Canada: Effect Of Consultant Certifying Application For Progress Payment

Last Updated: August 27 2008
Article by Peter A.K. Vetsch

Construction projects involve a complex and interconnected framework of relationships between their key players: among others, the owner, the contractor, its subcontractors and the consultant. Within such a framework, the consultant, usually an architect or engineer, can play several overlapping and potentially conflicting roles:

  1. as the owner's agent, it is charged with representing the owner's interests on the project site;

  2. as an impartial decision-maker, it is responsible for making unbiased choices on matters such as changes to scope, project timing, defective work and the issuance of payments; and

  3. as a quasi-judicial body, it may be required to serve as an arbiter of disputes between owners and contractors.1

Although the consultant is bound to follow the owner's instructions while acting as its representative on-site, when acting in its other roles it must be fair and balanced and must act strictly in accordance with its powers and duties under the contract.

One common task undertaken by the consultant in a decision-making role is the certification of amounts to be paid out to the contractor in response to applications for progress payments. Such progress certificates, which confirm that the amount of work represented by the sum directed to be paid has been satisfactorily performed, are frequently made a condition precedent to any payment by the owner under the contract, such that "the contractor is not entitled to be paid until the architect's certificate has been issued."2 Conversely, however, once the consultant's certificate has been issued, the amount certified as due becomes a debt owing to the contractor and, subject to the terms of the contract, the contractor can bring an action for the recovery of this amount, even if the owner has not been notified of, or objects to, the issuance of the certificate.3 It is generally accepted that, where the owner and contractor agree to charge the architect or engineer with the task of reviewing and determining progress payments, they will be bound by the consultant's certificate approving such payments, provided that the consultant's decision is made without fraud, bias or other misconduct and the consultant has obtained full information regarding the performance of the work.4

However, the fact that an owner may be contractually bound by the amount of a progress payment specified in a consultant's certificate does not mean that the owner must pay this amount in the face of potential cross-claims that it may have against the contractor. This issue was discussed in Modern Engineering (Bristol) Ltd. v. Gilbert-Ash (Northern) Ltd.5, a 1974 case where a contractor had refused to pay out the full certified amount of a progress payment to its subcontractor and had withheld funds on the basis of additional costs allegedly arising out of the subcontractor's delay and poor workmanship. The question was whether the contractor was required immediately to pay out the amounts certified by its agent, the consultant, in full without any right to set off claims it may have had arising out of the subcontractor's breach of contract, leaving such cross-claims to be resolved at a later date. The British House of Lords held that it is necessary to examine the particular contract in every case to determine whether the parties' common law and equitable rights of set-off and counterclaim have been explicitly excluded. In the absence of any such exclusion, there is no ground for holding that one party cannot deduct from the amount certified by the consultant other amounts claimed by it in good faith from the other party:

It is, of course, open to parties to a exclude by express agreement a remedy for its breach which would otherwise arise by operation of law.... But in construing such a contract one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption.


So when one is concerned with a building contract one starts with the presumption that each party is to be entitled to all those remedies for its breach as would arise by operation of law, including the remedy of setting up a breach of warranty in diminution or extinction of the price of material supplied or work executed under the contract. To rebut that presumption one must be able to find clear unequivocal words in which the parties have expressed their agreement that this remedy shall not be available in respect of breaches of that particular contract.6

This principle was expressly adopted in Canada by the British Columbia Supreme Court in its 2000 decision of Swagger Construction Ltd. v. University of British Columbia7, where the court confirmed, in relation to a similar claim by a contractor for immediate payment on the basis of a consultant's progress payment certificate, that "when a claim is made by a Contractor for the price of work and labour done, the Owner is entitled, in the absence of a provision in the Contract to the contrary, to set-off against the amount claimed any damages which he has suffered as a result of the Contractor's breach of the Contract"8. The court in Swagger made a clear distinction between the conclusiveness of a consultant's certificate as to the amount due in relation to a particular progress payment, which amount is binding on the parties, and the contractor's right to be paid that amount, which right is subject to competing extra-contractual rights of set-off or counterclaim. "And it is at least arguable that setting off claims for breach of contract against a claim based on a Certificate may be, in a sense, payment of the Certificate. The fixing of the amount due is one thing. The right to set-off against that amount is another."9 While there is nothing preventing parties to a construction contract from curtailing or extinguishing an owner's rights to set-off or counterclaim against amounts certified as owing under a consultant's certificate, the owner possesses these rights by operation of law and retains them unless and until they are taken away by "clear and unequivocal words"10 in the contract.

This issue was recently the focus of an Alberta Court of Queen's Bench decision handed down in September 2007, Point on the Bow Development Ltd. v. William Kelly & Sons Plumbing Contractors Ltd.11. This case involved an unsuccessful application by a contractor for summary judgment in relation to that portion of its claim against the owner that had been certified by the project consultant. The owner had filed a substantial counterclaim against the contractor regarding a variety of performance-related issues, but the contractor argued that the consultant's certificate was final and determinative of the value owed for work it performed. Following Gilbert-Ash and Swagger, the court held that, while the value assessed and certified by the consultant may not later be open for challenge, this does not result in the owner immediately having to pay the certified amount regardless of whether any set-off may be appropriate: "Payment of the certificates issued by the architect pursuant to the terms of the General Contract cannot be made in isolation of determination of [the owner's] counterclaims and claims for setoff These remain genuine issues to be tried."12 Given the numerous and significant cross-claims asserted by the owner, the consultant's certificate alone was not sufficient to allow the contractor's entitlement to payment to be determined summarily.

The consultant's certification of a progress payment still has the important practical effect of binding the parties to the construction contract to the certified amount. However, unless the contract states otherwise (and even if the contract is silent in this regard), owners with bona fide cross-claims for delays or deficiencies that may reduce the amount ultimately owing to the contractor under the certificate have the right to have these claims determined without the owners first having to pay out the certified amount and then having to seek recovery of the funds paid. The result of this principle is that, as seen in Swagger and Point on the Bow, disputed contractor claims for certified progress payments cannot easily be divorced from larger construction disputes and decided based strictly on the stated values in the consultant's certificate -- the owner's rights of set-off prevent the certificate from becoming the sole factor material to the contractor's right to payment.


1 Beverley M. McLachlin, Wilfred J. Wallace & Arthur M. Grant, The Canadian Law of Architecture and Engineering, 2nd ed. (Markham: Butterworths Canada Ltd., 1994) at 195.

2 Immanuel Goldsmith & Thomas G. Heintzman, Goldsmith on Canadian Building Contracts, 4th ed. (Agincourt: Thomson Carswell, 1988) at 4-8.

3 Ibid. at 8-9.

4 Ibid. at 8-8 & 8-9. See also Dilcon Constructors Ltd. v. ANC Developments Inc. (1996), 188 A.R. 241, 42 Alta. L.R. (3d) 32 (Q.B.) at paras. 145-162.

5 Modern Engineering (Bristol) Ltd. v. Gilbert-Ash (Northern) Ltd., [1974] A.C. 689 (H.L.). 6 Ibid. at 717 & 718.

7 Swagger Construction Ltd. v. University of British Columbia, 2000 BCSC 1839, 7 C.L.R. (3d) 99.

8 Ibid. at para. 20.

9 Ibid. at para. 21.

10 Ibid. at para. 25.

11 Point on the Bow Development Ltd. v. William Kelly & Sons Plumbing Contractors Ltd., 2007 ABQB 530, 81 Alta. L.R. (4th) 175.

12 Ibid. at para. 16.

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.

In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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