Executive Summary: Key Legal and Evidentiary Issues

• Ambiguity in the supplier agreement’s third-party verification clause raised questions about whether RMC could dispute invoice quantities after 60 days.

• Chambers judge found the agreement unambiguous and excluded extrinsic evidence; the Court of Appeal disagreed and found the clause open to multiple interpretations.

• Key affidavit evidence submitted by RMC was excluded by the chambers judge based on procedural grounds and the parol evidence rule.

• The appellate court found exclusion of the second Burak affidavit was incorrect and not contrary to the litigation schedule.

• The chambers judge's conclusion that RMC’s verification rights had expired was based on an erroneous interpretation of the contract.

• Appeal allowed and matter remitted to the Court of King’s Bench for a new hearing on whether the invoices are payable and whether RMC has a valid set-off claim.

Background and commercial relationship

RMC Construction Materials Ltd. (RMC) and RBee Aggregate Consulting Ltd. (RBee) entered into a supplier agreement on May 7, 2018. Under the agreement, RBee was to deliver washed and crushed aggregate to a stockpile at a BC Hydro worksite, and RMC would pay upon invoicing. Between May 2018 and September 2021, RBee issued approximately 35 invoices, all of which were paid by RMC.

Between September and December 2021, RBee issued three additional invoices to RMC totaling $4,485,480.64. RMC refused to pay, asserting that RBee overbilled and failed to deliver the invoiced volume of aggregate. RMC claimed a set-off of over $7 million for alleged overbilling during the term of the agreement.

On March 11, 2022, FTI Consulting Canada Inc. was appointed as receiver for RBee’s property. The receiver applied for a court order declaring the invoices due and directing RMC to pay $4,485,480.64 plus interest. RMC opposed the application based on its set-off claim.

Policy terms and disputed provisions

At the center of the dispute was paragraph 5 of the agreement, which addressed payment and verification. It stated that “All payments from [RMC] to [RBee] will be subject to third-party verification... within sixty (60) days of delivery,” and RBee’s entitlement to payment would be “based on such verification.” Paragraph 9 dealt with product delivery and risk of loss at the stockpile delivery point.

The chambers judge found this language unambiguous. She concluded that RMC’s rights to dispute invoices had expired because it failed to conduct the third-party verification within 60 days of delivery. The judge held that RBee did not have to prove the volume delivered, and that RMC could no longer challenge the invoiced quantities.

The Alberta Court of Appeal found that paragraph 5 was ambiguous. It held that the clause could reasonably be interpreted in more than one way—for example, as a timing requirement for payment but not a waiver of dispute rights. The Court noted that nothing in the agreement expressly barred later challenges or set out consequences for not verifying within the time limit.

Evidentiary error and procedural fairness

RMC submitted a second affidavit from Nicholas Burak, its Vice-President and Chief Financial Officer, addressing industry practice and invoice verification. The chambers judge excluded this affidavit, citing the parol evidence rule, case-splitting, and that Mr. Burak was not qualified as an expert.

The appellate court held that the affidavit should have been admitted. It found the agreement was ambiguous and therefore open to clarification by extrinsic evidence, including industry practice. The Court also ruled that the affidavit complied with the litigation schedule, was not case-splitting, and did not require Mr. Burak to be qualified as an expert because he was testifying based on personal experience over 12 years with RMC.

Final disposition

The Alberta Court of Appeal allowed the appeal and remitted the matter for a new hearing at the Court of King’s Bench to determine whether RMC owes the invoiced amounts and whether its set-off claim is valid. The Court also held that the costs of the appeal should follow the ultimate outcome of the new hearing.

No final ruling on payment, set-off, or costs has been made yet. The appeal succeeded procedurally, but the substantive financial issues remain unresolved pending rehearing.