Executive Summary: Key Legal and Evidentiary Issues

• CIMIC Morningstar Investment Ltd. sought leave to appeal an arbitral award of $6,470,275 plus costs and interest in favour of Chandos Construction Ltd. arising from a construction delay dispute.

• The arbitrator found that much of the delay was attributable to design changes for which CIMIC, as the property owner, bore responsibility.

• Chandos was found to have complied with contractual notice requirements for delay claims, and the arbitrator applied promissory estoppel against CIMIC's reliance on "zero day" change order forms.

• Application of the prevention principle barred CIMIC from enforcing liquidated damages because owner-caused interference prevented timely project completion.

• All four proposed grounds of appeal were determined to be questions of mixed fact and law rather than pure questions of law, making them ineligible for appeal under s. 59 of the Arbitration Act.

• Both the leave to appeal application and the stay of execution application were dismissed by the Court of Appeal.

Background and contractual arrangement

CIMIC Morningstar Investment Ltd. is the owner of a property in White Rock on which it sought to construct a four-storey mixed-use building. In its final iteration, the first storey was designed for use by a church organization, the upper three storeys were intended to be private senior care housing, and the building was to have one level of underground parking. The project initially began under a different general contractor, Kerkhoff Construction, which handled the excavation and shoring work under a CCDC-5 delivery model.

Chandos Construction Ltd. was subsequently invited to bid on the second phase, at which point the project transitioned to a CCDC-2, fixed price delivery model. Under this "design-bid-build" arrangement, the "build" scope was separate from the "design" scope, and the contractor had control over the means and methods for completion of the work. Chandos made a successful bid and entered into a contract with CIMIC on 23 October 2020. The contract provided that Chandos was to take over as the general contractor on 28 October 2020, and the work was to be substantially complete by 31 May 2022, at a fixed price of $20,245,000 plus taxes, subject to adjustments as provided for under the contract.

The delay dispute and arbitration proceedings

The arrangement between CIMIC and Chandos ultimately fell apart due to delay in completion of the project, with each party blaming the other. CIMIC took the position that Chandos was at fault, based on poor execution of its responsibilities under the contract. Chandos took the position that the delay was design related, alleging that the delay was primarily caused by a deficient and ever-changing design for the project. CIMIC alleged that Chandos failed in its planning, scheduling and management of the work.

The matter proceeded to arbitration, where the central issue was responsibility for delay in completion of the project. In a partial award released on 8 August 2025, the arbitrator awarded Chandos damages of some $7,018,000, for failure to make progress payments, failure to release holdbacks, delay and financing costs, plus interest and costs. In a final award released on 18 September 2025, the arbitrator adjusted the total amount of damages to $6,470,275, plus costs of $1,621,852. The amount of interest due as of the date of the final award was $1,013,317.

In the partial award decision, the arbitrator largely agreed with the position advanced by Chandos. She found that construction was delayed by acts or omissions of CIMIC and its agents. The arbitrator noted that CIMIC's own expert found CIMIC caused at least 49 days of delay, which prevented Chandos from completing the project on time. Over the course of the project, CIMIC issued hundreds of discreet design changes and added over $2.7 million worth of extra work. The arbitrator also noted that CIMIC continued to order changes and extra work even after the completion date specified in the contract. The expert reports furnished by both parties concluded that Chandos was entitled to a substantial extension of time.

Contractual notice requirements and compliance

A significant issue in the arbitration concerned whether Chandos had complied with the contractual notice requirements for delay claims. CIMIC relied on term 6.5.4 of the contract, which provided that no extension shall be made for delay unless Notice in Writing of the cause of delay is given to the Consultant not later than 10 Working Days after commencement of the delay. CIMIC argued that many of the delays identified by Chandos flowed from issues in the first year of the project, and that Chandos did not provide CIMIC with timely notice in writing of these issues and associated delay. CIMIC also argued that Chandos' subsequent delay notices contained insufficient supporting detail and documentation.

Chandos' position was that it did not issue a formal notice of delay until more than one year into the project because it was not until this point that the "float" was used up and "critical path" delay was evident. The arbitrator found that it was not until October 2021 that float had been used up such that critical path was impacted. The arbitrator reviewed the correspondence between the parties leading up to the first formal notice of delay, finding that in the preceding weeks, Chandos had repeatedly warned that design issues were creating a risk of delay. She found that Chandos issued four formal delay notices before making its first formal delay claim on 3 February 2022. She reviewed the multiple subsequent delay notices and updates to the delay claim, and the supporting documentation. The arbitrator found that, in addition to this documentation, there were several in-person meetings between the parties for the sole purpose of discussing Chandos' delay claims.

