Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of contract provisions regarding fee adjustments, change orders, and delay claims under a CCDC-3 construction contract.

• Assessment of whether project delays and increased costs were attributable to the contractor or the owners.

• Determination of the contractor’s entitlement to additional fees, staff costs, and interest for work performed beyond the original scope and schedule.

• Evaluation of the owners’ counterclaims for damages due to construction deficiencies, particularly non-compliant stairs.

• Application of legal principles for awarding remediation versus nominal damages in construction defect cases.

• Calculation and allocation of costs, interest, and outstanding payments based on contract terms and the parties’ conduct.

Background and facts of the case

PCL Constructors Canada Inc. (“PCL”) entered into a standard form CCDC-3 (1998) cost plus contract with the Town of Truro and the Municipality of the County of Colchester (the “Owners”) to construct the Rath Eastlink Community Center (“RECC”), a large community multisport complex. The project, initially budgeted at $30 million, ultimately cost over $48 million due to numerous changes and extensions. The contract included provisions for adjusting the contractor’s fee in the event of increased scope, extended schedules, or budget overruns. PCL was selected as general contractor and construction manager, and the Owners jointly funded and now operate the facility.

During construction, PCL submitted hundreds of requests for information and change orders, many of which increased the project’s budget and altered the schedule. The project was completed in phases, with substantial completion occurring months later than initially planned. PCL claimed entitlement to additional fees and staff costs due to the increased scope and delayed completion, while the Owners argued that delays and deficiencies were PCL’s responsibility and counterclaimed for damages, including the cost to remediate non-compliant stairs in the facility.

Procedural history and contract terms at issue

The contract, signed in 2012 but effective from 2009, incorporated PCL’s proposal, which set out mechanisms for adjusting fees in the event of increased scope, extended schedules, or budget overruns. The contract allowed for a 10% mark-up and 5% fee on construction costs exceeding the base budget, subject to certain conditions. Disputes arose over whether PCL properly notified the Owners of delays and whether the Owners’ requested changes justified additional fees. The Owners also sought damages for construction deficiencies, particularly stairs that did not comply with the National Building Code of Canada (NBCC).

Analysis of the parties’ claims and legal principles applied

The court reviewed the contract’s provisions, the parties’ conduct, and the evidence regarding delays, change orders, and additional costs. It found that PCL was entitled to additional fees and staff costs for work performed beyond the original scope, except for certain periods where delay claims were not properly advanced. The court denied PCL’s claims for certain subcontractor invoices and two smaller amounts due to insufficient evidence. The Owners’ counterclaim for remediation damages related to the stairs was addressed by applying legal principles distinguishing between technical breaches and deficiencies impacting safety or usability. The court found that, while the stairs were not NBCC-compliant, they were safe and functional, and remediation damages would be disproportionate. Instead, the Owners were awarded nominal damages to cover the cost of installing handrails and signage.

Discussion of policy terms and clauses at issue

Key contract clauses included provisions for fee adjustments (Article 5 and Appendix C), cost of the work (Article A-4), and procedures for change orders and delay claims (GC 6.2 and GC 6.5). The contract also specified interest on unpaid amounts and outlined the process for progress payments. The court emphasized that both parties had agreed to these terms and that sophisticated parties are generally held to their contractual bargains.

Ruling and overall outcome

The court ruled in favor of PCL Constructors Canada Inc., awarding them an additional contractor’s fee of $1,158,087.91, an outstanding cheque amount of $120,096.63, and staff costs of $751,665.00 (excluding a specific period), plus interest as set out in the contract. The Owners were awarded nominal damages for the stair deficiency, with the amount to be determined based on the cost of installing handrails and signage. PCL was declared the successful party and is entitled to costs, subject to further submissions if the parties cannot agree. The total monetary award in favor of PCL is $1,158,087.91 (additional fee) + $120,096.63 (cheque) + $751,665.00 (staff costs, with some exclusions) + interest and costs, while the Owners’ nominal damages remain to be determined.