Centura Building Systems (2013) Ltd. v 601 Main Partnership

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Centura Building Systems (2013) Ltd. v.

601 Main Partnership,

2022 BCSC 295

Date: 20220225

Docket: S164499

Registry: Vancouver

Between:

And

Centura Building Systems (2013) Ltd.

Plaintiff/

Defendant by Counterclaim

601 Main Partnership and 5264 Investments Ltd.

Defendants/

Plaintiffs by Counterclaim

Before: The Honourable Madam Justice Warren

Reasons for Judgment

Counsel for the Plaintiff and Defendant by

Counterclaim:

D. Laudan

N. Crema

Counsel for the Defendants and Plaintiffs by

Counterclaim:

S. Coblin

N. Preshaw

M. Hashmi, Articled Student

Place and Dates of Trial:

Vancouver, B.C.

January 18-22, 25-29,

February 1-5, 8-10,

12, 16-19, 22-26,

March 2-4, and 8-11, 2021

Written Submissions of the Defendants:

Place and Date of Judgment:

March 25, 2021

Vancouver, B.C.

February 25, 2022

Centura Building Systems (2013) Ltd. v. 601 Main Partnership

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Table of Contents

INTRODUCTION ....................................................................................................... 3

BACKGROUND......................................................................................................... 4

POSITIONS OF THE PARTIES............................................................................... 11

The plaintiff’s original position .............................................................................. 11

The defendants’ original position.......................................................................... 12

Change in positions on last day of trial................................................................. 13

ISSUES.................................................................................................................... 14

DISCUSSION........................................................................................................... 16

Credibility.............................................................................................................. 16

Was 601 Main entitled to terminate the Contract pursuant to GC 6.5.10

irrespective of whether Centura was at fault for or the cause of the delay? ......... 17

What, if anything, is Centura entitled to be paid in respect of the Contract Value

Claim?.................................................................................................................. 20

What, if anything, is Centura entitled to be paid in respect of the Interference

Claim?.................................................................................................................. 44

Have the defendants established that Centura breached the Contract and, if so,

what damages flow from the established breach(es)? ......................................... 49

Did Centura breach the Contract? .................................................................... 50

What if any damages flow from the breach of contract? ................................... 53

Did Centura file a claim of builders lien in an amount that it knew or ought to have

known was exaggerated and, if so, are the defendants entitled to damages for

abuse of process?................................................................................................ 58

What is the appropriate rate and method for calculating interest to be paid on any

amounts found owing to either party? .................................................................. 64

What is the appropriate costs award? .................................................................. 65

CONCLUSION......................................................................................................... 65

Centura Building Systems (2013) Ltd. v. 601 Main Partnership

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Introduction

[1]

This case concerns a dispute over work performed by the plaintiff, Centura

Building Systems (2013) Ltd. (“Centura”), on a construction project located at the

corner of Main Street and Keefer Street in Vancouver, BC (the “Project”). The

Project was a multi-level residential and commercial tower.

[2]

Centura was the initial framer, drywall installer, and insulation installer for the

Project.

[3]

The defendant 601 Main Limited Partnership (“601 Main”) was the developer

of the Project. 601 Main is an entity related to Westbank Projects Corp.

(“Westbank”), a well-known real estate development company in British Columbia.

During the time material to this dispute the defendant 5264 Investments Ltd. (“5264

Ltd.”) was the registered owner of the land on which the Project was built. 5264 Ltd.

held title as nominee for 601 Main, the beneficial owner. The manager for the Project

was Icon West Construction Ltd. (“Icon”), as agent for 601 Main.

[4]

Centura’s work on the Project was governed by a modified form of CCDC-17

stipulated-price contract between it and 601 Main (the “Contract”).

[5]

The Project was beset by delays and conflict between the parties from the

outset. In brief, Centura says Icon’s mismanagement caused a number of events

and conditions that interfered with its ability to complete its work in a timely way and

caused it to incur increased costs. 601 Main says Centura did not have the

workforce required to meet the schedule for the Project and failed to perform its work

properly which caused 601 Main to incur costs to retain an alternate contractor to

complete and correct deficiencies in Centura’s work, as well as costs resulting from

a four-month delay in completing the Project.

[6]

On January 23, 2016, 601 Main terminated the Contract. 601 Main says that

it was permitted to do so under a termination provision in the Contract, as a result of

Centura being delayed in the performance of its work. Centura’s initial position was

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that 601 Main did not have the right to terminate the Contract and that its purported

termination amounted to a repudiation of the Contract.

[7]

Centura filed a claim of builders lien and commenced this action alleging that

it is owed money for work it performed and materials it provided prior to the

termination of the Contract, and claiming damages for breach of contract for

interference in its work and lost profits it would have earned had 601 Main not

wrongly terminated the Contract.

[8]

601 Main counterclaimed, seeking damages for breach of contract associated

with the alleged delays and deficiencies in Centura’s work, as well as damages for

what it says was the improper filing of the builders lien.

[9]

On the last day of the trial, during reply submissions, Centura changed its

position with respect to the validity of the termination of the Contract. It maintained

that it was not at fault for any delay, but submitted that 601 Main was entitled to

terminate the Contract for delay irrespective of fault. As a result, it abandoned the

claim for lost profits.

Background

[10] On December 10, 2013, Icon put out a call to tender for the framing, drywall,

and insulation scope of work for the Project. On December 16, 2013, Centura

submitted a bid to complete this scope of work for $1,367,000, excluding taxes.

Centura’s bid was selected and, in or around August 2014, the parties entered into

the Contract which was dated April 15, 2014 for reference.

[11] Centura’s scope of work was detailed in Appendix D to the Contract (the

“Original Scope of Work”). Centura also performed work that fell outside the Original

Scope of Work and for which it seeks additional compensation.

[12] The typical sequencing of the work to be performed by the various trades

engaged to construct a mixed-use tower and the basic nature of the work of a

framing, drywall, and insulation contractor provides context that is helpful to

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understanding some of the sources of the friction that developed between Centura

and Icon. None of this general context was in dispute.

[13] Typically the trades perform their work in a rational order, with one trade

following another up the tower on a floor by floor basis. The work is scheduled to

provide each trade a start date for each floor and a window of time within which to

complete its work on the floor in question before the floor is turned over to the next

trade in the sequence.

[14] After excavation and site preparation, construction typically proceeds in the

following order:

1. The concrete installer pours the slabs and curb walls, prepares the perimeter

edge for the installation of the exterior assembly (in this case, steel stud

framing), cleans up, and moves up to the next floor.

2. The framing contractor completes layout and construction of the exterior

assembly, cleans up, and moves up to the next floor behind the concrete

installer.

3. The glazing contractor installs the windows, cleans up, and moves up to the

next floor behind the framing contractor.

4. The mechanical contractor completes plumbing rough-in, cleans up, and

moves up to the next floor behind the glazing contractor.

5. As the work is being completed on a floor, the concrete trade returns to

remove shoring and install re-shoring required for the concrete cure. The re-

shoring remains in place until the concrete has been poured three floors

above. It is then removed by the concrete trade.

6. After the re-shoring is removed, the framing trade starts interior layout and

framing. This includes the framing of shafts, party walls (common walls

between suites), interior walls (including furring walls, which are thicker than

Centura Building Systems (2013) Ltd. v. 601 Main Partnership

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typical to allow more space for work such as rough-ins and insulation to be

installed in the wall), sills, ceilings, and bulkheads.

