyle.[^3] Nonetheless, and in the absence of a “failing which” clause, the court clearly and emphatically concluded that compliance with a notice provision is a condition precedent to maintaining a claim in the courts.

[45] Accordingly, I see no error in the motion judge’s interpretation of the Notice Provision. This ground of appeal fails.

Issue 2: The Absence of Evidence of Prejudice to the City

[46] Clearway submits that when dealing with notice provisions, the court’s central concern is to protect parties from any prejudice resulting from non-compliance with them. It contends that Doyle and Bemar are authority for the proposition that notice provisions serve to bar claims only where there is evidence of prejudice resulting from non-compliance. Clearway says that the City provided no evidence that it suffered prejudice as a result of the timing and delivery of the August 2010 Claim and, therefore, the motion judge erred in granting partial summary judgment.

[47] I begin by considering Corpex. Does it stipulate that prejudice must be proven in order for an owner to rely on a notice provision? No, it does not. As para. 60 of Corpex makes clear, one purpose of a notice provision is to enable the owner to consider its position and the financial consequences of the contractor providing additional work. Notice gives the owner the opportunity to decide whether to conclude another agreement with the contractor or have the work done by some other. It also enables the owner to make arrangements to monitor the costs of the additional work. The contractor must give notice in accordance with the notice provision, otherwise it deprives the owner of the benefits guaranteed by the notice provision.

[48] What then of Doyle and Bemar? Do either of these cases stand for the proposition that the owner must show prejudice in order to rely on a notice provision? In my view, they do not.

[49] At para. 21 of Doyle, the trial judge is quoted as stating that had the contractor given proper notice, the defendant “could have addressed cost reduction measures, could have insisted upon the institution of a cost control system, and could have taken steps to see that all records, including site diaries, were preserved”. Similarly, had Clearway given proper notice in this case, the City could have chosen whether to permit Clearway to continue with the work occasioned by the flood and, if so, it could have instituted cost control mechanisms. The fact that the trial judge in Doyle made those findings does not make it a requirement in law.

[50] Bemar does not elevate this aspect of Doyle to a requirement of law. It is true that Doyle is quoted at length and relied on by the trial judge in Bemar, and that the findings of prejudice in Doyle set out in the preceding paragraph are quoted. But, Fragomeni J. does not suggest that prejudice must be established before non-compliance with notice provisions will bar a claim. At para. 194 of the Bemar trial decision, Fragomeni J. concludes that the contractor did not properly comply with the notice provisions in the contract and, therefore, it could not advance its claims. He made no finding of prejudice on the part of the city in reaching that conclusion.

[51] Accordingly, there was no onus on the City to lead evidence of prejudice. As owner, the City is assumed to have been prejudiced by a multimillion dollar claim being made years after the Contract permitted and long after the City could consider its position and take steps to protect its financial interests.

Issue 3: Reliance on the Notice Provision despite Failing to Comply with GC 3.14.04

[52] GC 3.14.04 of the Contract requires the parties to “make all reasonable efforts to resolve their dispute by amicable negotiations” and to provide “open and timely disclosure of relevant facts, information, and documents to facilitate these negotiations”.

[53] Clearway says that instead of attempting to negotiate after receiving the March 2007 Claim, the City simply issued the denial letter of April 4, 2007. Clearway also complains about the City’s delay in disclosing the report prepared by its geotechnical engineer on the causes of the flood. Clearway submits that because the City failed to comply with the negotiation and disclosure requirements in GC 3.14.04, it should be barred from relying on the Notice Provision.

[54] In my view, this submission completely misses the mark. GC 3.14.04 follows the Notice Provision in GC 3.14.03. Therefore, the negotiation and disclosure requirements in GC 3.14.04 arise after a claim has been made pursuant to GC 3.14.03. Accordingly, the complaints that Clearway levies against the City about negotiation and disclosure can only relate to the March 2007 Claim, with which the City took no issue in the motion below. An alleged failure on the part of the City to negotiate in the spring of 2007 is not, and cannot be, relevant to the August 2010 Claim, as the negotiation requirement did not arise until the August 2010 Claim had been delivered to the City. Similarly, the disclosure requirement could not have arisen in 2007 in respect of the August 2010 Claim.

