Canada: Final Certificate Of Payment – Final No More

Last Updated: June 13 2014
Article by Roy Nieuwenburg, Michal Jaworski and Cheryl Kornder

BC Supreme Court declines to apply final payment certificate release to deny previously unstated claim for interest on late payments

BC Supreme Court decision in First Queensborough Shopping Centres Limited v Wales McLelland Construction Company (1988) Ltd.

Paying invoices late is common—so much so that paying 'on time' is a mark of an exceptional business relationship. Of course, that flies in the face of almost all construction contracts, because they normally require prompt payment and impose interest on late payments. So, to put it another way, it is normal (but not optimal) for those owed money to allow some leeway on the timing of bill payments. This is especially so when demanding prompt payment and charging interest on outstanding bills may put you on "the blacklist".

At some point, however, it's reasonable for a contractor or consultant to say "enough is enough", and demand not only prompt payment, but the interest that has accrued.

While such a demand made in the course of the performance of a contract is clearly contemplated (and therefore permitted) in most CCA and CCDC standard forms, what happens if a contractor waits until after the final payment is certified to make its claim for interest? Isn't the contractor supposed to prepare a final certificate of payment, and once it is certified, isn't that supposed to waive and release the Owner from all claims against the Owner?

In the recent First Queensborough v. Wales McLelland case, the BC Supreme Court heard and accepted the contractor's argument that, such an "end of project" cross release provision contained in the CCA–14 did not prevent the contractor from claiming interest that accrued during the performance of the contract – even though the contractor had not made a claim for such interest in any progress draw, nor the final certificate of payment.

Summary of the case

The Owner, First Queensborough Shopping Centres, hired Wales McLelland as Design Builder pursuant to a CCA–14 Design Build contract. The Owner consistently made progress payments late, and made the final payment late. The Contract provided for interest to be paid at prime + 1% on late payments.

The Contract said, when the Design Building considers that total performance of the work has been achieved, the Design Builder must submit an application for final payment to the payment certifier. Once that final certificate for payment is certified, the Contract said "the Design Builder expressly waives and releases the Owner from all claims against the Owner... except those made in writing prior to the Design Builders application for final payment and still unsettled".

The Design Builder did not claim interest at the time of making its application for final payment, and in fact, entered into 13 additional contracts with the Owner. A few years later, likely because of the Owner's continued practice of paying invoices late and quickly elapsing limitation periods, the Design Builder came back to claim the interest on this Contract (which will, presumably, settle the issue on the other 13).

The Owner relied on the release provision to settle the matter.

The matter was heard first in small claims court. There, the judge ruled that the release provision should not apply in the circumstances. The Owner appealed to the BC Supreme Court.

The BC Supreme Court's reasons

Three fundamental rules of contractual interpretation come into play in this case:

  • individual provisions cannot be considered in isolation (i.e. must be read in context);
  • commercial contracts must be interpreted in accordance with sound commercial principles and good business sense; and
  • the Court's goal is not to discover what the parties thought the Contract meant when they signed the Contract, but what, objectively, their intent was, given the words they chose.

The Owner took the position that the release clause spoke for itself – the release clause says, in effect, you, Design Builder, have the opportunity to make all your claims known to us while the contract is proceeding, but if you don't bother to do so, then the final certificate of payment extinguishes outstanding claims.

The Court's reasons are an interesting read, so here are the choice parts:

"[45] ... the respondent [Design Builder] argues that the appellant [Owner]'s interpretation of the release clause makes no commercial sense. The appellant [Owner]'s interpretation means that all of the appellant [Owner]'s obligations, including the monies due under the final payment certificate, would be extinguished at the date of that certificate. It would be impossible for interest to accrue if the payment was overdue as the release clause would extinguish any claims. Certainly, this consequence is not what the parties agreed to in their original Contract.

[46] The respondent [Design Builder] recognizes that the release clause was intended to ensure timely notice to the appellant [Owner] of any claims outstanding at the date of the final certificate.