7. As the interior framing proceeds, installation of firestopping in party walls

commences.

8. When interior framing is complete, mechanical and electrical rough-in is

completed.

9. When rough-in is complete, insulation is installed starting with spray foam

installation followed by batt insulation and any vapor barriers.

10.Drywall installation begins after the insulation is installed.

11.Following drywall installation, the floor is cleaned and drywall deficiencies

addressed. Corner bead or other finish trims are installed and then tape and

fill of the drywall commences.

12.When tape and fill is complete, the floor is cleaned and then turned over to

the painting contractor.

[15] Pursuant to A 1.3.1 of the Contract, Centura was to perform its work “in

accordance with a schedule provided by the Owner at the time of signing the

Contract”. A schedule for the Project was attached as Appendix B to the Contract

(the “Original Schedule”). The Original Schedule set out dates and durations of work

for each trade on each floor of the Project.

[16] According to the Original Schedule, Centura’s work on the Project was to start

on March 2, 2015. However, the commencement of construction was delayed from

the outset for reasons that are not relevant to this dispute. Ultimately, Centura’s work

on the project commenced on May 21, 2015.

[17] Kelly Brezovski was Icon’s site superintendent on the Project. Kevin Booth

was Centura’s first site foreman.

Centura Building Systems (2013) Ltd. v. 601 Main Partnership

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[18] Disputes arose between the parties almost immediately over the slow

progress of Centura’s work and the reasons for the delay.

[19] As noted, Centura says Icon’s mismanagement resulted in multiple events

and circumstances that interfered with its ability to complete its work and gave rise to

delay and additional costs. Centura’s complaints included but were not limited to the

following: other trades were delayed which impacted Centura’s ability to ramp up its

workforce; floors were not turned over to Centura in a ready state which prevented

its production crews from completing their work efficiently and led to them leaving

the site; the elevator (skip) used to move workers and material up the tower was

inadequate; the correct shower design was provided late resulting in the need for

significant reframing; the reflected ceiling drawings were incomplete which led to

further reframing; Icon prioritized the work in the commercial space leased to the

Bank of Montreal which disrupted Centura’s schedule and work sequencing and

interfered with Centura’s ability to retain production crews on site and achieve

efficiencies in its work; and spray foam installation was delayed which prevented

Centura’s work from progressing.

[20] 601 Main says the primary problem was that Centura had spread itself too

thin and did not have the workforce required to get the job done; it prioritized other

projects with the result that its work on the Project suffered from slow progress from

the beginning and throughout.

[21]

In late July 2015, Centura replaced Mr. Booth with Scott Bowie. Mr. Bowie

reported to Robert Pengelly, Centura’s Operations Manager.

[22] Notwithstanding Mr. Bowie’s efforts, the problems persisted. Centura asserts

that the principals of Westbank were not happy about Centura working on the

Project. Centura says animosity had developed between representatives of

Westbank and representatives of Centura on a previous job and the animosity

followed Centura to the Project. Centura says Mr. Bowie was unfairly criticised, there

was a “chummy attitude” among the other trades to the exclusion of Centura, and

Centura was set up as the scapegoat for the delays. In contrast, the defendants say

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there was little Mr. Bowie could do without the necessary workforce so he came up

with a myriad of complaints in an attempt to deflect responsibility for the delays to

Icon and/or the other trades, create a misleading record of the cause of the delays,

and buy Centura time to secure the workers it needed to fulfil its obligations on the

Project.

[23] Pursuant to GC 3.5 of the Contract, Icon was to provide Centura with a

Project schedule, monitor the progress of the work relative to that schedule, and

update the schedule on a monthly basis. Icon did not do this. No formally revised

schedule for the Project to reflect the delay in commencement of construction was

produced by or on behalf of 601 Main. According to Mr. Brezovski, when the

commencement of a project is delayed, each date in the original schedule simply

shifts with the individual steps and the durations remaining unchanged. In contrast,

Mr. Bowie testified that typically a revised schedule is issued to the trades once

construction actually commences but this was not done for the Project.

[24] In October 2015, representatives of Icon advised representatives of Centura

that Centura would not be permitted to move up to level 10 in the tower until

Centura’s work on lower levels was complete. The defendants say this was a good

faith effort on Icon’s part to get Centura’s work on the lower floors complete so the

subsequent trades could progress. Centura says that Icon’s motive for holding

Centura below level 10 was to simplify the replacement of Centura with a different

framing, drywall, and insulation contractor. There is no dispute that in October 2015,

Icon and/or other representatives of 601 Main were in discussions with Crystal

Consulting Inc. (“Crystal”) about the possibility of Crystal replacing Centura on the

Project, starting at level 10. However, Crystal was not engaged at that time.

[25] In the later part of October 2015, the parties exchanged proposed schedules

that were intended to recover from the delays in the Project up to that time. These

consultations did not initially result in a schedule that was acceptable to 601 Main.

On October 28, 2015, 601 Main ordered Centura to provide a schedule pursuant to

GC 3.5.8 of the Contract which provides:

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Subject to GC 6.5, if the Trade Contractor does not maintain the progress

necessary to comply with the Contract and the Project Schedule, the Owner,

in addition to those rights and remedies provided by law and under the

Contract Documents (including those rights specifically set forth in GC 7.1)

may, after consultation with the Trade Contractor, order that the Trade

Contractor take such actions as the Owner, the Construction Manager or the

Consultant deems necessary to maintain the progress required by the

Contract Documents and the Project Schedule, which actions may include,

but will not be limited to: the provision of a recovery Trade Schedule, the

supply of additional labour, the provision of additional hours of work or the

furnishing of additional plant, all at the Trade Contractor’s expense.

[26] In response to this demand, Centura presented a new schedule on October

30, 2015, which the parties referred to as the “Recovery Schedule”. There is no

dispute that the Recovery Schedule was intended to take into account the then state

of the Project and all the previous delays, regardless of who caused them, and get

the Project back on track. The Recovery Schedule contained the following

statement, among others:

Your [601 Main’s] proposed M&E rough-in schedule does not appear to be

realistic. Unless these are actual feedbacks from the respective trades, this

schedule would be considered unreliable and it can potentially upset the

overall schedule.

[27] On November 4, 2015, 601 Main accepted the Recovery Schedule. Pursuant

to the Recovery Schedule, Centura was to complete all its work on the Project by

January 20, 2016.

[28] Centura says that the Recovery Schedule was almost immediately

abandoned by the parties as unrealistic. 601 Main disputes that the Recovery

Schedule was abandoned.

[29] The Project continued to experience delays which 601 Main attributes to

Centura. On January 21, 2016, 601 Main demanded that Centura accelerate its work

and sought Centura’s agreement to a further revised schedule. Centura did not

accept this proposed schedule.

[30] The Contract contained express provisions permitting 601 Main to terminate

the Contract in various situations. Of particular relevance is GC 6.5.10:

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Notwithstanding anything to the contrary in GC 6.5, if the Trade Contractor is

delayed in the performance of the Work for more than 30 days, the Owner

shall have the right to terminate the Contract and engage another party to

finish the Work. Upon such termination, the Trade Contractor will be entitled

to payment only in respect of the Work completed up to the date of

termination.

[31] On January 23, 2016, 601 Main exercised its right to terminate the Contract

pursuant to GC 6.5.10, alleging that Centura was behind both the Original Schedule

and the Recovery Schedule.

[32] Centura had been paid $455,879.33 for the work it had performed and the

materials it had supplied prior to the termination of the Contract.

[33] On January 15, 25 and 26, 2016, the defendants had the progress of the

Project documented in a series of digital photographs and interactive floorplans by a

company called Multivista (the “Multivista Photographs”).

[34] Crystal was engaged to complete most of Centura’s work. There were two

parts to Crystal’s contract:

 a fixed-price portion pursuant to which Crystal was to perform boarding on

levels 8 to 21 (excluding fireproofing); acrylic soffits from level 7; taping on

levels 7 to 12 (excluding fire taping); concrete seal on levels 8 to 21

(excluding ceiling prep); framing on levels 20 and 21; and all insulation to

compete the Project, for $645,000 excluding GST (the “Base Contract”); and

 a time and materials portion which governed everything else Crystal did on

the Project, including repairing deficiencies in Centura’s work, finishing work

that Centura had not yet completed and that did not fall within the Base

Contract, performing extra work not contemplated by the Original Scope of

Work, and supplying the materials required to perform all of Crystal’s work

(the “T&M Contract”).

[35] On March 4, 2016, Centura filed a claim of builders lien for $1,136,593. This

action was commenced on May 19, 2016.

Centura Building Systems (2013) Ltd. v. 601 Main Partnership

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[36] The Project was finished in August 2016, with the final occupancy permit

issued on August 30, 2016.

Positions of the Parties

The plaintiff’s original position

[37] Initially, Centura alleged that 601 Main wrongfully terminated the Contract.

Among other things, Centura submitted that it could not be terminated under GC

6.5.10 of the Contract for being 30 days delayed because at the time of the

termination there was no operative schedule and, in any event, GC 6.5.10 could only

be invoked if the delay was caused by the trade contractor (Centura said the delay

was caused by others) and after giving the trade contractor notice and a period

within which to remedy the delay (it is common ground that no such notice or cure

period was provided).

[38] Centura also alleged that 601 Main breached an express or implied term of

the Contract by failing to provide Centura with proper access to and control of the

site. Specifically, and as already mentioned, Centura says Icon’s mismanagement

caused a number of events and conditions that interfered with its ability to complete

its work in a timely way and caused it to incur increased costs.

[39] In its original closing submissions, Centura asserted that it is owed about

$630,000 in respect of the work it performed and materials it delivered under the

Contract to the date of termination (about $820,000 plus GST for work and materials

within the Original Scope of Work (“Base Contract Work”) and approximately

$215,000 plus GST for extra work and materials pursuant to change orders

(“Extras”), less $455,879.33 already paid) (the “Contract Value Claim”). It claimed

damages of about $310,000 for interference in its work (the “Interference Claim”)

and lost profits of about $41,000 that it said it would have earned if 601 Main had not

wrongly terminated the Contract (the “Lost Profit Claim”). It asserted the right to

interest in accordance with A 5.3 of the Contract (prime plus 2% for the first 60 days

and prime plus 4% thereafter).

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The defendants’ original position

[40]

The defendants’ position was that 601 Main was entitled to terminate the

Contract pursuant to GC 6.5.10 for delay caused by Centura. They submitted that at

the time of the termination of the Contract the governing schedule was the Recovery

Schedule. They say GC 6.5.10 could be invoked without giving Centura notice or

any cure period, Centura was more than 30 days behind the Recovery Schedule,

and the delay was caused by Centura. Alternatively, the defendants submitted that

601 Main was entitled to terminate the Contract for “fundamental breach”.

[41] If 601 Main was entitled to terminate the Contract, then the defendants’

position was that they were entitled to recover from Centura damages for breach of

contract in the amount of $707,216.58. This amount comprised the incremental

increased costs that were incurred to complete Centura’s scope of work

($157,341.60 plus GST) and additional insurance, financing and other overhead

expenses incurred as a result of what they say was a four-month delay in completing

the Project ($516,198 plus GST).

[42] If 601 Main was not entitled to terminate the Contract, then the defendants’

position was that:

(a) Centura was entitled to be paid for work it performed and materials it

delivered under the Contract to the date of termination (Base Contract Work

and some of the claimed Extras), less the amount incurred by the defendants

to have Crystal correct deficiencies in that work. The defendants quantified

this aspect of Centura’s claim at about $290,000, valuing Centura’s work

before considering deficiencies at about $450,000 after accounting for the

$455,879.33 that Centura had already been paid, against which the

defendants submitted they were entitled to a setoff of $157,594.40

representing the cost to repair deficiencies.

(b) The defendants could, in theory, be liable for damages for breach of contract

for delay caused by them, but Centura failed to establish that the defendants

caused any delay or are responsible for any event that resulted in Centura

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incurring increased costs. In any event, the defendants submitted that several

provisions of the Contract operated to bar recovery for any delay or impact

caused by them. The defendants say that among other contractual bars, GC

6.5.4 of the Contract barred recovery unless Centura provided notice of a

claim arising from an owner-caused delay within 10 working days of the

commencement of the delay or impact with such notice to include particular

information, and Centura failed to provide any such notice.

[43] Irrespective of whether 601 Main was entitled to terminate the Contract, the

defendants’ position is that the builders lien Centura filed was in an amount it knew

was exaggerated, and that Centura exaggerated the amount to exert financial

pressure on the defendants and thereby create a litigation advantage. The

defendants say this grounds a claim for damages for abuse of process which they

quantify at $262,525.32, representing interest, at the rate stipulated in A 5.3 of the

Contract as applicable to amounts owing under the Contract, on the amount by

which they say the lien was inflated ($814,032).

Change in positions on last day of trial

[44] During reply submissions on the last day of the trial, Centura abandoned its

claim that the termination of the Contract was wrongful. Centura submitted that 601

Main was entitled to terminate the Contract under GC 6.5.10 because the progress

of Centura’s work was delayed by more than 30 days, although Centura maintained

that it was not at fault for the delay. Centura submitted that GC 6.5.10 is a “no fault”

provision pursuant to which 601 Main had the right to terminate the Contract for

delay exceeding 30 days, irrespective of the cause of the delay.

[45] As a consequence of this change in position, Centura acknowledged that the

Lost Profit Claim, which was based on what Centura previously said was the

wrongful termination of the Contract, could not succeed. Centura submitted that this

change in positon did not affect the Contract Value Claim or the Interference Claim,

and that those claims fell within the second sentence of GC 6.5.10, which preserved

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Centura’s entitlement to payment “in respect of the Work completed up to the date of

termination”.

[46] In addition, Centura asserted that by choosing to terminate the Contract

under GC 6.5.10, 601 Main waived any claim for additional costs that arose from the

termination of the Contract. Centura’s position regarding the scope of this alleged

waiver was not clear to me. Specifically, it was not clear whether Centura was

asserting that the defendants were precluded from setting off the cost of repairing

deficiencies in Centura’s work and also any incremental increased costs that were

incurred to complete Centura’s scope of work, or just the latter. As I understood it,

Centura did not take the position that by invoking GC 6.5.10, 601 Main waived its

claim for damages for breach of contract flowing from delay caused by Centura, but

Centura says 601 Main did not establish that Centura was the cause of any delay.

[47] As discussed, the defendants initially argued for a construction of GC 6.5.10

that gave 601 Main the right to terminate the Contract for delay caused by Centura.

Defence counsel was taken by surprise by Centura’s late concession that 601 Main

had the right to terminate the Contract under GC 6.5.10. In surreply, defence

counsel observed that Centura’s change of position meant that 601 Main’s right to

terminate the Contract is undeniable and the focus must shift to a consideration of

the consequences of 601 Main invoking that right.