[55] Finally, while I need not decide the point, it may be that GC 3.14.04 is not engaged at all where, as in this case, the August 2010 Claim was not properly advanced in accordance with the Notice Provision.

Issue 4: Items 7 and 8 of the August 2010 Claim

[56] Items 3 and 6 of the March 2007 Claim were for the extended maintenance of excavations or pits, and the associated shoring required for the pits. The cost of these two items in the March 2007 Claim was slightly in excess of $455,000. Clearway says that items 7 and 8 of the August 2010 Claim are for the same items, but for the increased amount of approximately $1,700,000.

[57] Clearway submits that the motion judge erred in failing to recognize that items 7 and 8 of the August 2010 Claim are of the same type as those in items 3 and 6 of the March 2007 Claim and, instead, treated them as new claims. It asks that even if the appeal is otherwise dismissed, it be allowed to continue to pursue the amounts set out as items 7 and 8 of the August 2010 Claim.

[58] The City disputes the factual assertion that underpins this ground of appeal. It says that items 3 and 6 of the March 2007 Claim are for extended maintenance of excavations under Leslie Street and under a CN Rail tunnel but that items 7 and 8 are for pit delay costs at numerous locations, including Leslie Street and the CN Rail tunnel.

[59] Corpex dictates that this ground of appeal must fail. It will be recalled that in para. 62 of Corpex, the Supreme Court stated:

[O]nce work is complete, a contractor cannot claim in a Court of law benefits similar to those which [the notice provision] would have guaranteed if he has not himself observed that clause and given the notice for which the clause provides.

[60] Thus, even if Clearway’s factual assertion is correct, Clearway cannot rely on items 3 and 6 of the March 2007 Claim to save items 7 and 8 of the August 2010 Claim. The Notice Provision requires detailed claims in which the items being claimed are identified and supported by records. Items 3 and 6 do not contain the information necessary to meet those requirements in respect of items 7 and 8 of the August 2010 Claim. Accordingly, items 3 and 6 of the March 2007 Claim did not give the notice required by the Notice Provision such that Clearway can rely on them to proceed with its claims in items 7 and 8 of the August 2010 Claim.

Issue 5: No Complaint by the City in respect of the Date of Delivery of the March 2007 Claim

[61] This ground of appeal rests on the timing of the March 2007 Claim, which Clearway delivered to the City more than 30 days after completion of the work affected by the flood.

[62] Clearway contends that as the City did not raise any issue with respect to the timing of the March 2007 Claim, it waived compliance with the Notice Provision or, alternatively, it varied the terms of the Contract by this conduct. On the basis of either waiver or variation of contract, Clearway submits, the City cannot rely on the timing component of the Notice Provision to bar the August 2010 Claim.

[63] The Supreme Court of Canada provides guidance on the doctrine of waiver in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490. In paragraphs 19, 20 and 24, it lays down the following. Waiver occurs when one party to a contract (or proceeding) takes steps that amount to foregoing reliance on some known right or defect in the performance of the other party. It will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of the deficiency that might be relied on and (2) an unequivocal and conscious intention to abandon the right to rely on it. The intention to relinquish the right must be communicated. Communication can be formal or informal and it may be inferred from conduct. The overriding consideration in each case is whether one party communicated a clear intention to waive a right to the other party.

[64] There is nothing in Clearway’s affidavit material that meets the requirement that the City communicated an “unequivocal and conscious intention to abandon” its right to rely on the Notice Provision or to otherwise waive strict compliance with its terms. Indeed, Clearway did not assert that it had any such belief. Accordingly, there is no factual basis to support this submission. On that basis alone, this ground of appeal must fail.

[65] Two other arguments advanced on this ground of appeal warrant comment. The first is Clearway’s argument, based on the decision of this court in Colautti Construction Ltd. v. Ottawa (City of) (1984), 1984 CanLII 1969 (ON CA), 46 O.R. (2d) 236, that the City varied the terms of the Contract by its conduct such that it cannot rely on the timing component of the Notice Provision.

[66] Colautti Construction is a very different case from the present one. In Colautti Construction, the plaintiff contractor entered into a contract with the defendant city for the construction of a sanitary sewer. The contract stipulated that written authorization was required for additional charges. Nonetheless, at various different times over the course of the project, the contractor billed the city for significant extra charges and the city paid them, despite the absence of written authorization. This court held that the parties had varied the terms of the contract by their conduct and the city could not rely on the strict provisions of the contract to escape liability for further additional costs.

