CITATION: H. R. Doornekamp Construction Ltd. v. Canada (Attorney General) (Department of Public Works and Government Services), 2022 ONSC 2247
DIVISIONAL COURT FILE NO.:: 579/19
DATE: 2022/04/25
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Stewart, Lederer, Tzimas JJ
BETWEEN:
H.R. DOORNEKAMP CONSRUCTION LTD
Plaintiff (Respondent in Appeal)
– and –
ATTORNEY GENERAL OF CANADA (DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES
Defendant (Appellant in Appeal)
John Margie, for the Plaintiff (Respondent in Appeal)
Jacqueline Dais-Visca, for the Defendant (Appellant in Appeal)
HEARD: March 10, 2022
REASONS FOR JUDGMENT
Lederer, J.
Introduction
[1] This is an appeal from a motion for summary judgment brought by the defendant (the Attorney General of Canada) seeking the dismissal of the action commenced against it by the plaintiff (H.R. Doornekamp Construction Ltd.). The motion was dismissed. The motion judge found that there were genuine issues requiring a trial. The order being interlocutory, leave to appeal was required, sought and ordered by a panel of the Divisional Court. Leave to appeal was granted on the single question of “…whether the Dispute Resolution Clause (GC8) in the contract between the parties extinguished the Plaintiff’s right to bring a court action such that summary judgment should have been granted dismissing the Plaintiff’s claim against the Defendant.”[^1] The motion for summary judgment was joined by a cross-motion made on behalf of the plaintiff (Doornekamp) for partial summary judgment which requested a determination that the defendant (Canada) was liable for the damages claimed in the action. This motion was also dismissed. Leave to appeal was not sought and any issues raised by it are not before the court.
Background
[2] At the risk of being simplistic, a contract is an agreement. As a general proposition, the parties who endorse a contract (sign it) have agreed to and are bound by its terms. A contract outlines the parameters of the relationship. In this case, Canada submits that Doornekamp was bound by the “Dispute Resolution Clause” of the contract and that, as a result, it conceded any right, it might otherwise have had, to sue Canada as a means of resolving any disputes that arose during the course of performing its obligations under the contract. Moreover, with respect to the issue at hand, Canada submitted that Doornekamp did not comply with what the Dispute Resolution Clause requires and, as a result, has lost its ability to access the process it provides. In short, upon an issue being raised, the Dispute Resolution Clause requires that Canada make a decision, if the other party, in this case Doornekamp, was unhappy with that determination, it had fifteen days to deliver a Notice of Dispute. The Notice is the catalyst for entry into the dispute resolution process. As Canada perceives it, the case is straight forward. It rendered a decision, no Notice of Dispute was delivered and, accordingly, there is no active dispute to be resolved. The dispute resolution process was not engaged.
[3] Before the motion judge, Doornekamp took the position that the Dispute Resolution Clause was not the operative provision. The contract was for the demolition and replacement of the concrete face of a canal lock. The relevant portion of the work was to be paid for on a unit-price basis, based on the units of concrete actually demolished and supplied. Doornekamp noted that the disagreement respected a difference in the quantity of concrete actually removed and replaced from that “estimated” in the contract. Doornekamp argued that the request for an adjustment of compensation payable by unit rates was to be resolved under a different clause of the contract: GC6.4.3, “Price Determination” -Variation in Tendered Quantities”. The refusal of such a request was to be decided by way of a court action, not under GC 8, the Dispute Resolution Clause. Doornekamp submitted that GC6.4.3 constituted a “separate code”, which was not subject to GC8.[^2] Doornekamp went on to say that, far from rejecting the claim on the basis that no Notice of Dispute had been delivered, Canada indicated to Doornekamp that it was reviewing the request and that it would provide advice as to the next steps to be taken. Doornekamp understood these representations to be further to an ongoing process of co-operation and consultation, the completion of which was a condition precedent to the decision the dispute resolution clause required Canada to make. Accordingly, there was no decision, at least not a proper one. Canada failed to “abide by the terms of its own contract”.[^3] As a result, the fifteen-day period by which a Notice of Dispute was to be issued never began and did not run.
[4] From this foundation the motion judge concluded that “the evidentiary records…raise genuine issues that require a trial”[^4] and identified two such issues:
Did Doornekamp properly invoke and rely on GC6.4.3; and
Whether Canada’s conduct affected the rights of Doornekamp, with respect to its claim.[^5]
[5] The motion judge went on to “agree that in order to resolve these two competing summary judgment motions, the issue raised by Canada with respect to the interpretation of the contract must be dealt with first.” She determined that she could not “resolve the issue because of the genuine issues [she had] found that require a trial”.[^6] I shall have more to say about this later in these reasons. For the moment I say only that it was fundamental to Canada’s position on this appeal that the motion judge could have and should have undertaken to interpret the contract. Having done so and found, as Canada proposed is clear, that the dispute resolution clause foreclosed any right of Doornekamp to sue in court, she should have applied the established facts, namely that Canada had made a decision and Doornekamp had failed to deliver a Notice of Dispute and, on that basis granted summary judgment, dismissing the action.
Facts
[6] By invitation to tender dated August 29, 2013, Canada solicited bids for a project that called for re-facing concrete at Lock 15, located at Healey Falls, on the Trent Severn Waterway.[^7] On October 8, 2013, the contract was awarded. Doornekamp was the successful bidder.[^8] During February 2014, it started placing concrete.[^9] During January 2015, Ben Doornekamp, a Director of Doornekamp who was involved with the project, noticed what he described as “differences between the amounts of concrete being supplied and the amounts for which [Doornekamp was] being paid.”[^10] Relying on clause GC 6.4.3 of the contract, in an email dated January 23, 2015, he raised with Canada its obligation to pay for the concrete actually supplied.[^11] On February 4, 2015 Ben Doornekamp sent a further email noting “a very large discrepancy between the concrete poured and the concrete paid.”[^12] On April 1, 2015, a formal notice of claim for the shortfall was delivered. The claim was revised on April 6, 2015.[^13]
[7] The claim was for shortfalls in payment given the quantities of concrete demolished and concrete poured. In making the claim Doornekamp did not refer to any particular clause of the contract or any understanding of how the claim, if disputed, would be processed. The claim asserted an overage of 198.7 m3 for Unit Price Item 2: “Concrete Demolition” without any demonstration of the source or calculation of that amount. There was also a claim of an overage for Unit Price Item 5 Class 1 “Concrete poured” being (658.7 m3 (actually poured) - 450m3 (tendered)) 208.7 m3. The claim did not refer to any amount of money said to be owed. Rather it provided the quantities of concrete, said to have been “actually” demolished and poured, which Doornekamp indicated a willingness to agree to and which were, I presume, to be multiplied by the unit price to be paid under the contract. For Unit Price Item 2 the quantity was 652.2m3 and for Unit Price Item 5 Class 1 Concrete the quantity was (658.7 m3 (actually poured)– 2.5% (representing an overage factor included in the bid price) 642.2 m3.^14
[8] On May 21, 2015, Canada responded to the claim. It did not agree with the assertions made in the claim. Verification of the measurements of the lock undertaken in the field confirmed that there was no discrepancy between the conditions on-site and those shown on the drawings.[^15] By email dated May 22, 2015, Doornekamp contested this assessment and went so far as to suggest some doubt as to whether Canada had reviewed the claim. In response, on May 29, 2015, Atif Suhail, the project manager for Public Works and Government Services Canada (“Canada”) repudiated this assertion (“a thorough review was done of your submitted claim letter”) but having undertaken “a second look after reception of your email” there were two areas that stood as exception to the overall conclusion. As a result, on June 18, 2015, Change Order 8 was issued for an additional 7 cubic meters of concrete removal and placement.[^16] As counsel for Canada pointed out, this was a small portion of the claim that had been made. Nevertheless, it would seem that Doornekamp accepted the result. Certainly, no Notice of Dispute was forthcoming in response.