The arbitrator reviewed the law on sufficiency of notice, holding that courts in British Columbia have applied a purposive test to determine whether a party had sufficient information available to it to understand that there was a delay or that a claim would be made. She concluded that the information provided by Chandos complied with the contractual notice requirements, and therefore dismissed CIMIC's argument that the delay claims failed due to lack of proper notice.

The change order forms and promissory estoppel

CIMIC argued before the arbitrator that Chandos' delay claim failed because it had executed written "change order" forms stating that there were "zero" days of delay associated with various steps in the construction. CIMIC pointed to terms 6.2.1 and 6.2.2 of the contract. The arbitrator found that CIMIC's consultant prepared a change order template used throughout the project. She found that of the 134 change orders executed and implemented, 121 stated that the contract time was increased by zero working days, and 13 indicated that adjustment to contract time was "to be determined", or words to that effect.

Chandos presented evidence that it had been told by CIMIC's consultant and representatives not to claim specific time extensions within change orders, and instead to advance a global delay claim at a later time. CIMIC denied these allegations. Relying on contemporaneous project documentation and facts that were mutually recalled by the witnesses, the arbitrator found in favour of Chandos. She determined that by the time Chandos started to sign change orders indicating zero days of delay, it had already submitted its global delay claim which sought an extension for the same change orders. The parties engaged in lengthy negotiations about the evaluation of the delay claim, and CIMIC engaged a consultant to assist in reviewing and evaluating the cost and delay claims presented by Chandos. The arbitrator found that if CIMIC genuinely believed that the "zero days" notation on the change orders were binding, it would have advanced this position in these negotiations.

The arbitrator relied on contemporaneous records to conclude that both parties were proceeding on the understanding that Chandos was not claiming for extension or delay costs within the change order process and was instead pursuing those issues through the delay claims it was providing to CIMIC. She found that in reliance on CIMIC's assurances that its delay claims were being fairly evaluated, Chandos signed off on change orders indicating zero days of additional delay.

The arbitrator went on to consider the elements of estoppel as set out in Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, under which (a) the parties must be in a legal relationship at the time of the promise or assurance, (b) the promise or assurance must have been intended to affect that relationship and to be acted upon, and (c) the other party must have relied upon the promise or assurance. Applying that test, the arbitrator concluded that CIMIC assured Chandos that its delay claim would be evaluated separately, Chandos relied on CIMIC's assurance when it signed change orders during the project, and accordingly the doctrine of promissory estoppel prevents CIMIC from strictly relying on the time extensions as stated in the change orders.

The prevention principle and liquidated damages

The contract set 31 May 2022 as the substantial completion date for the project. The parties also agreed to a supplementary contract term 3.5.3, which provided that no less than eight months before the anticipated occupancy permit date, Chandos was to give notice of the "exact week" of the expected occupancy; if the work was not finished by that date, CIMIC would be entitled to deduct $5,000 per day for the first 30 days of delay, and $7,000 per day for any subsequent delay.

After reviewing the project timeline in considerable detail, the arbitrator concluded that CIMIC was not entitled to withhold payment under the liquidated damages provision because CIMIC was the cause of delay that prevented Chandos from completing on time. The arbitrator relied on the prevention principle, holding that where the fixed completion date is lost due to owner interference, the owner cannot enforce liquidated damages for delay. She cited Perini Pacific Ltd. v. Greater Vancouver Sewerage and Drainage District (1966), 57 D.L.R. (2d) 307, for the principle that where both contractor and owner cause delay, the owner cannot enforce a liquidated damages clause for the period of contractor-caused delay.

The arbitrator found that time had been "put at large" on the project due to CIMIC's design changes, which she found to have a real and material impact on Chandos' performance, and due to CIMIC's refusal to grant an extension. She also considered CIMIC's arguments that it was entitled to insist on compliance with the contract time extension mechanism without putting time at large, and that Chandos' failure to meet its contractual notice requirement prevented the granting of an extension. She rejected these arguments, finding that Chandos went to great effort to seek a time extension once it became apparent that the critical path was impacted, and CIMIC refused to grant such an extension. In support of her conclusion, the arbitrator cited Kei-Ron Holdings Ltd. v. Coquihalla Motor Inn Ltd. (1996), 29 C.L.R. (2d) 9, which similarly assessed the availability of liquidated damages where an owner refused to grant an extension.

