Executive Summary: Key Legal and Evidentiary Issues

• The Supreme Court of British Columbia issued two related decisions in this construction dispute: a trial judgment (2026 BCSC 1115) and reasons on a voir dire (2026 BCSC 1229), both released July 3, 2026.
   
• Interpretation of a guaranteed maximum price (GMP) clause in a CCDC 5B construction management contract formed the central issue at trial.
   
• Rectification of the contract was granted to reflect the parties' agreement that owner-paid third-party costs would count toward the $1.5 million GMP.
   
• Whether the defendant validly terminated the contract for repudiation, or whether it was the defendant who breached the agreement, required the court to review numerous alleged instances of misconduct individually and cumulatively.
   
• Adverse inferences were drawn against the defendant for failing to call two witnesses with material knowledge of the project's history.
   
• On the voir dire, the admissibility of a chain of "without prejudice" emails was contested on the basis of settlement privilege and a pre-trial agreement between counsel to exclude them.
   

Facts of the case

Kinsol Timber Systems Ltd. (the plaintiff, acting as construction manager) and Oliphant Properties Inc. (the defendant, the owner) entered into a CCDC 5B contract on March 28, 2018, for construction of a high-end floating lodge at the defendant's Nimmo Bay Resort in British Columbia. The contract contained a GMP clause guaranteeing that the combined price of services and work would not exceed $1.5 million, with any excess to be absorbed by the plaintiff. Design responsibility rested largely with Sarah Davies-Long, a designer retained by the defendant's principals, whose delays in producing architectural and interior plans repeatedly disrupted budgeting and scheduling throughout 2018 and 2019. As costs rose—reaching a projected $1.9 million in a July 2019 budget estimate—the defendant terminated the contract by letter dated August 8, 2019, alleging the plaintiff had repudiated it by failing to complete the lodge within the GMP, within the agreed schedule, and in accordance with the contract generally. The plaintiff disputed the termination and sued to recover unpaid invoices, while the defendant counterclaimed for damages representing the difference between the GMP and its actual cost to complete the project through a replacement contractor, Story Construction. During the seven-week trial, a separate voir dire arose concerning the admissibility of an email exchange between July 17 and July 31, 2019, which the defendant sought to introduce in re-examination of its witness, Ms. Murray, and which the plaintiff argued was inadmissible settlement communication.

Policy and legislative provisions at issue

The GMP clause, set out in Article A-8.2 of the contract, provided that "[t]he sum of Price of the Services and the Price of Work will not to exceed $1,500,000" and that any amount in excess "will be paid by Construction Manager without reimbursement by the owner." Article A-8.3.1 reiterated this obligation at the project's conclusion. Article A-7.1 defined "cost of the work" as the actual costs incurred by the construction manager in performing the work—a definition the court ultimately rectified to also capture payments made directly by the owner to third parties. The termination provisions at GC 7.1.2 and GC 7.1.4 governed notice requirements where the construction manager neglected to prosecute the work properly, permitting the owner to demand correction within five working days before terminating for an uncured default. Article A-3 addressed phased confirmation of cost and schedule, and Article A-5 set out the construction manager's fee structure. On the voir dire, the governing principle was settlement privilege, which the court described, citing Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, as serving the public interest in encouraging the resolution of disputes.

Reasoning and analysis

The court first addressed the defendant's failure to call Fraser Murray and Ms. Davies-Long as witnesses, drawing an adverse inference against the defendant given their close involvement in the project and the absence of any explanation for not calling them. Turning to the GMP clause, the court found its language unambiguous: the plaintiff had guaranteed completion for no more than $1.5 million and bore responsibility for any overage. However, the court accepted the defendant's rectification claim, concluding that the written contract failed to record the parties' pre-signing understanding that costs paid directly by the defendant to third parties—such as the $430,000 float—would still count toward the GMP; the contract was rectified accordingly. The court rejected the plaintiff's argument that the defendant's termination was invalid for failure to comply with the notice-and-cure procedure in GC 7.1.2, holding that this clause operated "without prejudice" to the defendant's separate common-law right to terminate for repudiation. On the substance of the repudiation claim, the court found that the plaintiff's July 2019 budget estimate of $1.9 million was not a demand for payment above the GMP and did not constitute a breach, since the plaintiff remained contractually obligated to absorb any overage. The court then reviewed each of the eleven specific acts the defendant relied on as cumulatively evincing repudiation—including alleged overbilling, scheduling misrepresentations, delay in securing a float builder, and an alleged threat to "cut the Lodge loose"—and found that none, individually or together, demonstrated a clear and unequivocal intention by the plaintiff not to be bound by the contract. The court was critical of the reliability of Ms. Murray's testimony on several points, including a contested invoice for an item variously described as a generator and an outboard motor. On the voir dire, the court declined to admit the July 2019 email chain, finding that settlement privilege applied, that no recognized exception (as discussed in Livingston v. I.M.W. Industries Ltd., 2015 BCSC 1627) was engaged since the communications did not contain clear inconsistent admissions, and that the defendant's attempt to resile from a pre-trial agreement between counsel to exclude the documents came too late in the proceeding to be permitted.

Ruling and overall outcome

The court dismissed the defendant's counterclaim in its entirety, finding no repudiation or fundamental breach by the plaintiff, Kinsol Timber Systems Ltd. Judgment was granted in the plaintiff's favour for its unpaid invoices, with the source document identifying the amount owed at the time of termination as $228,111.98, and the final judgment sum, after adjustments for expenses paid by the defendant, as $228,111.90. Interest was to be added at the rate specified in Clause 9.3 of the contract, with any dispute over the interest calculation to be referred to the Registrar for an accounting. Costs were awarded to the plaintiff at Scale B, absent submissions from either party within 30 days. In the companion voir dire ruling (2026 BCSC 1229), the defendant's application to admit the July 2019 email correspondence was dismissed, preserving the exclusion of those communications from the trial record.