Executive Summary: Key Legal and Evidentiary Issues

• Reliance Construction terminated its construction management contract with Akelius Montreal "for cause" and claimed $2,472,388.80 in damages for past and future losses.
• The central issue was whether Reliance was entitled to terminate under Quebec's résiliation-sanction (termination for cause) regime in articles 1590 and 1604 C.c.Q.
• Akelius's alleged failures included not providing timely information and approvals on project requirements and not paying invoices totalling $510,587.04.
• The Court found the alleged breaches were not substantial enough to justify termination and that Reliance failed to put Akelius in default in a timely manner.
• Evidence showed Reliance tolerated the delays and changes without invoking the contract's modification clause (6.5.1) or its termination clauses (7.2.3 to 7.2.5), and its June 23, 2020 demand letter appeared to be a mere formality.
• On damages, examined in obiter, the Court would have allowed the unpaid invoice balance (reduced by $4,900) and the lost-profits claim, but would have rejected the loss-of-business-opportunities claim.

Facts of the case

Akelius Montreal Ltd., a company that owns and manages rental properties, decided in June 2018 to fully renovate a Montreal building containing 264 apartments over 20 storeys with underground parking. On December 21, 2018, it retained Reliance Construction of Canada Ltd. as construction manager for the project, whose total cost was in the tens of millions of dollars. Reliance began rendering services in January 2019 before any contract was signed, started installing a hoist on May 27, 2019, and demolition work began in June 2019. The parties signed a "Construction Management Contract for Services and Construction" of the CCDC 5B type, executed by Akelius on June 27, 2019 and by Reliance on June 29, 2019, even though the architectural plans prepared by the firm Aedifica had not yet been approved by Akelius's European head office. A preliminary construction schedule attached to the contract indicated completion by May 19, 2021. On July 2, 2019, Akelius informed Reliance that its parent company had revised the interior layout, requiring larger minimum apartment sizes, which reduced the number of units and required new plans. Further delays followed, including a three-month wait (June 25 to September 20, 2019) for the parent company's approval of new sketches. On February 26, 2020, Akelius told Reliance the project had to be modified to substantially reduce costs, and works were to be suspended around March 15, 2020. On March 23, 2020, the Quebec government announced the closure of construction sites effective March 25, 2020 due to the COVID-19 pandemic. After unsuccessful discussions on restarting the project, Reliance published a legal hypothec on May 29, 2020 and a notice of exercise of a hypothecary right on June 22, 2020, sent a demand letter on June 23, 2020 giving Akelius five days to cure the alleged defaults, and terminated the contract "for cause" on July 3, 2020. On September 3, 2020, Reliance sued for $2,472,388.80, comprising $64,469.30 as the unpaid balance of an invoice, $1,170,635 for profits it would have earned had the project been completed, and $1,237,284 for lost business opportunities.

Policy terms and contractual clauses at issue

Clauses 5.3 and 5.4 of the contract set Reliance's fees, including a 3% fee on the Cost of the Work, weekly personnel rates subject to annual revision, and reimbursable expenses, with a preliminary works budget of $42,601,028 before profits and administration. The contract also contained clause 6.5.1, allowing modification of contract terms in case of delay, and termination clauses 7.2.3, 7.2.4 and 7.2.5. In its demand letter, Reliance invoked clause 5.4.7 of the general conditions, concerning payment of instalments for the work, and clauses 2.1.1(1), (2) and (9) of the general conditions, concerning the owner's responsibilities. Under article 2.1(1), (2) and (9) of the general conditions, Akelius was obliged to provide Reliance in a timely fashion with the information and approvals needed regarding project requirements, to review documents submitted by Reliance and communicate its decisions promptly, and to coordinate and facilitate the services of Reliance and the professionals it had engaged — obligations the Court noted also flow from the general duty of good-faith collaboration between contracting parties.

The court's reasoning and analysis

Justice Simon Chamberland of the Quebec Superior Court explained that the Civil Code of Québec provides two termination regimes for service and construction contracts: termination for cause (résiliation-sanction) under the general law (articles 1590 and 1604 C.c.Q.) and unilateral termination without cause (articles 2125 and 2126 C.c.Q.). Reliance invoked the for-cause regime, which requires a non-performance of an obligation that is not of minor importance, without justification by the debtor, preceded by a demand letter given in time to allow the debtor to correct the situation. On the first category of alleged breaches — failure to provide timely information and approvals — the Court accepted that the project's execution was not without difficulties and that Akelius's conduct could even be considered deficient, particularly the changes to unit sizes and total cost that caused regrettable delays. Those failings, however, were not important enough to justify termination. Reliance was informed at all times of the changes and their impacts, never put Akelius in default without delay, and did not invoke clause 6.5.1 or clauses 7.2.3 to 7.2.5; instead it let Akelius proceed without suggesting the collaboration was in peril, first raising a potential claim only on April 16, 2020, and its June 23, 2020 demand letter appeared to be transmitted merely for form, referring to past events Akelius could no longer correct. By not acting sooner, Reliance tacitly accepted the situation. On the second category — the alleged failure to pay invoices totalling $510,587.04 dated March 31, April 30 and May 29, 2020 — the Court found the non-payment was rather a pretext for terminating the contract: Akelius never refused to pay, the invoices were under discussion, the 10% contractual holdback was offered against final subcontractor releases, one invoice included roughly $50,000 in A.D. Prévost cancellation fees Akelius said it never consented to, and another billed a $5,000 lump sum instead of the contractual 3% fee. For completeness, the Court commented on damages notwithstanding its conclusion: the $64,469.30 unpaid-invoice claim was proven, though it would have been reduced by $4,900 because the subcontractor Jamco was eventually paid by Akelius; the $1,170,635 lost-profits claim, supported by a J.S. Held ULC expert report, would have been accepted, the Court finding on the balance of probabilities that the project's total cost would have been at least $42,601,028 and drawing a negative inference from Akelius's failure to prove the actual completion cost; but the $1,237,284 lost-business-opportunities claim would have been rejected due to weak evidence of refused projects, methodological limits in the absence of post-2020 data, and the risk of double compensation with the lost-profits claim.

Ruling and overall outcome

In its judgment dated July 6, 2026, the Court concluded that Reliance's claim was unfounded because the circumstances did not permit it to terminate the contract under the résiliation-sanction regime. The Tribunal dismissed Reliance's originating application, ordered the striking of the legal hypothec published on May 29, 2020 (number 25 414 985) and of the notice of exercise of a hypothecary right published on June 22, 2020 (number 25 496 075) from the Quebec Land Register for the registration division of Montréal, the whole with legal costs. Akelius Montreal Ltd. was therefore the successful party; no damages were awarded to either side, and while legal costs were granted in Akelius's favour, the decision does not specify their amount.