[67] In the present case, there is no pattern of conduct by the parties over the course of the Contract demonstrating that they did not intend to be bound by the Notice Provision. Far from ignoring the relevant provisions in the Contract, the parties acted in compliance with its terms. GC 3.14.03.01 required Clearway to give notice of any situation that might lead to a claim for additional payment. The affidavit evidence shows that Clearway did this. Further, as we have seen, the Notice Provision required Clearway to give a detailed claim after completion of the work affected by the situation. Clearway did that, by delivering its March 2007 Claim. As for the City, GC 3.14.03.05 required that it advise Clearway, in writing, within 90 days of receiving the detailed claim, of its opinion of the validity of the claim. This the City did by means of its letter dated April 4, 2007, which denied the March 2007 Claim. There is no pattern of conduct by the parties that had the effect of varying the terms of the Contract.

[68] The second matter warranting comment is the City’s contention that waiver and promissory estoppel are one and the same. Based on this view, the City submitted that Clearway had to meet the test for promissory estoppel enunciated by the Supreme Court of Canada in Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, at para. 13:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.

[69] The Supreme Court decided Saskatchewan River Bungalows a mere three years after Maracle. It did not conflate or equate the requirements for waiver and promissory estoppel in those two cases. Rather, as has been seen, it articulated different requirements for each doctrine. Indeed, at para. 18 of Saskatchewan River Bungalows, after acknowledging that waiver and promissory estoppel are “closely related”, the Supreme Court expressly declined to determine how and whether the two doctrines should be distinguished. Instead, it decided the appeal based on waiver, because that is how “the parties [had] chosen to frame their submissions”.

[70] There has been much speculation, both judicial and academic, on whether waiver and promissory estoppel are essentially the same thing, with the sole or primary difference being that waiver developed as a common law doctrine whereas promissory estoppel arose in equity.[^4] That determination awaits the proper case, one in which it is squarely raised and fully argued. Following the lead of the Supreme Court, I would decide this ground of appeal based on waiver and variation, as that is how Clearway framed the issue. I would add, however, that if the doctrine of promissory estoppel is in play, my conclusion that Clearway has failed to establish the necessary evidentiary basis is reinforced because there is no evidence of detrimental reliance.

DISPOSITION

[71] Accordingly, I would dismiss the appeal, with costs to the City in the agreed-on amount of $5,000, inclusive of disbursements and applicable taxes.

Released: September 12, 2012 (“E.E.G.”)

“E.E. Gillese J.A.”

“I agree R.G. Juriansz J.A.”

“I agree G.J. Epstein J.A.”

Appendix A

GC 3.14 Claims, Negotiations, Mediation

GC 3.14.01 Continuance of the Work

.01 Unless the Contract has been terminated or completed, the Contractor shall in every case, after serving or receiving any notification of a claim or dispute, verbal or written, continue to proceed with the Work with due diligence and expedition. It is understood by the parties that such action will not jeopardize any claim it may have.

GC 3.14.02 Record Keeping

.01 Immediately upon commencing work which may result in a claim, the Contractor shall keep Daily Work Records during the course of the Work, sufficient to substantiate the Contractor’s claim, and the Contract Administrator will keep Daily Work Records to be used in assessing the Contractor’s claim, all in accordance with clause GC 8.02.07, Records.

.02 The Contractor and the Contract Administrator shall reconcile their respective Daily Work Records on a daily basis, to simplify review of the claim, when submitted.

.03 The keeping of Daily Work Records by the Contract Administrator or the reconciling of such Daily Work Records with those of the Contractor shall not be construed to be acceptance of the claim.

GC 3.14.03 Claims Procedure

.01 The Contractor shall give oral notice to the Contract Administrator of any situation which may lead to a claim for additional payment immediately upon becoming aware of the situation and shall provide written notice to the Contract Administrator of such situation or of any express intent to claim such payment, within seven days of the commencement of any part of the work which may be affected by the situation or will form part of the claim.

.02 Not used.

.03 The Contractor shall submit detailed claims as soon as reasonably possible and in any event no later than 30 Days after completion of the work affected by the situation. The detailed claim shall:

a) identify the item or items in respect of which the claim arises;

b) state the grounds, contractual or otherwise, upon which the claim is made; and

c) include the Records maintained by the Contractor supporting such claim.