[9] I pause to point out that this exchange, and the ultimate acknowledgment and change order following upon the initial outright denial, demonstrates the value of consultation and co-operation between the parties in the assessment and resolution of these claims. The significance of this observation will become apparent as these reasons proceed.
[10] The work was inspected and found by Doornekamp to be complete on June 29, 2015 and certified as substantially complete by Canada (Atif Suhail) on July 6, 2015.[^17] Six months later, on February 10, 2016 Doornekamp delivered a document entitled “Request for Adjustment of the Contract Time and Cost”.[^18]
[11] The document is a claim for what is explained and summarized as:
To date, PWGSC has restricted payment for Concrete Demolition and Class 1 Concrete items of the contract to be estimated tender quantities only, relying on wording in the contract specifications to support its position that it is not required to pay for all work properly completed under the contract. Doornekamp asserts that it is entitled to be paid for all work completed, as well as an adjustment to the contract unit prices for that work, based on the terms in the General Conditions of the contract and the legal principle of contra proferentem.
In summary, DoorneKamp requests equitable adjustments to the contract to address the following:
• Rescind Change Orders No. 7 and 8, which were unilaterally issued by PWGSC
• Extend the Time for Completion of the Work to April 30, 2015
• Payment for the additional quantity of concrete demolition work completed at the contract unit price
• Payment for the additional quantity of Class 1 Concrete completed at the contract unit price
• An adjustment to the unit price for all Class 1 Concrete in excess of 115% of the tendered quantity
• The financial adjustments to the contract total $1,435,938.98 plus HST
In the alternative, should PWGSC refused to compensate Doornekamp by making the appropriate financial adjustments in accordance with the terms of the contract, Doornekamp requests payment for all work completed in accordance with its claims for Subsurface Conditions, valued at $357,331.65 and for Delays and Extension of Time, valued at $1,078,607.33.[^19]
[12] In describing its claims Doornekamp relied on specified provisions found in its contract with Canada. With respect to the additional work:
GC6.4.3.2 Price Determination” -Variation in Tendered Quantities … If the final quantity of the price per unit item exceeds the estimated tendered quantity by more than 15 percent either party to the Contract may make a written request to the other party to negotiate an amended price per unit for that portion of the item which exceeds 115 percent of the estimated tendered quantity.[^20]
[13] In the alternative, the claim proposed that the additional work was the result of unforeseen subsurface conditions:
GC6.2 Changes in Subsurface Conditions… If, during the performance of the Work, the Contractor encounters subsurface conditions that are substantially different from the subsurface conditions described in the tender documents… the Contractor shall give notice to Canada immediately upon becoming aware of the situation… “and”… If the Contractor is of the opinion that the Contractor may incur or sustain any extra expense or any loss or damage… the Contractor shall with in 10 days give Canada written notice of intention to claim… “and”… the Contractor shall give Canada a written claim… no later than 30 days after the date that a Certificate of Substantial of Performance is issued… “and”… If Canada determines that a claim… is justified, Canada shall make an extra payment to the Contractor.[^21]
[14] With respect to the extension of time for completion of the work:
GC6.5 Delays and Extension of Time… Upon application of the Contractor made before the date first fixed for completion of the Work… Canada may extend the time for completion of the Work by fixing a new date if Canada determines that causes beyond the control of the Contractor have delayed its completion… “and”… If the Contractor is of the opinion that the contractor may incur or sustain any extra expense or any loss or damage…the Contractor shall within 10 days notice of intention to claim… “and”…the Contractor give Canada a written claim… no later than 30 days after the date that a Certificate of Substantial Performance Completion is issued…[and]… If Canada determines that a claim… is justified, Canada shall make an extra payment to the Contractor.^22
[15] The claim for additional work (both demolition and the quantity of concrete poured), seen as a variation of the quantities tendered or, in the alternative, justified as a result of unexpected subsurface conditions is different from what was claimed in April 2015. Whereas at that earlier time the overrun for concrete demolition was identified as 198.7 m3, for the claim made on February 10, 2016, it had increased to 273.7 m3.[^23] It is not clear as of what point in time the additional demolition claimed in April 2015 was assessed; however, it would seem, at least some of the additional demolition, could have occurred between April 2015, the time the initial claim was made and June 29, 2015, the date the “Contractor” (Doornekamp) inspected and found the work to be complete. I repeat what has already been said. The 198.7m3 claimed, in April 2015, as overrun for demolition, was made without any demonstration of its source or calculation. In the claim made on February 10, 2016, the calculation of the concrete quantity overrun (273 m3) is attributed to Section 6.5 of the document making the claim (the “Request for Adjustment of the Contract Time and Cost”). Section 6.5 refers to the Class 1 Concrete quantity overrun, which is to say the concrete poured, not the concrete demolished.[^24] As with the April 2015 claim, there is nothing in the February 10, 2016 claim that explains the claim for additional concrete demolition.
[16] The claim made on February 10, 2016 for a Class 1 Concrete quantity overrun is also different from the one made in April 2015. The claim made in April 2015 was for 208.7 m3 whereas the claim made on February 10, 2016 was for 283.7 m3.[^25] Section 6.5 of the Request for Adjustment of the Contract Time and Cost refers the reader to Appendix C which is a “Summary of Concrete Deliveries”.[^26] It is made up of three columns: Ticket Dates (presumably the dates that deliveries were made), Material Description and Quantity. The total of “35MPA W/C.45 AIR” concrete delivered from February 26, 2014 to April 15, 2015 was 801.200 m3. At Section 6.5 amounts for Class 2 and Class 3 Concrete are deducted as are the amounts for which payment had been received (385 m3, 20.0 m3 and 45.0 m3) which total 450 m3 (the tendered amount) leaving the amount claimed, 283.7 m3.[^27]
[17] The February 10, 2016 claim went further. Not only did Doornekamp seek payment for the increased quantities, relying on clause GC 6.4.3.2 of the contract, it also asked for increases to the unit prices to be applied to the established quantities of both demolished and poured concrete. This calculation begins with the request that the time for completion of the contract be extended to April 30, 2015. As a result of the increased amount of concrete demolition, and the “ongoing uncertainty related to weather conditions”, the placement of concrete did not begin until late February 2014.[^28] The contract provided that no work was to be performed on site during the navigation season. It had been expected that, by then, the work would be complete. It wasn’t. Accordingly, Doornekamp was required to “demobilize” from May 29, 2014 until November 22, 2014.[^29] Following the placement of the concrete another 47 days were required to complete the work.^30 The calculations made by Doornekamp in support of the claim show that the “theoretical substantial completion date was therefore May 4, 2015” which, Doornekamp noted, “very closely correlates with the actual certified date of substantial completion of April 30, 2015”.^31 It is on this basis that, in accordance with clause GC 6.5 of the contract, Doornekamp requested that the Time for Completion of the Work be extended to April 30, 2015. From this Doornekamp calculated the delay from the planned completion of work (April 2, 2014) to the actual completion date (April 30, 2015) as 392 days, subtracted the period of stoppage for the navigation season (May 29, 2014 to November 22, 2014) as 177 days to arrive at a “Compensable delay period” of 215 days.[^32]
[18] In making this claim Doornekamp opted not to separate and explain the adjustment to the unit price for concrete demolition separate from that of the adjustment in respect of Class 1 Concrete unit price.[^33] Doornekamp calculated the quantity of Class 1 Concrete eligible for price adjustment as follows:
801.2 m3 (total concrete delivered)– 62.0 m3 (Class 2 Concrete)) – 5.5 m3 (Class 3 Concrete) – 442.75 [385 m3 (the base mount of Class Concrete) x 1.15 (the allowable excess under the contract][^34]) = 290.95 m3 [^35]
[19] Doornekamp then calculated its incremental costs associated with the additional work and the delays:
Time-dependent indirect costs $431,694.80^36
Unabsorbed overhead and profit $190,767.15^37
Additional demobilization $ 12,500.00^38
Additional remobilization $403,690.00^39
Delayed release of holdback $ 3,555.38[^40]
Claim preparation costs $ 36,400.00^41
Total $1,078,607.33^42
[20] Doornekamp calculated what it says was the unit price adjustment necessary to “make it whole” by dividing the incremental costs associated with the additional work and delay by the number of units of concrete delivered that was “eligible for price adjustment”:
$1,074, 607.33 divided by 290.95= $3,707.19[^43]
[21] Doornekamp added up the components of its claim:
Concrete Demolition quantity overrun: 273.7 m3 @ $179.00 per m3 $48,992.30
Concrete Demolition unit price adjustment: $ 0.00
Class 1 Concrete quantity overrun: 283.7 m3 @ $1,086.85 per m3 $308,339.35
Class 1 Concrete unit price adjustment: 290.95 m3 @ $3,707 per m3 $1,078,607.33
Total $1,435,938.98[^44]
[22] I repeat that while relying on the foregoing as the “appropriate means of providing equitable compensation” Doornekamp proposed that, should Canada not accept this position, in the alternative it relies on clause GC 6.2 of the contract “Changes in Subsurface Conditions” also in company with clause GC 6.5 “Delays and Extension of Time” as the foundation for its claim.^45 This adds little, if anything to what this court is asked to decide.