[49] The respondent argues that it did not expressly or by conduct represent that it would not enforce its contractual rights. That it delayed suing for its interest claim is not conduct that demonstrates it intended to change their legal relationship. The respondent was subject to the Limitations Act, and within the legislated timeframe, it could sue for debts owing to it. The equitable estoppel defence is not a defence to a claim delayed for good reason.

[50] Moreover, the respondent asserts it did not pursue the interest because the appellant would have blacklisted the respondent or refused to enter into further contracts with the respondent if it knew the respondent would insist on its contractual right to interest on all unpaid accounts.

[51] The respondent argues that the trial judge found the appellant's actions deeply troubling and recognized the preceding point. The appellant claimed relief from its interest obligations because the respondent did not pursue its interest claims before entering into 13 other contracts with the appellant and related companies. The trial judge concluded that if the respondent had insisted on its right to interest, no further work would have been made available to it.


[85] Rather, looking at the Contract objectively, the parties intended that interest would have continued to accrue until the full balance was paid.

[86] Just as the Contract language cannot be interpreted in a commercially reasonable sense to deprive the Design Builder of the balance of its final account after the certifier issued the payment certificate, no commercial or sound reason justifies construing the Contract to deny the respondent [Design Builder] interest on amounts the owner had not paid at the date of the payment certificate.

[87] This appellant [Owner]'s literal interpretation of the clause is completely against rational commercial principles and good business sense and, when considered in light of the entire Contract, the meaning contended by the appellant [Owner] does not, objectively reflect the parties' intention. The Contract required the appellant [Owner] to pay the full contract price at the end of the Contract; this amount should rationally include the accrued interest and any amounts that became due after the final payment certificate was issued.

[88] The parties cannot have intended that triggering the appellant [Owner]'s obligation to pay the Contract price simultaneously extinguishes the obligation to pay the full Contract price.

[89] Whether it is lack of clarity or ambiguity in the Contract, the trial judge was correct in her conclusion that the release and release clause did not apply to any part of the Contract price that is payable to the respondent [Design Builder] upon issuing the payment certificate.

[90] In this case, the release clause did not extinguish claims for interest that had accrued up to issuing the payment certificate or after. Those charges were payments on the Contract price that the appellant [Owner] had to pay the respondent [Design Builder].

Don't underestimate the influence of the Court's general sense of fairness

The Court's reasoning makes good sense when it comes to the Owner's continuing obligation to pay the final installment of the contract price (and any interest for late payment of that final installment). It is obvious that a certificate of payment cannot simultaneously serve notice for the owner to pay, and release the Owner from the obligation to pay.

However, to extend that reasoning to claims for interest that arose well before the final payment and that the Design Builder did not previously assert is evidence, in our view, of the one core principle that underlies most legal principles, including the three we listed above: the Court will strive (and in some cases strain mightily) to arrive at an outcome the Court considers palatable, whatever language might appear in a contract.

What's good for the goose is good for the gander

This case is unhelpful to owners in regard to a contractor's claim for interest (or, for that matter, any other claim that a contractor might choose to advance after application for final payment).

On the other hand, the reasoning would be helpful to an owner in a case where the owner had a claim for certain construction deficiencies, such as where it appeared that the contractor failed to comply with the contract specifications. For example, if a commercial building or structure collapsed or had structural deficiencies because the contractor skimped on the specified amount of reinforcing steel or the mix or quantities to be used for the concrete, this case could be helpful for an owner to argue that the release language should likewise not apply – i.e. the owner would argue:

"... understood, the release provision would apply if the contractor complied with the specifications, but if the contractor played "fast and loose" in regard to complying with the specs, then similarly 'the Contract language cannot be interpreted in a commercially reasonable sense to deprive' the owner of its remedy ..."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Roy Nieuwenburg
Cheryl Kornder
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions