Canada: Elite Construction Inc. v. Canada – Compliance With Contractual Notice Provisions Is A Must

In large-scale construction projects, delays to the schedule of completion are almost inevitable. Often, the delays to the project will result from circumstances outside of a contractor's control, and can impact the contractor's already tight profit margins.

As a result, contracts for large-scale construction projects have increasingly included terms permitting a contractor to submit claims for additional expenses it has incurred from delays to the project, provided that it meets certain requirements to provide the owner with notice of its intention to claim for delay. The recent decision of the Ontario Superior Court of Justice in Elite Construction Inc. v. Canada¹(Elite) confirms that strict compliance with contractual notice provisions is a prerequisite to claiming damages for delay.

In Elite, the Court summarily dismissed Elite's claim for damages arising from delay due to the fact that Elite had failed to provide notice of its claim within 10 days of the delay, in accordance with the contract.² The Court rejected Elite's claims that its notices that changes to the scope of the project would cause delays were notices of its intention to claim damages resulting from said delays, finding that Elite's notices were not indicative of an intention to claim damages for delay.³ The Court also rejected Elite's argument that the government's delays were a breach of a "time is of the essence" provision in the contract, and that the government therefore waived its entitlement to require strict compliance with the notice provisions.⁴ A delay itself does not constitute a waiver of the notice requirements to claim damages for delay.

Accordingly, the Elite decision confirms that a contractor should take all steps necessary to comply with the strict requirements of contractual notice provisions in the event that it intends to claim damages for delay, and should not assume that informal notice will be sufficient.

Footnotes

1. Elite Construction Inc. v. Canada, 2021 ONSC 562

2. Elite, supra, at para 122

3. Elite, supra, at paras 58-81

4. Elite, supra, at paras 82-98

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