[23] Why go through the claim in this detail? In her submissions counsel for Canada, relying on the request that Change Orders 7 and 8 be rescinded, proposed that the claim being made was nothing more than an attempt to reopen the request made in April 2015 for shortfalls in payment given the quantities of concrete demolished and poured. It is apparent that while there is an overlap this claim encompasses far more than that one. As perceived by Doornekamp, the potential for this sort of all encompassing claim was foreseen by the contract. Where there are delays, the time for completion may be extended and extra payments made after the date for completion has passed. It may or may not be that the claim made by Doorenkamp complies with the requirements to make such a request and that it can be justified. For the moment I observe only that Canada’s response to the claim was not to say the issues had been decided within the 2015 claim or that any conditions necessary to make the claim were not present or had not been met. It said the claim was being reviewed.
[24] Canada’s first response was delivered by email on February 12, 2016. There had been some difficulty in the delivery of the claim. The email acknowledged that the claim had been received:
I can confirm that the claim document has been downloaded from the dropbox. I have forwarded the link to RPC to allow them to access the file.[^46]
[25] This was followed by an email on February 25, 2016, saying the claim process was underway and that updates would be forthcoming:
We have started the PWGSC Claim process. I will give you updates as soon as I have them.^47
[26] On March 4, 2016 a further email was delivered:
In Atif’s absence, I understand that this is still being reviewed by PWGSC’s legal services who are conducting preliminary review and will recommend next steps to us. Then, we will be able to provide you with anticipated milestones dates to get through the recommended steps.[^48]
[27] Nothing further was forthcoming from Canada until July 8, 2016, when the following letter was sent and subsequently received. It begins by identifying the claim and rejecting it:
This letter is formal notice under GC 2.3 Notices and GC 8 Dispute Resolution of the above mentioned the contract.
PWGSC has reviewed the information provided by HR Doornekamp, identified by “Request for Adjustment of the Contract Time and Cost” dated February 10, 2016.
Based on our review, your request for an adjustment to the time and cost of the contract cannot be entertained given the conditions in GC 6.2 and GC 6.5.
[28] The letter goes on to refer to the alternative justification for the claim, noting among other things that it was made too late[^49]:
With respect to GC 6.2 Changes in Subsurface Conditions, no substantiation has been provided that the existing concrete was weaker than anticipated. Furthermore, Change Order #03 was issued on the basis of H.R. Doornekamp’s claim that the condition of the concrete was stronger than anticipated. As no evidence is provided that due to changes in subsurface conditions, concrete demolition beyond the Contractor’s direct control occurred, a claim for additional Concrete Demolition and Class 1 concrete placed cannot be considered.
Additionally, referencing GC 6.2 paragraph 3, the timeframe to claim for an entitlement based on Changes in Subsurface Conditions elapsed on May 30, 2015.
[29] And concludes with its rejection of the principle claims that had been made:
With respect to GC 6.5 Delays and Extension of Time, GC 6.5 paragraph 3 states that “… no payment, other than a payment that is expressly stipulated in the Contract, shall be made by Canada to the Contractor for any extra expense, loss or damage incurred or sustained by the Contractor due to delay, whether or not the delay is caused by circumstances beyond the control of the Contractor.” Furthermore, referencing GC 6.5 paragraph 4, no substantiation is provided that any neglect or delay occurred on the part of Canada.
Additionally, in review of the claim that severe winter conditions hinder productivity, our finding are [sic] that the winter conditions experienced cannot be considered as a reason to extend the end date of the contract. As such, insufficient substantiation is provided to extend the contract end date to April 30, 2015.
In light of the above with consideration of the GC’s and specifications, this claim is not substantiated and therefore is hereby rejected.
Yours truly,[^50]
[30] Canada understood this letter to be its decision with respect to the claim and in the absence of a Notice of Dispute being received within the fifteen days prescribed by the contract, the end of the matter. Doornekamp did not deliver a Notice of Dispute. Rather, by email dated July 12, 2016, Doornekamp suggested that Canada had failed to address the issues raised in the request that had been made:
Our request was simply to be compensated for all work performed in strict accordance with the terms of the contract, specifically GC 6.4.3.1, GC 6.4.3.2 and GC 1.2.2. Your response completely ignores this request and instead attempts to address alternative claims which were offered to support Doornekamp’s position only in the event that for some reason the primary request could not be considered.
We therefore again seek your immediate consideration of our previous request for adjustment, as originally submitted. Your favourable response to this request will form the basis for a negotiated settlement of this matter, in order to avoid recourse to more costly and time-consuming methods of dispute resolution.
Yours truly,[^51]
[31] On July 26, 2016, Canada responded:
As previously stated, PWGSC has reviewed all information provided by HR Doornekamp, in consideration of all General Conditions including GC 6.4.3.1, GC 6.4.3.2 and GC 1.2.2.
In light of the aforementioned review and an absence of any new additional information, our position with respect to the “Request for Adjustment of the Contract Time and Cost” dated February 10, 2016 remains unchanged. We hold the claim is still unsubstantiated.
Yours truly[^52]
[32] At this point counsel became involved. There was an exchange between them and on January 27, 2017, the Statement of Claim was issued, and the action commenced.[^53]
Canada’s Position
[33] In bringing the motion for summary judgment, Canada has produced no affidavit from any of the individuals that took part in drafting the contract, reviewing the tenders, or monitoring the progress of the work. The only affidavit filed on its behalf was sworn by a legal assistant in the office of its counsel.[^54] She was cross-examined. She had nothing of substance to contribute.[^55] This is in furtherance of the direct and simple position taken by Canada. It submits that the issue raised by the motion is one of interpretation of the contract. Clause GC 8.3 at paras. 1 and 2 govern. They state:
Any difference between the parties to the Contract of any nature arising out of or in connection with the Contract which could result in a claim by the Contractor against Canada, and which is not settled by consultation and co-operation as envisaged in GC 8.2, “Consultation and Co-operation”, shall be resolved in the first instance by Canada, whose written decision or direction shall be final and binding subject to the provisions of GC8. Such written decision or direction includes, but is not limited to, any written decision or direction by Canada under any provision of the General Conditions.
The Contractor shall be deemed to have accepted the decision or direction of Canada referred to in paragraph 1) of GC 8.3 and to have expressly waived and released Canada from any claim in respect of the particular matter dealt with in that decision or direction unless, within 15 working days after receipt of the decision or direction, the Contractor submits to Canada a written notice of dispute requesting formal negotiation under GC8.4, “Negotiation”. Such notice shall refer specifically to GC8.4, “Negotiation”, and shall specify the issues in contention and the relevant provisions of the Contract.[^56]
[34] Canada submits that in circumstances where a dispute arises, a decision is rendered by Canada and no notice of dispute forthcoming within 15 days, the action must be dismissed. As seen by Canada, the July 8, 2016 letter was its decision. Canada says that the first line of the letter makes this clear (“This letter is formal notice under GC 2.3 Notices and GC 8 Dispute Resolution of the above mentioned the contract.”). There was no Notice of Dispute delivered and any rights to dispute resolution that were open to Doorenkamp were, accordingly at an end. Hence the question put by the panel that granted leave: whether the right to sue was extinguished by operation of the contract. Canada says the answer must be “yes”. It follows that there can be no “genuine issue requiring a trial”.
Doornekamp’s Position
[35] In its submissions to this Court, as distinct from what it may have said to the motion judge, Doornekamp does not disagree with the underlying premise that, pursuant to clause GC 8.3 of the contract, where Canada has made a decision and no Notice of Dispute is delivered, the contractor will lose its rights to pursue the dispute resolution process the contract provides. To that extent, contrary to the position taken on behalf of Canada, the issue in this case is not one of contract interpretation. Doornekamp points out, and Canada did not disagree, that clause GC 8.3 paragraph 1 includes a precondition to the issuance, by Canada, of a decision. A decision is to be rendered where the “difference” … “is not settled by consultation and co-operation as envisaged in GC 8.2, ‘Consultation and Co-operation’”. Clause GC 8.2 says:
The parties agree to maintain open and honest communication throughout the performance of the Contract.
The parties agreed to consult and co-operate with each other in the furtherance of the Work and the resolution of problems or the differences that may arise.^57
[36] The opening words of clause GC 8.3 paragraph 1 incorporate the requirement that the parties “consult and co-operate…in furtherance of…the resolution…of…differences” into the initiation of the dispute resolution process. Before Canada makes a decision, the parties are to co-operate and consult in an effort to resolve the problem or difference. Compliance with this obligation stands as a condition precedent to the issuance, by Canada, of a decision pursuant to Clause GC 8.3 paragraph 1.
[37] The position taken by Doornekamp, like that of Canada, is straight forward. It accepts that once a decision is properly made and no notice of dispute follows, the Contactor’s rights under clause GC 8.3 are over. However, it asserts that the condition precedent for a decision (the need to consult and co-operate) was not met. There was no proper decision.
Analysis (Canada’s perspective)
[38] In her submissions counsel for Canada relied on the fundamental proposition that the contract should be read as a whole, represented the entirety of the arrangement between the parties and that its terms should be strictly interpreted and applied. In taking this position Canada relied on Clause GC 1.14 at paragraph 1 referred to, by the parties, as the “entire agreement clause”:
The Contract constitutes the entire and sole agreement between the parties with respect to the subject matter of the Contract and supersedes all previous negotiations, communications and other agreements, whether written or oral, relating to it, unless they are incorporated by reference in the Contract. There are no terms covenants, representations, statements or conditions binding on the parties other than those contained in the Contract.^58
[39] With this as the foundation counsel submitted that the process of dispute resolution is governed by the terms of the contract[^59] and referenced clause GC 2.2 paragraph 1(e) to which I add (d) as being relevant to the point being made”:
- If, at any time before Canada has issued a Certificate of Completion, any question arises between the parties about whether anything has been done as required by the Contract or about what the Contractor is required by the Contract to do, and in particular but without limiting the generality of the foregoing, about
(d) whether or not labour, Plant or Material performed, used and supplied by the Contractor for performing the Work and the carrying out of the Contract are adequate to ensure that the Work shall be performed in accordance with the Contract and that the Contract shall be carried out in accordance with its terms;
(e) what quantity of any of the Work has been completed by the Contractor;
the question shall be decided, subject to the provisions of GC 8, “Dispute Resolution”^60
[Emphasis added]
[40] Canada relies on this provision to say that any question as to the quantity of work done by the contractor is to be decided subject to clause GC 8 in the first instance.[^61]
[41] The factum filed on behalf of Canada refers to relevant clauses as “standard form general conditions”[^62] and to “federal construction contracts” as “contracts of adhesion”[^63] both to support the proposition that such contracts are to be strictly enforced, in this case in Canada’s favour. Immediately following the statement that these are contracts of adhesion the factum goes on:
The policy rationale for strictly enforcing binding notice provisions and claim substantiation requirements is to ensure Canada has sufficiently detailed information to allow it to consider its options and take corrective action.^64
[42] The “entire agreement clause” provides that there can be nothing outside the terms of the written and executed contract that modifies, amends or extends the arrangement made by the parties. However, the entire contract clause also means every term applies. While clause GC 6.4.3 is not a separate code for resolving the disputes to which it refers, it cannot be set to the side and ignored. There is nothing in Clause GC 2.2 to suggest that GC 8 is to be relied on in the first instance. To the contrary, it is the last resort; it applies but only after reliance on whatever other provisions apply have not resolved the issue. In that circumstance, there is a “difference” between the parties that requires dispute resolution which, under the terms of the contract, leads to “negotiation”, “mediation” and, finally, “binding arbitration”.[^65] To read this otherwise is to set aside the idea that the contract is to be read as a whole and to ignore Clause 6.4.3. which deals with “Price Determination – Variation in Tendered Quantities”-that is the specific issue at hand. The reference to a determination in the “first instance” is found in clause GC 8.3 paragraph 1 and is internal to that paragraph. It is only after consultation and co-operation have been undertaken and there is no settlement that clause GC 8.3 is engaged. It is consultation and co-operation carried out pursuant to Clause GC 8.3 paragraph 1 that is completed “in the first instance” by the decision made by Canada from which the process outlined in clause GC 8 begins and carries forward.
[43] It may be that the “General Conditions” (GC’s) in issue are standard to contracts entered into by Canada but there is no evidence to suggest that they have any application to the construction industry at large or beyond the particular requirements of Canada.[^66] Moreover, it is not at all clear that these are contracts of adhesion.[^67] Whether or not these are contracts of adhesion or whether the “General Conditions” are standard form does not matter. These concepts do nothing to advance the idea that the conditions or the contract should be interpreted in a way that necessarily favours Canada. To my mind the more applicable principle is contra proferentem that holds where there is ambiguity in a contract, a clause shall be construed against the party that drafted it.
[44] Canada relies on a series of cases which it submits demonstrate that in circumstances where a decision of Canada in respect of a dispute or difference has been made and no Notice of Dispute has been delivered within the time frame set aside for that purpose (15 days), there is no genuine issue requiring a trial and summary judgment should be granted. There are such cases, but they don’t help here.
[45] In Technicore Underground Inc. v. Toronto (City)[^68] the City had contracted with Clearway Construction Inc. to construct a watermain that ran under a number of roads. Clearway subcontracted the required underground tunnelling to Technicore. The excavated tunnel flooded. It took some time for the tunnelling machine to be recovered and refurbished and for the tunnelling to be completed. As a result, in March 2007, Clearway made a claim to the City for additional payment to cover the costs associated with the flooding. The claim was for indemnity for the claim of Technicore and Clearway’s own costs. The City denied the claim.
[46] In 2008, Technicore sued the City. The City defended and started a third party action against Clearway. In March of 2010, Clearway defended the third party claim and counterclaimed, again for indemnity for Technicore, and damages. In August of 2010, Clearway sent the City a claim in which it repeated the amounts it sought in 2007 and added new claims in excess of $3,000,000. In 2011 Clearway amended its defence and counterclaim, this time claiming $3,400,000.
[47] The City moved for summary judgment for those parts of the counterclaim that exceeded the March 2007 claim. The motion judge concluded that the notice provision operated as a condition precedent that served to bar the August 2010 claim because Clearway had failed to deliver it before the expiry of time limit. She granted partial summary judgment. Clearway was limited to the claim it had made in 2007. On the appeal Clearway submitted that the judge had failed to properly interpret the notice requirement. It did nothing more than set out a procedure, identify, and provide details of any claims that were to be negotiated, and possibly mediated. The contract did not contain the clear language necessary to deprive Clearway of the right to proceed with its full counterclaim against the City.
[48] The Court of Appeal disagreed. The notice provision sets out a mandatory procedure for the filing of claims including the requirement that detailed claims be submitted no later than 30 days after completion of the work affected by the situation.
[49] In the case being decided it is acknowledged that if the preconditions were met, that is if a Notice of Dispute was delivered:
• in the circumstances specified in clause GC 8.3 at paragraph 1 and
• within the time limit of 15 days imposed by Clause GC 8.3 at paragraph 2,
Doornekamp would have the right to proceed through the dispute resolution process found in GC 8. The concern is that the first point was not met. The condition precedent requiring consultation and co-operation was not satisfied.
[50] In Tower Restoration Ltd. v. Canada[^69] the contract was for a lump sum. The contractor encountered logistical issues. The court noted that the contractor should have known that by submitting a lump sum bid it would be taking on obvious and inherent financial risks. There was no suggestion that any government employee had represented that they had the authority to increase the amount payable. Change Orders could be made and eight were. A Certificate of Final Completion was issued. Thereafter the contractor made a claim for additional payment and, some weeks later, Canada delivered its “final written decision”. The decision made clear it was open to the contractor to “exercise its options under the GC.” It did not do so.
[51] On the motion for summary judgment the contractor argued that Canada had waived its contractual rights through the actions of its employees. The Court found there “was no air of reality to this argument”.
[52] In the case being decided the question of whether consultation and co-operation should have taken place before a decision was taken has more than an “air of reality.” The requirement is explained in Clause GC 8.2, part of GC 8, the general condition which deals with Dispute Resolution. It is made a condition precedent to the decision by Canada and, therefore, to the point in time when the 15 day limit begins to run. This occurs as a result of the reference to consultation and co-operation in Clause GC 8.3 at paragraph 1; the provision that spells out the requirement for a Notice of Dispute. The “air of reality” is furthered by the promises in the emails of February 25, 2016 (“give you updates”)”and March 4, 2016 (“provide you with anticipated milestones dates to get through the recommended steps”) and by the expectation of Ben Doornekamp that consultation and co-operation would be forthcoming.[^70]
[53] Elite Construction v. Canada[^71] concerned a contract to build a 96 cell unit within the Collins Bay Correctional Institution. The contractor sued for alleged delays and extra work and Canada sought summary judgment. The contractor opposed the motion. It argued that its alleged lack of notice was in dispute, that Canada had waived strict compliance of contract and that it deserved payment of various Requests for Extras (“RFEs”).[^72] In that case both parties presented extensive material on the motion. There were no material facts in dispute and although the contractor maintained that the action required a trial, it did not strongly pursue that argument at the hearing. It was on that basis that the motion judge concluded that there were no issues requiring a trial.[^73] The judge was able to and did determine all of the issues based on the record before the court. He found that:
• the contractor did not properly request an extension of time to complete the contract,
• the documents that the contractor relied on as providing notice were “problematic” in terms of compliance with applicable general condition and that it never issued a Notice of Dispute with respect to “any of the Change Orders within 15 days of their issuance”,
• with respect to waiver, the contractor had not satisfied its burden this issue placed on it. Canada had not waived its rights under the contract,
• for some of the Requests for Extras the contractor had not provided the requisite notice for the others Canada was justified in rejecting the claims,
• the claims for quantum meruit and unjust enrichment essentially because the contract was for a lump sum that provided agreement with regards to payment.
[54] In the case being decided Canada presented no evidence, except the affidavit of the uninformed legal clerk. Canada relied on the words of the contract without reference to anything other than its submission that a decision had been made and no notice of dispute had been received.
Analysis (the Doornekamp perspective)
[55] I begin by referring back to the proposition that the motion judge should have interpreted the contract and that having done so she would have been inexorably led to the dismissal of the action. As presented to this court, the parties do not disagree with the meaning of the relevant terms of the contract. The question is whether its terms were complied with and whether the attempt to answer that question leads to a genuine issue requiring a trial.
[56] What would need to be undertaken to satisfy the obligation to consult and co-operate?
[57] It would seem, as a minimum, the “open and honest communication” referred to in clause GC 8.2 paragraph 1 would be required. In the context of this situation, it could be more.
[58] Before this court, Doornekamp stepped away from the submission made to the motion judge that clause GC 8.4.3 represented a separate code designed to deal with variation in the tendered quantities. On the other hand, it cannot be ignored. Arguably, it is the first part of a continuum through which such disputes are to travel. Where such a concern arises the contractor (Doornekamp) is to continue working on the understanding that it will be paid for the work performed:
GC 6.4.3 paragraph 1
Except as provided in paragraphs 2), 3), 4) and 5) of GC 6.4.3, if it appears that the final quantity of labour, Plant and Material under a price per unit item shall exceed or be less than the estimated quantity, that Contractor shall perform the Work or supply the Plant and Material required to complete the item and payment shall be made for the actual Work performed or Plant and Material supplied at the price per unit set out in the Contract.[^74]
[59] A claim can only be made where there is an exceedance of more than 15 percent of the tendered quantity. The form of such a claim is a request for negotiation:
GC 6.4.3 paragraph 2
If the final quantity of the price per unit item exceeds the estimated tendered quantity by more than 15 percent, either party to the Contract may make a written request to the other party to negotiate an amended price per unit for that portion of the item which exceeds 115 percent of the estimated tendered quantity…^75
[Emphasis added]
[60] To assist with the negotiation, Canada could ask for certain specified information. Clause GC 6.4.3 paragraph 2 continues:
…and to facilitate approval of any amended price per unit, the Contractor shall, on request provide Canada with
a. detailed records of the actual cost to the Contractor of performing or supplying the tendered quantity for the price per unit item up to the time the negotiation was requested; and
b. the estimated unit cost of labour, Plant and Material required for the portion of the item that is in excess of 115 of the tendered quantity.^76
[61] If the negotiations do not succeed, the Contract provides a methodology to resolve the dispute:
GC 6.4.3 paragraph 3
If agreement is not reached as contemplated in paragraph 2) of GC 6.4.3, the price per unit shall be determined in accordance with GC 6.4.2. ^77
[62] Clause GC 6.4.2 bears the title and deals with “Price Determination Following Completion of Changes”. It begins:
GC 6.4.2 paragraph 1
If it is not possible to predetermine, or if there is failure to agree upon the price of the change in the Work, the price of the change shall be equal to the aggregate of
a. all reasonable and proper amounts actually expended or legally payable by the Contractor in respect of the labour, Plant and Material that fall within one of the classes of expenditure described in paragraph 2) of GC 6.4.2 that are directly attributable to the performance of the Contract;
b. an allowance for profit and all other expenditures or costs, including overhead, general administration costs, financing and interest charges, in an amount that is equal to 10 percent of the sum of the expenses referred to in subparagraph 1) (a) and 1) (b) of GC 6.4.2 calculated in accordance with GC 5.12, “Interest on Settled Claims”;
…^78
[63] The clause goes on to provide direction as to how the applicable costs are to be determined:
GC 6.4.3 paragraph 2
The cost of labour, Plant and Material referred to in subparagraph 1) (a) of GC 6.4.2 shall be limited to the following categories of expenditure:
a. payments to Subcontractors and Suppliers;
b. wages, salaries, bonuses and, if applicable, travel and lodging expenses of employees of the Contractor located at the site of the Work and that portion of wages, salaries, bonuses and, if applicable, travel and lodging expenses of personnel of the Contractor generally employed at the head office or at a general office of the Contractor provided they are actually improperly engaged on the Work under the Contract;
c. assessments payable under any statutory authority relating to workers’ compensation, employment insurance, pension plan or holidays with pay, provincial health or insurance plans, environmental reviews and Applicable Taxes collection costs;
d. rent that is paid for Plant, or an amount equivalent to the said rent if the Plant is owned by the Contractor, that is necessary for and used in the performance of the Work, if the rent or equivalent amount is reasonable and use of that Plant has been approved by Canada;
e. payments for maintaining and operating Plant necessary for and used in the performance of the Work, and payments for effecting repairs thereto that, in the opinion of Canada, are necessary for the proper performance of the Contract, other than payments for the repairs to the Plant arising out of defects existing before its allocation to the Work;
f. payments for Material that is necessary for and incorporated in the Work, or that is necessary for and consumed in the performance of the Contract;
g. payments for preparation, delivery, handling, erection, installation, inspection, protection and removal of the Plant and Material necessary for and used in the performance of the Contract; and
h. any other payments made by the Contractor with the approval of Canada that are necessary for the performance of the contract in accordance with the Contract Documents.^79
[64] Clause GC 6.4.3 and clause GC 6.4.2 deal specifically with variations to the tendered quantities. Clause GC8.3.1 deals generally with “differences” between the parties. It is a fundamental principle of interpretation of statutes and contracts that the general should not be used to overrule the specific (generalia specialibus non derogant). Where the concern is for a change to any tendered quantity, the general provision (GC 8.3.1) should only come into play after the process referred to in the specific provision (GC 6.4.3) have failed. This would demonstrate that there remains a difference or dispute between the parties.
[65] It may be that proceeding under clause GC 6.4.3 is a separate precondition that the parties are obliged to follow before resorting to clause GC 8.3.1 or that the process it outlines assists in understanding the nature of the “consultation and co-operation” required of the parties proceeding under Clause GC8.3.1 where the dispute concerns an increase in the tendered quantities. Either way, it would be required that this take place before Canada is to come to its decision. What seems clear is that in this situation, Doornekamp expected more and that Canada indicated it would do more in advance of the decision that was made.
[66] The document making the claim (the “Request for Adjustment of the Contract Time and Cost”) referred to and relied on Clause GC 6.4.2 and, in particular, to the reference to a written request to negotiate.[^80] Once it was confirmed that the document had been received, on February 24, 2016, Ben Doornekamp wrote to Atif Suhail asking, not when can we expect a decision, but rather “When can we expect feedback from PW’s”.[^81] The response was the email of February 25, 2016 promising “updates”.[^82] This led Ben Doornekamp to believe that he “would be provided with updates on the progress of our claim.”[^83] In fact, Ben Doornekamp responded by sending a further email on February 25, 2016 requesting “a list of the steps of the claim process and projected completion dates for each” of them.[^84] Having received no response he followed up with another email on March 3, 2016.[^85] In its response (the email of March 4, 2016), Canada said it would “recommend next steps” and “provide you with anticipated milestones dates to get through the recommended steps.”[^86] There is no suggestion that any updates or next steps were ever provided. The next communication from Canada was the letter of July 8, 2016, which is said to be the decision made pursuant to Clause GC 8.3.1. In its email of July 12, 2016, suggesting that the decision had failed to respond to the issues raised by the claim, Doornekamp repeated its understanding that the process expected was the one that was provided for to Clause GC 6.4.3, the clause specific to claims for increases in quantities tendered, being negotiation. The response from Canada gave no substantive evaluation, did not offer any negotiation or alternative forms of consultation or co-operation. The July 26, 2016 email from Canada simply repeats that a review had taken place and that the claim was not substantiated.
[67] To my mind the question of what is required to satisfy the condition precedent of “consultation and co-operation” raises the concern alluded to in the second of the issues identified by the motion judge as requiring a trial that is “whether Canada’s conduct…affected the rights of Doornekamp, with respect to its claim.[^87]
Analysis (Canada’s response)
[68] In her submissions counsel did attempt to respond to the proposition that there was a condition precedent to the decision of Canada being made, which in the circumstances had not been met. The issue is whether the condition precedent was satisfied. In her primary submissions, in answer to questions from the court counsel for Canada suggested that a dispute over whether there was a condition precedent and whether it had been met was itself a difference to be dealt with pursuant to Clause GC 8.3.1. In making this submission she relied on Clause GC 8.1 which deals with “Interpretation” within Clause 8, the dispute resolution provision. It begins by defining what, for the purposes of the clause is an “arbitral question of law”:
In these Dispute Resolution, an “arbitral question of law” means a question of law that
a. is capable of determination by arbitration under the laws of Canada;
b. does not involve interpretation or application of public law, including without limitation any matter of constitutional, administrative, criminal or tax law; and
c. concerns…[^88]
[69] The clause goes on to list the particular “concerns” that can be addressed as “arbitral questions of law”. Counsel referred to:
iii. the rights, disputes, obligations or remedies of parties created by or pursuant to the Contract;^89
[70] As submitted by counsel for Canada this provision would apply to the question of whether the condition precedent (consultation and co-operation) had been satisfied. As she sees it, following the receipt of the July 8, 2016 letter (the decision), Doornekamp, if it wished to rely on the failure to consult and co-operate would have been required to deliver a Notice of Dispute raising that issue and engaging the dispute resolution process as a means resolving that “difference”.
[71] The problem with this approach is not hard to see. The dispute resolution process, once engaged, takes the parties through a series of defined steps:
• first negotiation[^90], if not successful and requested through the proper notice, then
• mediation[^91] and, if that is not successful, if the “disputed issues involve issues of fact or issues of arbitral questions of law or issues of mixed fact and arbitral questions of law [Emphasis added][^92] and the proper notice is given, then
• binding arbitration.^93
[72] If this is the applicable approach to resolve the issue of whether the condition precedent of consultation and co-operation has been satisfied, it would confront the contractor with what has been colloquially referred to as a Hobson’s choice (a choice of taking what is available or nothing at all) being:
• the contractor could file a notice of dispute on the basis that the condition precedent had not been satisfied, thus acknowledging a claim could be filed in the absence of consultation and co-operation rendering the requirement to provide it meaningless
or
• in order to satisfy the condition precedent, the contractor could ask for consultation and co-operation as to whether the condition precedent had been satisfied prior to the decision of July 8, 2016. In such circumstances, Canada could, as it is alleged to have done here, “decide”, without providing any substantive response, that there had been consultation and co-operation. Doornekamp would be left to make the same request in response to that decision in what could become a continuous circle of requests for consultation and decisions made without it.
[73] If, in this situation, Dispute Resolution was engaged, the question of whether the condition precedent was satisfied would have to be negotiated and, after that, mediated and then arbitrated. It is unlikely that either party would concede its position because to do so would jeopardize the overall issue of whether the claim for additional compensation was justified. The matter would proceed through the process, at each juncture a new notice would be required to proceed to the next step, in time, taking the parties through to “Binding Arbitration”. Even then the reliance on the dispute resolution process, separate from the courts, may not be the result. Taking the last step, that is choosing to proceed from mediation to binding arbitration, is uncertain. If the dispute remains unresolved and the mediation is terminated, either party, by giving notice in writing “may require that the dispute be resolved by binding arbitration”.[^94] The functional word is “may”. There is no obligation to do so. If such a notice is not provided there will not be any arbitration.[^95] However, that is not necessarily the end of the matter. Where an arbitration does not proceed because notice was not given “either party may take such court action or proceedings as it considers appropriate, including, without limiting the foregoing, all suits that would otherwise have been immediately available to it but for the provisions of these Dispute Resolution Conditions”[^96]
[74] In her Reply submission counsel for Canada took a different tack. She submitted that there had been consultation and co-operation. What she was referring to was the claim made in April 2015, responded to in May and resolved by the issuance of Change Order 8 on June 18, 2015. If that was consultation for the claim made on February 10, 2016, why promise to provide updates, milestones and next steps. The fact remains the claim made on February 10, 2016, was different and more comprehensive than the earlier one. It was founded on the delay which could not be finally calculated until the work was complete. Dealing with a limited claim cannot double as consultation and co-operation on a larger one.
Standard of Review
[75] In Sattva the Supreme Court of Canada determined that as a general rule interpretation of contracts raises issues of mixed fact and law and is, accordingly, to be given deference. In Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co.[^97]an exception is proposed where the appeal involves the interpretation of a standard form contract:
I would recognize an exception to this Court’s holding in Sattva that contractual interpretation is a question of mixed fact and law subject to deferential review on appeal. In my view, where an appeal involves the interpretation of a standard form contract, the interpretation at issue is of precedential value, and there is no meaningful factual matrix that is specific to the parties to assist the interpretation process, this interpretation is better characterized as a question of law subject to correctness review.[^98]
[76] I repeat what was said earlier, in this circumstance, contrary to the submissions made on behalf of Canada, there is some doubt as to whether the contract involved is properly understood to be in a standard form. In Ross-Clair v. Attorney General of Canada^99 the contract was for the construction of offices within the Millhaven Institution, a correctional facility. In that case the precursor to entry into the dispute resolution process was a decision, not by Canada, but by the project engineer. A claim was made but no decision was forthcoming. The question was whether the notice was sufficient to obligate the engineer to decide. On the motion a determination was made that it was. The Court of Appeal disagreed. It found that the standard of review was correctness. In coming to that conclusion, for reasons similar to circumstances in the case being decided, it did not rely on any understanding that the contract followed a standard form:
I do not come to this conclusion based on a finding as to the nature of the Contract. Although it may be appropriate to regard the Contract as a standard form agreement, the interpretation of which is subject to review on a correctness standard, it is difficult to arrive at a definitive resolution of that question on this record. There is scant evidence of the circumstances surrounding the formation of the Contract, particularly any aspects that may have been negotiated. There is also scant evidence of the extent to which the terms in the Contract are used in other agreements with the Government of Canada. Moreover, the fact that in a previous decision, the court was required to interpret a very similar contractual provision does not provide a basis for a conclusion that the interpretive exercise in this case would have the potential precedential value that influenced the decisions in Vallieres, Precision Plating, Ledcor, and Chicago Title.[^100]
[77] Rather, as found by the Court of Appeal the decision of the lower court erred in failing to consider the contract as a whole, thus, making a fundamental error of law calling for a correctness review. Canada submits that the case being decided is one of contract interpretation. The parties agree as to the meaning of the contract provisions involved. The issue is whether the precondition of consultation and co-operation was satisfied. This requires the facts to be considered and applied to the understood meaning of the contract. This is a question of mixed fact and law and, thus, the determination of the motion judge is to be given deference. The degree of that deference is itself an issue. Housen v. Nikolaisen[^101] deals with the standard of review on appeal. Where the issue at hand is of mixed fact and law it notes:
However, where the error does not amount to an error of law, a higher standard is mandated. Where the trier of fact has considered all the evidence that the law requires him or her to consider and still comes to the wrong conclusion, then this amounts to an error of mixed law and fact and is subject to a more stringent standard of review: Southam, supra, at paras. 41 and 45. While easy to state, this distinction can be difficult in practice because matters of mixed law and fact fall along a spectrum of particularity.[^102]
[78] Where on the spectrum between “correctness” and “palpable and overriding error” any case may fall depends on the particular circumstances. If the case is specific to the facts involved such that it has no precedential value, it will tend to the deferential end of the spectrum (palpable and overriding error). If the case is more general such that it will act as a precedent, it will tend more to the correctness end.
[79] As a practical matter, in this case it does not matter where on the spectrum it falls, or, for that matter whether the standard of review should, in fact, be correctness. In this case the decision of the motion judge with respect to the determinative issue was correct. She found what follows:
Doorenkamp [sic] argues that the process of “consultation and/or operation” was incomplete at the time that Canada alleges it made a decision rejecting Doornekamp’s claim. In particular, Canada had advised on February 25, 2016 that it had "started the PWGSC claims process" and would provide updates, and, further, on March 4, 2016, that it would provide Doornekamp with "anticipated milestone dates to get through the next steps”. Relying on Canada’s correspondence, Doorenkamp [sic] submits that there was a process with a number of steps and assurances given to Mr. Doornekamp that he will be advised of those steps and their dates. The commercially reasonable way to understand the advice from Canada, in the context of the dispute then between the parties and given the contractual framework, is that Canada was proposing a process of consultation and cooperation to attempt to resolve Doornekamp Construction's claim. Pursuant to GC 8.3.1, it was not until such a process failed to result in a settlement that Canada was entitled to make a binding decision on the issue. That process not having been completed, the contractual precondition for the delivery of a binding decision was not satisfied, and Canada’s purported decisions were therefore nullities. Canada must abide by the terms of its own contract if it seeks to enforce the most draconian provisions of that contract to deny payment. I agree that such evidence does establish a genuine issue requiring a trial.[^103]
Conclusion
[80] There is a genuine issue requiring a trial. The issue is whether the obligation to consult and co-operate was satisfied such that the Dispute Resolution Clause (GC 8) in the contract between the parties was properly engaged so that the failure of Doornekamp to deliver a Notice of Dispute extinguished the Plaintiff’s right to bring a court action. On the particular facts of this case, it is not possible on a motion for summary judgment to determine whether Doornekamp’s rights under the dispute resolution clause have been extinguished. This is the question that requires a trial.
[81] Accordingly, the appeal is dismissed.
Costs
[82] The parties agree that costs of the appeal should be awarded to the successful party in the amount of $15,000.
[83] Costs for the motion for leave to appeal were fixed by the panel granting leave at $5,000. The entitlement to those costs was reserved to the panel hearing the appeal. On this, the parties disagree. Counsel for Canada, as the successful party on the motion submits it should receive those costs. Counsel for Doornekamp submits that, as the successful party on the appeal, it should be awarded those costs.
[84] Where an appeal is dismissed, after leave has been granted, costs for both the leave and the appeal are often awarded to the successful respondent, after all, in the end, there was no purpose in the appeal. In this case, while the appeal was dismissed, the decision which has been made should refine the understanding and limit the issues to be taken up by the trial.
[85] In these circumstances it is appropriate that no costs be awarded for the motion for leave to appeal.
[86] Costs of the appeal are awarded to Doornekamp, in the amount of $15,000, all inclusive.
Lederer, J.
I agree _______________________________
Stewart, J.
I agree _______________________________
Tzimas, J.