[48] 601 Main submitted that its termination of the Contract pursuant to GC 6.5.10

did not have the effect of curtailing its right to compensation for the additional costs

that arose from the termination of the Contract. Further, if 601 Main had the right to

terminate the Contract under GC 6.5.10, then the defendants say Centura’s

recourse is expressly limited by the second sentence of GC 6.5.10 to “payment only

in respect of the Work completed up to the date of termination” and neither the

Interference Claim nor the Lost Profit Claim falls within that limiting language.

Issues

[49] As a result of the late change in Centura’s position, it is not necessary to

determine whether 601 Main was entitled to terminate the Contract under GC 6.5.10.

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It is conceded that it was entitled to do so. However, it is not clear whether the

parties agree that GC 6.5.10 is a “no fault” provision – in other words, whether it

gives 601 Main the right to terminate the Contract for delay irrespective of the cause

of the delay.

[50] As noted, Centura ultimately submitted that GC 6.5.10 was a “no fault”

termination provision. Ironically, the initial position advanced on behalf of 601 Main

was that its right to terminate the Contract pursuant to GC 6.5.10 depended on

Centura being at fault for the delay and arose from “a specifically identified breach

[of contract by Centura] relating specifically to delays”. In its written closing

submission, in response to the suggestion that GC 6.5.10 might give rise to a right to

terminate for delay irrespective of fault, 601 Main wrote:

It was also argued that perhaps this was intended to be some sort of a “no

fault” termination provision, however such an interpretation would be

inconsistent with the fact that there already exists such a provision at GC

7.1.7, which states:

The Owner may terminate this Contract for its convenience at any

time and without cause, upon giving not less than 30 days prior notice

to the Trade Contractor. In this event the Owner shall pay to the Trade

Contractor all amounts due to the Trade Contractor on account of the

Contract price earned to that date.

[51] In oral submissions made before Centura changed its position on the validly

of the termination, defence counsel argued that GC 7.1.7 would only be necessary if

GC 6.5.10 could only be invoked in circumstances where the trade contractor was at

fault for the delay. Whether that remained 601 Main’s position after the validity of the

termination was conceded is not clear.

[52] It is necessary to decide whether GC 6.5.10 is or is not a “no fault”

termination provision because the answer to that question shapes the framing and

analysis of the other issues. The live issues, framed broadly, are:

1. Was 601 Main entitled to terminate the Contract pursuant to GC 6.5.10

irrespective of whether Centura was at fault for or the cause of the delay?

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2. What, if anything, is Centura entitled to be paid in respect of the Contract

Value Claim?

3. What, if anything, is Centura entitled to be paid in respect of the Interference

Claim?

4. Have the defendants established that Centura breached the Contract and, if

so, what damages flow from the established breach(es)?

5. Did Centura file a claim of builders lien in an amount that it knew or ought to

have known was exaggerated and, if so, are the defendants entitled to

damages for abuse of process?

6. What is the appropriate rate and method for calculating interest to be paid on

any amounts found owing to either party?

7. What is the appropriate costs award?

Discussion

Credibility

[53] Before addressing the substantive issues, I will briefly address the credibility

of the key witness of each of the parties.

[54] Mr. Bowie was Centura’s primary witness. He had a tendency to exaggerate.

Given the complex nature and large scope of the Project, it is extremely likely that

Centura caused or contributed to some of the problems that arose on the site but Mr.

Bowie rarely conceded any fault. Most significantly, I was satisfied that a

memorandum he prepared to record the facts related to several particular problems

that he claimed interfered with Centura’s work was misleading in some respects and

based, in part, on an email that he altered to align with his narrative. He maintained

in his testimony that the memorandum was correct, to the best of his knowledge, but

I did not believe that. Unfortunately, these problems undermined Mr. Bowie’s

credibility to an extent that caused me to conclude I could not rely on his evidence

except where it was corroborated by evidence I did accept.

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[55] Mr. Brezovski’s testimony was more measured and reasonable. He readily

acknowledged when his memory was less than clear and when he did not have

personal knowledge of a particular issue. He made admissions against interest. I

had no concerns about his credibility, but the usefulness of some of his testimony

was limited by a lack of clarity in his recollection or a lack of personal knowledge.

Was 601 Main entitled to terminate the Contract pursuant to GC 6.5.10

irrespective of whether Centura was at fault for or the cause of the

delay?

[56] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 [Sattva], the

Court endorsed a “practical, common-sense approach” to the interpretation of

contracts, “not dominated by technical rules of construction”, with the meaning of the

words “often derived from a number of contextual factors”. The principles, as drawn

from Sattva, include the following:

a) the goal of contractual interpretation is to ascertain the objective intentions of

the parties (para. 55);

b) in ascertaining the parties’ intentions, a practical, common-sense approach

not dominated by technical rules of construction is to be adopted (para. 47);

c) the contract must be read as a whole, giving the words used their ordinary

and grammatical meaning, consistent with the surrounding circumstances

known to the parties at the time of contracting (para. 47);

d) the surrounding circumstances (such as the purpose of the contract and the

nature of the relationship created by it) inform the analysis because words in

isolation do not have an immutable or absolute meaning and often take their

meaning from the context (paras. 47–48);

e) the goal in considering the surrounding circumstances is to acquire a deeper

understanding of the objective intentions of the parties, but the interpretation

of a written provision must always be grounded in the text and read in light of

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the entire contract; the surrounding circumstances cannot be used to deviate

from the actual words used (para. 57); and

f) in ascertaining the surrounding circumstances the only evidence that may be

relied upon is objective evidence of the background facts at the time the

contract was made; in other words, knowledge that was or reasonably ought

to have been within the knowledge of both parties at or before the date of

contracting (para. 58).

[57] With these principles in mind, I turn to the question at hand: does GC 6.5.10

give 601 Main the right to terminate the Contract for delay of more than 30 days

irrespective of the cause of or fault for the delay? For ease of reference, GC 6.5.10

provides:

Notwithstanding anything to the contrary in GC 6.5, if the Trade Contractor is

delayed in the performance of the Work for more than 30 days, the Owner

shall have the right to terminate the Contract and engage another party to

finish the Work. Upon such termination, the Trade Contractor will be entitled

to payment only in respect of the Work completed up to the date of

termination.

[58] I start with the ordinary and grammatical meaning of the words in the

provision. The key words are “if the Trade Contractor is delayed in the performance

of the Work”. The first point to note is that there are no words attributing blame for or

referencing the cause of the delay; fault or cause language has not been included.

[59] The significance of the omission of fault or cause language is heightened by a

consideration of the Contract as a whole. Other provisions in the Contract that

pertain to delay do contain fault or cause language which suggests that when the

parties intended the application of a delay provision to be limited to circumstances

triggered by a particular cause or the fault of a particular party, they did so expressly.

For example, GC 6.5.1 applies where the trade contractor is delayed by “an event

outside its reasonable control”, GC 6.5.3 applies where the trade contractor is

delayed by “an event of default or neglect caused solely by the Owner”, and GC

7.1.2 applies where the trade contractor “neglects to prosecute the Work in

accordance with the Contract”.

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[60] I do not agree with the defendants’ submission that interpreting GC 6.5.10 as

a no fault termination provision would render GC 7.1.7 superfluous. GC 7.1.7 is a no

fault termination provision but it has broader application than does GC 6.5.10. GC

7.1.7 permits 601 Main to terminate the Contract for any reason and requires 601

Main to give the trade contractor at least 30 days notice of termination. In contrast,

GC 6.5.10 may be invoked only where the trade contractor is delayed by more than

30 days, and it does not require any notice. The two provisions serve different

purposes.

[61] Finally, interpreting GC 6.5.10 as a no fault termination provision is consistent

with the surrounding circumstances – that is, the purpose of the Contract and the

nature of the relationship created by it. The purpose of the Contract is to secure the

completion, on clear terms, of a substantial component of the work required to build

a multi-level mixed-use tower. This an endeavor that is complicated by nature and

time sensitive. 601 Main, as developer, has a strong interest in ensuring that the

work progresses at an appropriate pace and that the overall construction schedule is

met. The work to be performed by the various trades follows a logical sequence and

a delay in the performance of one trade’s work can have a cumulative effect. As

demonstrated by this case, it can be very difficult to disentangle the various causes

of any particular delay or impact and even more so to attribute fault. In this case,

representatives of the parties spent months in conflict characterized by an ongoing

litany of accusations and complaints against each other about the causes of delays.

As an experienced developer and contractor, the parties would have been aware of

the potential for this kind of conflict. In these circumstances, a provision that allows

an owner to terminate its contract with one trade contractor without notice where

there has been a significant delay in that trade’s work, without having to prove the

cause of or fault for the delay, and simply pay the trade contractor in respect of the

work already completed, is objectively sensible.

[62] For these reasons, it is my view that GC 6.5.10 is a “no fault” termination

provision; in other words, pursuant to GC 6.5.10, 601 Main had the right to terminate

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the Contract for a delay in the performance of Centura’s work of more than 30 days

irrespective of the cause of or fault for the delay.

What, if anything, is Centura entitled to be paid in respect of the

Contract Value Claim?

[63] The Contract Value Claim concerns the value of the work Centura performed

and materials it delivered under the Contract to the date of termination. It is

comprised of two components: Base Contract Work and Extras. As noted, the

Contract Value Claim was quantified by Centura at about $630,000 comprised of

about $820,000 plus GST at 5% for Base Contract Work and approximately

$215,000 plus GST at 5% for Extras, less the $455,879.33 already paid.

[64] Leaving aside the issue of the cost of correcting deficiencies in Centura’s

work, to which I will return, the defendants’ original closing submission suggested

that Centura was only entitled to be paid for the work it performed and materials it

delivered under the Contract to the date of termination if 601 Main was not entitled to

terminate the Contract. From the oral submissions made after Centura’s change in

position concerning the validity of the termination pursuant to GC 6.5.10, it appeared

(but was not entirely clear) that the defendants acknowledged that Centura was

entitled to be paid for the work it performed and materials it delivered under the

Contract to the date of termination (less the amount incurred by them to have Crystal

correct deficiencies in that work) and the only issue concerned the quantum of

Centura’s entitlement.

[65] Given the uncertainty in the defence position, I start by finding that upon the

termination of the Contract by 601 Main, Centura became entitled to payment “in

respect of the Work completed up to the date of termination”, pursuant to the second

sentence of GC 6.5.10. “Work” is defined in the Contract as “the total construction

and related services required by the Contract Documents”.

[66] At this stage I am dealing only with the Contract Value Claim, which clearly

falls within the second sentence in GC 6.5.10. The live questions are:

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1. What is the value of the Base Contract Work?

2. To what extent has Centura established its claim for Extras?

3. Is 601 Main entitled to a set off for the cost of repairing deficiencies in

Centura’s work?

4. If so, have the defendants established that there were deficiencies in

Centura’s work and that those deficiencies had a quantifiable impact on the

value of Centura’s work?

[67] Each of the parties tendered expert evidence concerning the value of the

Base Contract Work and Extras. Centura’s expert, Evan Stregger, is an experienced

claims consultant and professional quantity surveyor. As a professional quantity

surveyor, he has expertise in construction scheduling, and analyzing and pricing

construction projects. His opinions concerning the value of the Base Contract Work

and Extras were reflected in a report titled “Review of Value of Work …” dated

September 18, 2018 (“Review of Value Report”), which was a compilation of earlier

opinions he had provided. The defence expert, Ken King, is also an experienced

professional quantity surveyor. He provided an opinion of the value of the Base

Contract Work and some of the Extras as of January 26, 2016, and he commented

on Mr. Stregger’s opinions. These opinions were reflected in a report dated August

23, 2018.

[68] Mr. Stregger’s opinions about the value of the Base Contract Work and

Extras, as set out in his Review of Value Report, were based on representations

from Centura as well as a variety of documents, including progress photographs

taken by Richard Lim of Centura, photographs taken by Mr. Bowie on Centura’s last

day on the site, and photographs provided by 601 Main. He did not review the

Multivista Photographs prior to forming the opinions expressed in the Review of

Value of Work report.

[69] Mr. Stregger’s approach was to assess the state of completion of each

component of the Base Contract Work on each level of the tower, in percentage

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terms, and then to apply the corresponding value for that component of Centura’s

work, as stated in the schedule of values for the Contract, to derive an overall value

for the Base Contract Work. With respect to the Extras, he reviewed the change

orders underlying Centura’s claim for Extras, adopted or largely adopted Centura’s

view of the state of completion of the relevant work in percentage terms, and then

applied the price of the completed work as claimed on the change order, to derive an

overall value for the Extras. This was a purely mathematical exercise. In his Review

of Value Report, he valued the Base Contract Work at $888,448 (before GST) and

the Extras at $196,512.46 (before GST).

[70] Mr. King’s opinions about the value of Centura’s work, as set out in his

August 23, 2018 report, were based on a variety of documents and photographs,

including the Multivista Photographs, and to some extent representations from the

defendants.

[71] Mr. King’s approach to valuing the Base Contract Work was similar to that of

Mr. Stregger. His opinion was that the Base Contract Work had a value of $787,230

(before GST). The reason for the difference between his opinion of the value of the

Base Contract Work and that of Mr. Stregger was underlying differences in their

respective assessments of the state of completion of some of the components of the

Base Contract Work. In his August 23, 2018 report, Mr. King took no issue with

Mr. Stregger’s methodology, but he expressed the view that Mr. Stregger overstated

the extent to which certain components of the Base Contract Work had been

completed. Mr. King’s approach to valuing the Extras was to review contract

documents, drawings, and Icon’s own assessment as reflected in a spreadsheet

provided to him by the defendants (“Icon’s Spreadsheet”) to determine whether the

work contemplated by each change order fell outside the Original Scope of Work. He

relied heavily on Icon’s Spreadsheet in doing so. Mr. King did not address all the

claimed Extras. He concluded that the Extras he did consider had a value of

$77,647.08.

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[72] Mr. Stregger responded to Mr. King’s August 23, 2018 report in a reply report

dated February 27, 2019. Prior to preparing the February 27, 2019 reply report,

Mr. Stregger reviewed the Multivista Photographs. Having done so, his assessment

of the value of Base Contract Work decreased to $858,040 excluding GST. He also

expressed the view that some variance can be expected when using photographs to

assess the extent to which this kind of work is complete and opined that the value of

the Base Contract Work “probably lies somewhere between [his] assessed value of

$858,040 and [Mr. King’s] value … of $787,230”. Although not entirely clear, it

appeared that his assessment of the value of the Extras did not change in any

material way.

[73] There were aspects of Mr. Stregger’s testimony during cross-examination that

caused me to question the reliability of his evidence. He admitted that before

completing the Review of Value Report, he was given access to a very large number

of progress photographs that he did not review. Those photographs would have

informed his analysis and he did not provide a reasonable explanation for not

reviewing them. More concerning, in his direct evidence he indicated that he

independently assessed the state of completion of the Extras; however, in cross-

examination he reluctantly admitted that he did not do so but rather accepted what

he was told by Centura about the state of completion of the Extras. Mr. King

adopted, or largely adopted, the defence position with respect to whether claimed

Extras fell within the Original Scope of Work, but this was apparent from his report

where, as noted, he expressly referred to Icon’s Spreadsheet. To be clear, there is

nothing objectionable about an expert expressing opinions based on assumed facts

– to the contrary that is what expert witnesses are supposed to do. What is

objectionable is an expert suggesting he has formed an independent opinion about

something when he has merely adopted the party’s position. This caused me to

prefer Mr. King’s opinions over Mr. Stregger’s opinions where they differ.

[74] In cross-examination, Mr. King acknowledged that an adjustment should be

made to his assessment of one item that would increase his opinion about the value

of the Base Contract Work to about $794,000 before GST. On the basis of his

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evidence, I find that the value of the Base Contract Work, before consideration of

deficiencies, is $794,000 plus GST of 5%.

[75] I turn now to the Extras.

[76] There is no dispute that the parties adopted two methods of approval of extra

work. One method was through a formal request and site instruction followed by the

issuance of a change order ultimately signed on behalf of Westbank. The other

method was informal and initiated on site. Under this informal method, Centura

would usually present an extra work confirmation form to Icon and, if approved by

Mr. Brezovski, Centura would proceed with the work. On a few occasions there was

no extra work confirmation form prepared, but the work was the subject of

contemporaneous email correspondence between the parties. Each of the extra

work confirmation forms stated that it was “confirm[ing] that the following work is

extra to our Contract and will be charged accordingly”. Mr. Brezovski

contemporaneously initialled each of the extra work confirmation forms next to the

words “Received & Acknowledged By”. I will refer to each of the change orders,

extra work confirmations, and email exchanges as a “Change Order”, using the

identification numbers ultimately assigned to them by Centura.

[77] There is little if any direct conflict in the expert evidence concerning the

Extras. Significantly, there is no dispute about the extent to which the Extras were

completed. Mr. King’s valuation of Extras departs from Centura’s claim because he

adopted the defence position with respect to whether claimed Extras fell within the

Original Scope of Work. Mr. Stregger did not address that point.

[78] Centura’s claim to be compensated for the Extras is based on 53 Change

Orders. (Initially it was based on 54 but one, #11r1, was withdrawn by Centura.)

Ultimately, only 21 of the 53 Change Orders was in dispute.

[79] There is no dispute that Change Orders #1 though #5 and #32 were formally

approved and that Centura is owed $41,000 in relation to those, before

consideration of any deficiencies.

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[80] Change Orders #6r2 ($1,782), #7 ($172), #8r1 ($822), #9 ($162), #18r1

($383), #33 ($1,653), and #51 ($4,762) were the subject of site instructions. The

defendants ultimately conceded that Centura is owed a total of $9,736 with respect

to those, before consideration of any deficiencies. The only issue with respect to

these concerned #6r2. Mr. King expressed the view that Centura was entitled to the

full amount of that Change Order ($11,136) but Centura’s evidence was that the

work was only 16% complete at the time the Contract was terminated. In the

circumstances, I have attributed a value of $1,782 to Change Order #6r2 (16% of

$11,136).

[81] Change Orders #12r2 (-$11,293), #14r1 ($7,116), #15r1 ($1,616), #16r1

($787), #20r1 ($11,403), #21r1 ($484), #23r1 ($890), #24r1 ($3,550), #35 ($303),

#37 ($2,187), #39 ($1,416), #40 ($1,786), #41r1 ($1,355), and #50 ($3,262) were

the subject of extra work conformation forms approved by Mr. Brezovski on site. The

defendants ultimately conceded that Centura is owed a total of $24,862 with respect

to those, before consideration of any deficiencies.

[82] Change Orders #27r2 ($19,960), #28r1 ($3,843), #29r1 ($993), #31r1

($2,864), and #34r1 ($1,367) were the subject of contemporaneous email

exchanges. The defendants ultimately conceded that Centura is owed a total of

$29,027 with respect to those, before consideration of any deficiencies.

[83] The Change Orders in dispute are #10r1, #13r2, #17r2, #19r2, #22r2, #25r2,

#26r1, #30r1, #36, #38, #42, #43, #44, #45, #46, #47, #48, #49, #52, #53, and #54.

[84] Change Order #10r1 concerned the replacement of hollow steel framing with

regular steel framing. The amount claimed is $4,967. An extra work confirmation

form was prepared by Centura and contemporaneously approved by Mr. Brezovski.

There is no dispute that the work was done. Mr. King opined that there was too

much time spent on the work and he valued it at only $2,607. However,

Mr. Brezovski testified that when he signed the extra work confirmation form he

considered the number of hours quoted to be appropriate. Mr. Brezovski was the

Icon representative with the most direct involvement in the work on the Project as it

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was being performed. Mr. King agreed, when questioned about a different Change

Order, that the circumstances on the ground inform the assessment of whether any

particular work is appropriately characterized as extra work. For these reasons, I

prefer Mr. Brezovski’s views over Mr. King’s views where they do not align. I am

satisfied that Centura has established its claim in relation to Change Order #10rl.

[85] Change Order #13r2 concerned framing and boarding in the vestibule in the

Bank of Montreal space. The amount claimed is $5,663. There is no dispute the

work was done. An extra work confirmation form was prepared by Centura and

contemporaneously approved by Mr. Brezovski. Mr. King rejected this claim, but

based entirely on Icon’s Spreadsheet on which Mr. Brezovski noted that he

considered this to be “base building”. In cross-examination, Mr. Brezovski explained

that there was extra work performed by Centura in the vestibule and his comment on

Icon’s Spreadsheet reflected a concern that Centura was claiming all the work in the

vestibule as extra work. He said he wanted someone to confirm the amount of the

claim. There is no evidence that anyone did confirm his suspicion that the claim was

inflated. During his examination for discovery, he described this work as in relation to

the “nightmare vestibule”, confirmed he signed the extra work confirmation form at

the time, acknowledged that Centura definitely made changes in that area, and

agreed there definitely was extra work. In the circumstances, I am satisfied that

Centura has established its claim in relation to Change Order #13r2.

[86] Change Order #17r2 concerned the addition of furring walls. The amount

claimed is $3,093. There is no dispute that the work was done. An extra work

confirmation form was prepared by Centura and contemporaneously approved by

Mr. Brezovski. Mr. King rejected this claim based on Icon’s Spreadsheet on which

Mr. Brezovski noted that he considered this to be “base” work. However, in cross-

examination, Mr. Brezovski acknowledged that this claim did reflect extra work.

During his examination for discovery, he confirmed that he actually wrote a note on

the extra work confirmation form that included “NIC”, which was his notation for “not

in contract”. In the circumstances, I am satisfied that Centura has established its

claim in relation to Change Order #17r2.

