This article appeared in the Fall 2024 issue of Build Manitoba magazine.
Players in the construction industry – whether general contractors, owners, subcontractors or design professionals – will be well familiar with Canadian Construction Documents Committee (more widely known as CCDC) contracts. The CCDC is made up of representatives from the various types of construction industry participants who work to develop standardized construction documents for use in Canadian projects.
A key benefit to using CCDC contracts is to simplify contracting by providing a standard form of main contract that can be added to and revised by the parties to a specific agreement. For example, Article A-3 of the 2020 CCDC-2 Stipulated Price Contract sets out as follows:
ARTICLE A-3 CONTRACT DOCUMENTS
3.1 The following are the Contract Documents referred to in Article A-1 of the Agreement – THE WORK:
- Agreement between Owner and Contractor
- Definitions
- General Conditions
[a blank space is then provided for a comprehensive list of all Contract Documents, including supplementary conditions, general requirements, project information, technical specifications, material finishing schedules, drawings, addenda and time schedules]
In short, the CCDC contracts are drafted in a way to provide parties with the legal terms and processes of the contract, while allowing for the parties to insert the more specific information and requirements of their agreement as additional contract documents. This allows the parties to focus on the "nitty gritty" rather than the legalese, while also providing comfort that the standard legalese is drafted fairly.
Other CCDC contracts such as the CCDC-3 Cost Plus Contract, the CCDC-4 Unit Cost Contract, the CCDC-5B Construction Management Contract – for Services and Construction and the CCDC-14 Design-Build Stipulated Price Contract contain similar provisions.
None of the above provisions set out the order of priority that these documents take over one another. Instead, that order of priority of documents is found elsewhere in the CCDC contracts. For example, the provision that prioritizes the Contract Documents in the CCDC-2 Stipulated Price Contract reads as follows:
1.1.5 If there is a conflict within the Contract Documents:
.1 the order of priority of documents, from highest to lowest, shall be
- the Agreement between Owner and Contractor,
- the Definitions,
- Supplementary Conditions,
- the General Conditions,
- Division 01 of the Specifications,
- technical Specifications,
- material and finishing schedules,
- the Drawings.
.2 Drawings of larger scale shall govern over those of smaller scale of the same date.
.3 dimensions shown on Drawings shall govern over dimensions scaled from Drawings.
.4 amended or later dated documents shall govern over earlier documents of the same type.
.5 noted materials and annotations shall govern over graphic indications.
Of course, if parties to a specific construction contract disagree with this order of priority, they can amend the order by way of supplemental conditions. Such a decision should not be made lightly, however, as the order of priority can have important impacts on the interpretation of the agreement between the parties. Moreover, the standard prioritization was determined by the CCDC with input from different construction industry sectors as a way to fairly allocate risk.
Do not assume your construction document takes priority over the CCDC form
Given that the Contract Documents in a CCDC context will be made up of more than one set of documents, it is important that contracting parties do not simply assume that a Court will prioritize the language in their own documents over those in the CCDC contract used in a given case. Instead, contacting parties should take care in ensuring that the language in the CCDC contract used is consistent with the underling contract documents and the intentions of the parties.
A Design-Builder and project Owner recently argued over which dispute resolution term governed when there were differing terms in the CCDC-14 Design-Build Stipulated Price Contract they used and in the Design-Builder's general Construction Contract that was incorporated into that CCDC contract as a Contract Document (the "Design-Builder's Contract"). The approach the Court took in that case provides important insight into the way that Courts will resolve disputes about the interpretation of CCDC contracts and incorporated Contract Documents.
In Knox Presbyterian Church v. Oakwood Designers & Builders, 2024 ONSC 3131, a dispute arose when a buried power line was exposed at the start of the design-build project. The Design-Builder issued notice of increased costs to the Owner under GC 6.4 of the CCDC-14, but the Owner disputed the Change Order. The Design-Builder then refused to resume work on the project unless the Change Order increasing the Contract Price was issued.
The parties attempted to resolve the issue, but were unsuccessful. The Owner then served a Notice to appoint an arbitrator pursuant to General Condition 8.1 of the CCDC-14. The Design-Builder did not respond. As a result, the Owner brought an application to Court for an Order appointing an arbitrator and requiring the Design-Builder to participate in the arbitration to resolve the dispute.
While the CCDC-14 requires that disputes regarding the interpretation, application or administration of the CCDC contract be resolved by way of arbitration, the Design-Builder's Contract that was incorporated by the parties into the CCDC-14 stipulated that disputes regarding the interpretation of the Contract, plans and specifications, or purported deficiencies be resolved first by a Court. The Design-Builder argued that the language in the Design-Builder's Contract applied and took priority over the arbitration agreement in the CCDC-14, such that it was not obligated to participate in arbitration. The Design-Builder therefore requested that the Court dismiss the application to appoint an arbitrator and compel arbitration.
The Court granted the Owner's application and ordered that the parties participate in arbitration. In doing so, it held that:
- The CCDC contract only required that the Contract Documents be prioritized (instead of read harmoniously) if there was a conflict between the documents. The Court that there was no conflict between the dispute resolution terms because the scope of the two terms differed: (i) the CCDC contract and arbitration clause covered disputes about the interpretation of the CCDC contract and processes set out in the CCDC contract; and (ii) the Design-Builder's Contract required that disputes about day-to-day issues that arise in the construction project be dealt with first by a Court. Since the dispute related to concealed conditions and a Notice issued under GC 6.4 of the CCDC-14, the Court found that the substance of the dispute fell under the arbitration clause.
- Even if the Court were wrong that there was no conflict between the two documents, the Court found that the CCDC-14 was clear that it took priority over any project-specific contract documents such as the Design-Builder's Contract. The document listed first in priority, the "Agreement between Owner and Design-Builder, was found to be the CCDC Articles of Agreement, not the Design-Builder's Contract. The Design-Builder's Contract was found to be a "Construction Document," which was lower in priority to the arbitration clause in the General Conditions of the CCDC-14.
Conclusion and key takeaways
Knox serves as a cautionary tale to contracting parties to ensure consistency between contract documents and that the documents taking priority reflect the intention of the parties.
Additionally, misunderstandings as to the meaning or scope of a contract could become evident if the parties do not take the necessary time to consider and negotiate the contract. Courts will only intervene or rectify the contract to align with a parties' mistaken understanding of the contract in limited circumstances, and the costs to pursue that intervention can be substantial. In other words, a party that rushes through contracting does so at their own peril.
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.