Released: April 25, 2022
[^1]: Order granting Leave to Appeal: H. R. Doornekamp Construction Ltd. v. Attorney General of Canada, Monday June 7, 2021 (Divisional Court) (Caselines B718)
[^2]: H.R. Doornekamp v. Attorney General of Canada, 2019 ONSC 3101, at paras. 2, 3, 15, 16, 17 and 21
[^3]: Ibid at para. 34
[^4]: Ibid at para. 59
[^5]: Ibid at para. 54
[^6]: Ibid at para. 57
[^7]: Affidavit of Ben Doornekamp, sworn May 11, 2018, at para. 7 (Caselines A5936) and para. 11 (Caselines A5937)
[^8]: Ibid at para. 9 (Caselines A5936)
[^9]: Ibid at para. 54 (Caselines A5948)
[^10]: Ibid at para. 55 (Caselines A5948)
[^11]: Ibid at para. 56 (Caselines A5948) and Exhibit L (Caselines A6277)
[^12]: Ibid at para. 57 (Caselines A5948) and Exhibit M (Caselines A6281)
[^13]: Ibid at para. 59 (Caselines A5949) and, respectively, Exhibit O (Caselines A6290) and Exhibit P (Caselines A6296)
[^15]: Ibid at para. 61 (Caselines A5949) and Exhibit Q (Caselines A6302)
[^16]: Ibid at para. 62 (Caselines A5949) and Exhibit R (Caselines A6306) and Change Order 8, Exhibit Book- Volume 2, T. 24 (Caselines A5823)
[^17]: Certificate of Substantial Performance, Exhibit Book-Volume 2, T. 25 (Caselines A5825)
[^18]: Request for Adjustment of the Contract Time and Cost, Exhibit Book-Volume 2, T. 26 (Caselines A5835)
[^19]: Ibid (1.0 Executive Summary) (Caselines A5837)
[^20]: Ibid (4.0 Entitlement) (Caselines A 5845)
[^21]: Ibid (4.0 Entitlement) (Caselines A5845-A5846)
[^23]: Ibid (6.3 Concrete Demolition quantity overrun) (Caselines A5849)
[^24]: Ibid (6.5 Class 1 Concrete quantity overrun) (Caselines A5849-A5850)
[^25]: Ibid (6.5 Class 1 Concrete quantity overrun) (Caselines A5850)
[^26]: Ibid (Appendix ‘C’, Summary of Concrete Deliveries) (Caselines A5868)
[^27]: Ibid (Class 1 Concrete quantity overrun) (Caselines 5850)
[^28]: Ibid (5.0 Schedule Analysis) (Caselines A5847), see also p. 523 (6.2 Extension of the Time for Completion of the Work) (Caselines A5849)
[^29]: Ibid (Schedule Analysis) (Caselines A5848)
[^32]: Ibid (6.6 Class 1 Concrete unit price adjustment (6.6.2 Compensable Delay Period)) (Caselines A5850)
[^33]: Ibid (6.4 Concrete Demolition unit price adjustment) (Caselines 5849)
[^34]: See GC. 6.4.3 para. 2: If the final quantity of the price per unit exceeds the estimated tendered quantity by more than 15 percent, either party may make a written request to the other party to negotiate an amended price per unit for that portion of the item which exceeds 115 percent of the estimated tendered quantity… (Caselines A6206)
[^35]: Request for Adjustment of the Contract Time and Cost, Exhibit Book-Volume 2, T. 26, at p. 524 (6.6 Class 1 Concrete unit price adjustment) and (6.6.1 Quantity of Class 1 Concrete eligible for price adjustment)) (Caselines A5850)
[^40]: Ibid (Caselines A5852
[^43]: Ibid (6.6.3.6 Total Incremental Costs) (Caselines A5853)
[^44]: Ibid (6.7 Summary of contract financial adjustments) (Caslines A5853)
[^46]: Respondent’s Compendium, at p. 28 (Email dated February 12, 2016 from Atif Suhail to Ben Doornekamp) (Caselines B615)
[^48]: Ibid at p. 32 (Email dated March 4, 2016, from Jean Lemire to Ben Doornekamp) (Caselines B620)
[^49]: No such assertion was made with respect to the principal claim based on increased quantities and delay.
[^50]: Respondent’s Compendium at p. 38 (Caselines B627) (Letter dated July 8, 2016, from Atif Suhail to Ben Dornekamp)
[^51]: Exhibit Book-Volume 2 at p. 556 (Letter dated July 12, 2016, from Ben Doornekamp to Atif Suhail) (Caselines A5882)
[^52]: Ibid (Letter dated July 26, 2016, from Atif Suhail to Ben Doornekamp) (Caselines A5884)
[^53]: Motion Record -Leave to Appeal – Volume 3 at p. 792 (Caselines A896
[^54]: Affidavit of Julie Tomaselli, sworn September 13, 2017 (Caselines A2699)
[^55]: Cross-examination of Julie Tomaselli, June 28, 2018 (Caselines A2683)
[^56]: Affidavit of Ben Doornekamp, sworn May 11, 2018, at Exhibit E (General Conditions) (Caselines A6217-A6218)
[^59]: Ibid While no reference was made to it by the parties, I note clause GC 1.4 “Rights and Remedies”: Except as expressly provided in the Contract, the duties and obligations imposed by the Contract and the rights and remedies available there under shall be in addition to and not a limitation of any duties, obligations, rights, and remedies otherwise imposed or available by law (Caselines A6160) At a minimum this would seem to suggest that where the parties step outside the contract, whatever rights they would otherwise have, remained.
[^61]: Factum of the Appellant at para. 64 (Caselines A6463)
[^62]: Ibid at paras. 4, 45 and 64
[^63]: Ibid at para. 61
[^65]: See fns. 80, 81 and 83 herein
[^66]: In fact, in Ross-Clair v. Canada (Attorney-General) 2016 ONCA 205 at para. 46, the Court of Appeal expressed some doubt as to whether these contracts are properly standard from contracts (see: fn. 100 herein).
[^67]: A contract of adhesion is one where the offeror provides to, what is as a general rule, a customer, a contract made up of standard terms that are identical to all who accept it. There is no opportunity to bargain. Typical examples are credit cards contracts, cell phone contracts and mortgages. In this case Canada is not the offeror. It asks for tenders. It requires certain terms but there is no contract until Canada accepts the offer of the contractor. The offeror (Doornekamp) can propose a change. If it results in a lower price to accomplish the same end, maybe it will be accepted.
[^68]: 2012 ONCA 597
[^69]: 2021 ONSC 3063
[^70]: See fns. 82-86 herein
[^71]: 2021 ONSC 562
[^72]: Ibid at para. 50
[^73]: Ibid at para. 57
[^74]: Affidavit of Ben Doornekamp, sworn May 11, 2018, at Exhibit E (General Conditions) (Caselines A6206)
[^80]: See fn. 20 herein
[^81]: Respondent’s Compendium at p. 28 (Caselines B615) (Email dated February 24, 2016 from Ben Doornekamp to Atif Suhail)
[^82]: See fn. 47 herein
[^83]: Affidavit of Ben Doorenkamp sworn April 27, 2018, at paragraph 72 (Caselines B671)
[^84]: Ibid at para.73 (Caselines B671) and Respondent’s Compendium at p. 33 (Caselines B621)
[^85]: Ibid and Respondent’s Compendium at p. 32 (Caselines B620)
[^86]: See fn. 48 herein
[^87]: H.R. Doornekamp v. Attorney General of Canada, supra (fn. 2) at para. 54 and see para. 34
[^88]: Affidavit of Ben Doornekamp, sworn May 11, 2018, at Exhibit E (General Conditions) (Caselines A6217)
[^90]: Ibid (Clause GC8. Negotiation) (Caselines A6218)
[^91]: Ibid (Clause GC.8.5 Mediation) (Caselines A6219)
[^92]: Ibid (Clause GC 8.6 Binding Arbitration), in particular, GC 8.6 at paragraph 1b.
[^94]: Ibid (Clause GC 8.6 at paragraph 1) (Caselines A6220)
[^95]: Clause (GC 8.6 at paragraph 3) Caselines A6220)
[^96]: Ibid (Clause GC 8.7 at paragraph 1) (Caselines A6220)
[^97]: 2016 SCC 37, [2016] 2 SCR 2, 19 Admin LR (6th) 1, 19 Admin LR (6th) 1, [2016] 10 WWR 419, 404 DLR (4th) 25
[^98]: Ibid at para. 24
[^100]: Ibid at para.46
[^101]: 2002 SCC 33, [2002] 2 SCR 235, 112 ACWS (3d) 991, [2002] 7 WWR 1, 211 DLR (4th) 577
[^102]: Ibid at para. 28
[^103]: H.R. Doornekamp v. Attorney General of Canada, supra (fn. 2) at para. 34