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[87] Change Order #19r2 concerned repairs to walls in the Bank of Montreal

space. The amount claimed is $476. There is no dispute the work was done. An

extra work confirmation form was prepared by Centura and contemporaneously

approved by Mr. Brezovski. Mr. King rejected this claim based on Icon’s

Spreadsheet on which Mr. Brezovski acknowledged this work was “touch up for

trade damage”, but also noted that he saw it as “base building walls”. In cross-

examination, Mr. Brezovski said that all he meant by that note was that someone

should check whether the work fell within the Contract. There is no evidence that

anyone did check. During his examination for discovery, Mr. Brezovski indicated that

this was extra work. I am satisfied that Centura has established its claim in relation

to Change Order #19r2.

[88] Change Order #22r2 concerned the installation of a wall. The amount claimed

is $2,038. There is no dispute the work was done. An extra work confirmation form

was prepared by Centura and contemporaneously approved by Mr. Brezovski.

Mr. King rejected this claim based on Icon’s Spreadsheet on which Mr. Brezovski

noted that this was a “base building wall shown on drawings”. However, in cross-

examination, Mr. Brezovski testified that he agreed this was extra work because

there was a site instruction. I am satisfied that Centura has established its claim in

relation to Change Order #22r2.

[89] Change Order #25r2 concerned the installation of shaft walls around pipes

and other mechanical items. The amount claimed is $4,351. There is no dispute the

work was done. An extra work confirmation form was prepared by Centura and

contemporaneously approved by Mr. Brezovski. Mr. King rejected this claim based

on Icon’s Spreadsheet on which Mr. Brezovski noted this was “base building on

drawings”. In cross-examination, Mr. Brezovski said that he considered this work to

be part of the base building but he did not know whether it was extra to the work that

Centura “tendered on”. During his examination for discovery, he indicated that this

work could have been temporary and required to achieve an occupancy permit for a

particular area. He wrote the note “OP Requirements” on the extra work confirmation

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form. I am satisfied that Centura has established its claim in relation to Change

Order #25r2.

[90] Change Order #26r1 concerned the installation of a shaft wall. The amount

claimed is $2,334. There is no dispute the work was done. An extra work

confirmation form was prepared by Centura and contemporaneously approved by

Mr. Brezovski. Mr. King rejected this claim based on Icon’s Spreadsheet on which

Mr. Brezovski again noted this was “base building on drawings”. As already noted,

he testified that this notation reflected his observation but he did not know whether it

was extra to the work that Centura “tendered on”. I am satisfied that Centura has

established its claim in relation to Change Order #26r1.

[91] Change Order #30r1 concerned a revision to a shaft and the addition of a

shaft. The amount claimed is $993. There is no dispute the work was done. Mr. King

rejected this claim based on Icon’s Spreadsheet on which Mr. Brezovski again noted

this was “base building”. There is no signed extra work confirmation form in support

of this claim. There is no site instruction or other documentation indicating that it was

approved as an extra at the time. In the circumstances, I am not satisfied that

Centura has established its claim in relation to Change Order #30r1.

[92] Change Order #36 concerned the addition of sills in the Bank of Montreal

vestibule. The amount claimed is $2,798. There is no dispute the work was done. An

extra work confirmation form was prepared by Centura and contemporaneously

approved by Mr. Brezovski. Mr. King rejected this claim based on Icon’s

Spreadsheet. However, he also acknowledged that whether any particular item

reflects extra work depends on the circumstances on the ground. In cross-

examination, Mr. Brezovski conceded that this was legitimate extra work. In the

circumstances, I am satisfied that Centura has established its claim in relation to

Change Order #36.

[93] Change Order #38 concerns the completion of shafts in the parkade and

loading bay. The amount claimed is $9,299. There is no dispute the work was done.

An extra work confirmation form was prepared by Centura and contemporaneously

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approved by Mr. Brezovski. Mr. King rejected this claim based on Icon’s

Spreadsheet. However, Mr. Brezovski acknowledged, in his examination for

discovery, that he approved this as extra work noting that “it must have made sense

at the time”. I am satisfied that Centura has established its claim in relation to

Change Order #38.

[94] Change Orders #42, #43, #44, and #45 concern repairs and/or out of

sequence work performed after the work of other trades had been finished. The total

amount claimed in relation to these Change Orders is $12,499. There is no dispute

the work was done. Extra work confirmation forms were prepared by Centura and

contemporaneously approved by Mr. Brezovski for this work. Mr. King rejected these

claims based on Icon’s Spreadsheet which indicated that they reflected a failure on

Centura’s part to coordinate its work with that of the other trades. However, Mr. King

also said that determining whether this work was or was not appropriately

characterized as extra required him to “get into the head of the site superintendent”.

The site superintendent, Mr. Brezovski, acknowledged during his discovery that he

approved this as extra work at the time. I am satisfied that Centura has established

its claims in relation to Change Orders #42, #43, #44, and #45.

[95] Change Orders #46, #47, #48, and #49 concern the addition of furring walls

and sills around the perimeter of the building. The total amount claimed in relation to

these Change Orders is $19,613. There is no dispute the work was done. Extra work

confirmation forms were prepared by Centura and contemporaneously approved by

Mr. Brezovski for this work. Mr. King rejected these claims based on Icon’s

Spreadsheet which indicated that they were not accepted because the work was

contemplated by the drawings. However, during his examination for discovery,

Mr. Brezovski conceded that this work reflected additional furring walls and that it

was appropriately characterized as extra work. I am satisfied that Centura has

established its claims in relation to Change Orders #46, #47, #48, and #49.

[96] Mr. King did not address Change Orders #52, #53, or #54. The total amount

claimed in relation to these is $22,523. There is no dispute the work was done.

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Change Orders #52 and #53 were the subject of extra work confirmation forms

prepared by Centura and contemporaneously approved by Mr. Brezovski, while #54

was the subject of contemporaneous email correspondence between the parties.

During his examination for discovery, Mr. Brezovski acknowledged that at the time

the work reflected in these Change Orders was performed, he considered it to be

legitimate extra work. I am satisfied that Centura has established its claims in

relation to Change Orders #52, #53 and #54.

[97] For these reasons, I find that the total value of the Extras, before

consideration of deficiencies, is $194,279 before GST.

[98] To this point, Centura has established that the Base Contract Work had a

value of $794,000 plus GST and that the Extras had a value of $194,279 plus GST.

The next question is whether, in quantifying its entitlement pursuant to GC 6.5.10 to

payment “in respect of the Work completed up to the date of termination”, it is

necessary to deduct or set off the value of deficiencies in that work.

[99] Again, after changing its position on the validity of the termination, Centura

asserted that by choosing to terminate the Contract under GC 6.5.10, 601 Main

waived any claim for additional costs that arose from the termination of the Contract.

However, as mentioned, it was not clear whether Centura was asserting that the

defendants were precluded from setting off the cost of repairing deficiencies in

Centura’s work or only the incremental increased costs that were incurred to

complete Centura’s work. In the circumstances, it is necessary for me to decide

whether 601 Main is entitled to set off the cost of correcting deficiencies in Centura’s

work when quantifying Centura’s Contract Value Claim. In other words, is a set off

for deficiencies a component of quantifying Centura’s entitlement pursuant to GC

6.5.10 to payment “in respect of the Work completed up to the date of termination”?

[100] As noted, the definition of “Work” in the Contract is “the total construction and

related services required by the Contract Documents”. With that definition in mind,

Centura is entitled by GC 6.5.10 to payment “in respect of [the total construction and

related services required by the Contract Documents] completed up to the date of

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termination”. In other words, Centura is entitled to payment for services it provided

as contemplated by the Contract.