In exceptional cases the 30 Days may be increased to a maximum of 90 Days with approval in writing from the Contract Administrator.

.04 Within 30 Days of the receipt of the Contractor’s detailed claim, the Contract Administrator may request the Contractor to submit any further and other particulars as the Contract Administrator considers necessary to assess the claim. The Contractor shall submit the requested information within 30 Days of receipt of such request.

.05 Within 90 Days of receipt of the detailed claim, the Contract Administrator shall advise the Contractor, in writing, of the Contract Administrator’s opinion with regard to the validity of the claim.

GC 3.14.04 Negotiations

.01 The parties shall make all reasonable efforts to resolve their dispute by amicable negotiations and agree to provide, without prejudice, open and timely disclosure of relevant facts, information, and documents to facilitate these negotiations.

.02 Should the Contractor disagree with the opinion given in paragraph GC 3.14.03.05, with respect to any part of the claim, the Contract Administrator shall enter into negotiations with the Contractor to resolve the matters in dispute. Where a negotiated settlement cannot be reached and it is agreed that payment cannot be made on a Time and Material basis in accordance with clause GC 8.02.04, Payment on a Time and Material Basis, the parties shall proceed in accordance with clause GC 3.14.05, Mediation.

GC 3.14.05 Mediation

.01 If a claim is not resolved satisfactorily through the negotiation stage noted in clause GC 3.14.04, Negotiations, within a period of 30 Days following the opinion given in paragraph GC 3.14.03.05, and the Contractor wishes to pursue the issue further, the parties may, upon mutual agreement, utilize the services of an independent third party mediator.

.02 The mediator shall be mutually agreed upon by the Owner and Contractor.

.03 The mediator shall be knowledgeable regarding the area of the disputed issue. The mediator shall meet with the parties together and separately, as necessary, to review all aspects of the issue. In a final attempt to assist the parties in resolving the issue themselves prior to proceeding to arbitration the mediator shall provide, without prejudice, a non-binding recommendation for settlement.

.04 The review by the mediator shall be completed within 90 Days following the opinion given in paragraph GC 3.14.03.05.

.05 Each party is responsible for its own costs related to the use of the third party mediator process. The costs of the third party mediator shall be equally shared by the Owner and Contractor.

GC 3.14.06 Payment

.01 Payment of the claim will be made no later than 30 Days after the date of resolution of the claim or dispute. Such payment will be made according to the terms of Section GC 8.0, Measurement and Payment.

GC 3.14.07 Rights of Both Parties

.01 It is agreed that no action taken under this subsection GC 3.14, Claims, Negotiations, Mediation, by either party shall be construed as a renunciation or waiver of any of the rights or recourse available to the parties, provided that the requirements set out in this subsection are fulfilled.

[^1]: The Notice Provision allows for time extensions of up to 90 days in “exceptional cases”, with approval in writing from the Contract Administrator. As the August 2010 Claim greatly exceeds either time limit, for ease of reference I refer only to the 30-day limit.

[^2]: Corpex, at para. 31.

[^3]: See pp. 101-103.

[^4]: See, for example, Re Med-Chem Health Care Inc., [2000] O.J. No. 4009 (S.C.); HREIT Holdings 45 Corp. v. R.A.S. Food Services (Kenora) Inc. (2009), 80 R.P.R. (4th) 64, at paras. 57-61 (Ont. S.C.); Re Tudale Explorations Ltd. and Bruce et al. (1978), 1978 CanLII 1471 (ON SC), 20 O.R. (2d) 593, at pp. 595-99 (H. Ct. J.); Petridis v. Shabinsky (1982), 35 O.R. 92d) 215 (H. Ct. J.); Laurie v. Jones, 2004 NSSC 87, at para. 14, 223 N.S.R. (2d) 129. For academic consideration of this matter see, for example, S.M. Waddams, The Law of Contracts, 6th ed. (Toronto: Canada Law Book, 2010), at paras. 195-206; Angela Swan, Canadian Contract Law, 2d ed. (Markham, Ont.: LexisNexis, 2009), at paras. 2.198-255; John D. McCamus, The Law of Contracts (Toronto: Irwin Law, 2005), at pp. 275ff.