The appeal application and court's analysis

CIMIC applied to the British Columbia Court of Appeal for leave to appeal under section 59 of the Arbitration Act, S.B.C. 2020, c. 2, advancing four proposed grounds of appeal framed as errors of law. CIMIC also sought a stay of execution of the arbitral award pending the hearing of the appeal. The Court, per Justice Riley, conducted a thorough analysis of each ground.

Regarding the first ground of appeal concerning interpretation of the contractual notice provision, the Court found CIMIC's characterization of this issue as a question of law unconvincing. The arbitrator expressly considered the notice requirement in term 6.5.4 of the contract and acknowledged the requirement for written notice of delay, finding that the notice requirement was satisfied. The Court determined that CIMIC's complaint was not about the arbitrator's interpretation of the notice requirement but was, in reality, a challenge to the arbitrator's determination that the contractual notice requirement was satisfied. This constituted, at best, a question of mixed fact and law, which is not amenable to appeal under s. 59 of the Arbitration Act.

On the second ground of appeal concerning promissory estoppel, the Court did not accept CIMIC's position that the arbitrator's failure to use the phrase "clear and unequivocal" in her reasons is properly framed as a question of law. The arbitrator consulted Trial Lawyers Association for its discussion of the legal test for promissory estoppel and was not required to recite every legal phrase or concept discussed in the case law. The Court found there was no indication in the arbitrator's reasons that she misdirected herself or applied the wrong legal test. The Court agreed with Chandos that CIMIC's promissory estoppel argument, although framed as a question of law in an effort to meet the test for leave to appeal, is, in reality, a complaint about how the arbitrator applied the legal test for promissory estoppel to the facts of the case.

Concerning the third ground of appeal relating to the prevention principle, the Court took the view that the arbitrator's application of the prevention principle turned heavily on four findings of fact, or mixed fact and law: (i) CIMIC was responsible for significant portions of delay, (ii) Chandos fulfilled the notice requirements so as to engage the extension provisions in the contract, (iii) Chandos was entitled to a significant extension, and (iv) CIMIC refused to grant the extension. The Court agreed with Chandos that merely including a time extension clause in the contract does not bar the application of the prevention principle. The Court noted that there is no absolute rule that the mere existence of an extension clause ousts the prevention principle; rather, the prevention principle may be ousted, depending on the interpretation of the particular extension clause, and the tribunal's findings of fact as to whether the circumstances are brought within its application.

As for the fourth ground of appeal concerning alleged misapprehension of evidence regarding mechanical and electrical rough-ins in the baseline schedule, the Court found this was a challenge to the arbitrator's weighing of the evidence, not a question of law. The arbitrator had preferred the evidence of Chandos' senior project manager, who gave firsthand evidence explaining that the M&E rough-ins were included in the baseline schedule, under the classification of interior finishes.

Ruling and outcome

Justice Riley dismissed CIMIC's application for leave to appeal on January 7, 2026, concluding that none of the four proposed grounds raised questions of law as required under section 59 of the Arbitration Act. In the alternative, the Court found that even if any of the proposed grounds of appeal do involve questions of law, they do not meet the requirements of s. 59(4)(a), (b), or (c) of the Arbitration Act. Regarding significance, the Court found that with respect to the first, second, and fourth grounds of appeal, given their case-specific nature, none of them are matters of importance to any particular class of persons or to the public. With respect to the third ground regarding the prevention principle, the Court determined that the arbitrator's application of that principle turned heavily on her factual findings about the conduct of the parties in relation to notice and the contract extension process, and therefore saw nothing of general importance to the construction industry arising from the arbitrator's treatment of the prevention principle.

The stay of execution application was also dismissed, as there was no basis to grant a stay without leave to appeal. Consequently, Chandos Construction Ltd. prevailed as the successful party, entitled to enforce the arbitral award of $6,470,275 in damages, $1,621,852 in costs, and $1,013,317 in interest as of the date of the final award.