[101] I have no difficulty concluding that, pursuant to the Contract, 601 Main has a

prima facie right to a set off in respect of costs it incurred to correct deficiencies in

Centura’s work. In other words, the value of Centura’s work at the time of the

termination necessarily reflects deficiencies in it at that time.

[102] It almost goes without saying that it is an implied term of a construction

contract that the work is to be done in a good and workmanlike manner: see

Turano’s Home Improvement Inc. v. Stern, 2018 ONSC 201 at para. 54. Further,

there are provisions in the Contract that make it clear that Centura’s right to payment

for its work is subject to 601 Main’s right to withhold payment for defective and

delayed work:

 GC 2.4.3 provides:

If in the opinion of the Construction Manager it is not expedient to correct

defective work or work not performed as provided in the Contract Documents,

the Owner may deduct from the amount otherwise due to the Trade

Contractor the difference in value between the work as performed and that

called for by the Contract Documents. If the Owner and the Trade Contractor

do not agree on the difference in value, they shall refer the matter to the

Construction Manager for a finding.

 GC 3.5.5 provides:

Should the Trade Contractor fail to complete the Work under this Contract

within the time specified, the Owner will be entitled to make deductions from

payments due to the Trade Contractor to compensate the Owner for the

following:

…

(d) any other costs claimable at law and provable by the Owner,

and the Owner shall be entitled to set all such costs off against any amounts

that would otherwise have been owing to the Trade Contractor pursuant to

the Contract.

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 GC 5.8.3 provides:

The Owner shall have the right to set off any amounts claimed by the Owner

hereunder against any amounts owed or claimed by the Trade Contractor

hereunder.

[103] Similar provisions have been held to preserve an owner’s right of set off in

relation to delays and deficiencies: Swagger Construction Ltd. v. U.B.C. et al, 2000

BCSC 1839 and Centura Buildings Systems Ltd. V Cressey Whistler Project Corp.,

2002 BCSC 1220.

[104] Citing RPC Construction Ltd. v. Zhiyi Zhou, 2017 ONSC 4044 [RPC

Construction], Centura argued that 601 Main lost its right to a set off for deficiencies

by failing to provide Centura with the opportunity to correct the deficiencies. The

defendants addressed this point before Centura changed its position on the validity

of the termination of the Contract. The defendants argued that even if 601 Main was

not entitled to terminate the Contract, they were entitled to a set off for correcting

deficiencies and their obligation to provide Centura with the opportunity to remedy

deficiencies arose only where it was reasonable to do so. They relied on Jozsa v.

Charlwood-Sebazco, 2016 BCSC 78.

[105] I observe that in both RPC Construction and Jozsa, as well as the cases cited

in Jozsa on this point (Wiebe v. Braun, 2011 MBQB 157 and Obad (c.o.b. Rockwood

Drywall) v. Ontario Housing Corp., [1981] O.J. No. 282), the party seeking a set off

for deficiencies was found to have wrongly terminated the contract: RPC

Construction at para. 74, Jozsa at para. 65, Wiebe at para14, and Obad at paras.

22-23 and 31.

[106] Whether the obligation to provide a contractor with an opportunity to correct

deficiencies arises when the contract has been validly terminated was not directly

addressed by the parties. Nevertheless, it is my view that the intention of the parties

as reflected in the Contract was that 601 Main would not be obliged to provide

Centura with the opportunity to correct deficiencies upon termination pursuant to GC

6.5.10. First, a termination of the Contract without notice is inconsistent with the

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trade contractor remaining on site to correct deficiencies because the Contract under

which the deficiencies would be corrected has been validly terminated. More directly,

upon termination under GC 6.5.10, the Owner has the express right to “engage

another party to finish the Work”. Finishing the work would include correcting

deficiencies existing at the time of the termination. This conclusion is consistent with

GC 2.4.3 which, as noted above, expressly gives 601 Main the right to a set off in

relation to deficiencies subject only to the Construction Manager holding the opinion

that it is not expedient for the contractor to remedy the deficiencies. Icon was the

Construction Manager and the evidence of its site superintendent, Mr. Brezovski,

leaves no doubt that by the time the Contract was terminated Icon had formed the

opinion that it was not expedient to permit Centura to correct any deficiencies.

[107] The next step in deciding what Centura is entitled to be paid in respect of the

Contract Value Claim requires me to determine whether the defendants have

established that there were deficiencies in Centura’s work that had a quantifiable

impact on its value.

[108] The defendants’ position is that there were deficiencies in Centura’s work that

Crystal corrected at a total cost of $157,594.40 ($140,156.75 to fix deficiencies and

$17,437.65 to supply materials related to fixing the deficiencies), as reflected in

quotations Crystal submitted to Icon for payment. Centura’s position is that the

defendants have failed to establish that there were deficiencies in its work and,

alternatively, have failed to link any deficiencies in its work to amounts paid to

Crystal.

[109] It is important to keep in mind that at the time the Contract was terminated

much of Centura’s work was incomplete and the incomplete work has already been

accounted for in valuing the Base Contract Work and the Extras. This stage of the

analysis is concerned with defective work; that is, work that was performed by

Centura but that did not conform to the requirements in the drawings, specifications,

and related documents, or did not meet the accepted standard of workmanship.

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[110] The record established, in general terms, that there were defects in Centura’s

work at the time the Contract was terminated. This was clear from the testimony of

Kim Adlington who was called by Centura, and two expert witnesses, Glenn

Duxbury, a defence witness, and Brian Sim, Centura’s witness.

[111] Mr. Adlington was employed by Centura as a supervisor during the time

Centura worked on the Project. During Centura’s last days on site, in January 2016,

Mr. Adlington performed what he referred to as “pre-board” and “post-board”

inspections. He explained that the pre-board inspection was performed before the

drywall was installed, while the post-board inspection was performed after the

drywall was installed and before the taping began. During these inspections,

Mr. Adlington checked Centura’s work in each unit and recorded everything that he

thought needed to be done to complete the work. This included defects in Centura’s

work as well as problems with the work of other trades that had to be corrected for

Centura to finish up. His intention was to provide a list of the issues to Mr. Bowie

who would assign hourly workers to make the required corrections and repairs to

Centura’s work, and speak to the other trades or Mr. Brezovski about the issues with

the work of other trades.

[112] Mr. Adlington kept notes of the issues he identified in the pre-board and post-

board inspections. He was presented with the notes during his testimony. He

identified certain items as Centura’s deficiencies and other items as deficiencies of

other trades. There were some items noted about which he had little if any

recollection. Mr. Adlington testified that he also wrote notes in chalk on drywall to

identify problems that had to be fixed.

[113] Mr. Duxbury is a certified home inspector with extensive experience

assessing the quality of construction. He identified several problems with Centura’s

work and expressed the opinion that it fell below industry standards. The problems

he identified included both defective work and incomplete work.

[114] Mr. Sim is an architect with experience in architectural design and

construction field reviews, including field reviews of drywall installations. He

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responded to Mr. Duxbury’s report. In doing so, he emphasized the distinction

between defective and incomplete work. He expressed the opinion that there were

some defects in Centura’s work but they were within the range that “would have

been foreseeable” and represented “a reasonable penultimate phase of the drywall

installer satisfactorily completing the drywall work”.

[115] Again, in light of the evidence summarized above, I have no doubt there were

some defects in Centura’s work at the time the Contract was terminated. The more

difficult task is determining whether the evidence links them to amounts paid to

Crystal so that their impact on the value of Centura’s work can be quantified.

[116] As mentioned, the defendants rely on a series of Crystal quotations, which

are actually a selection of invoices Crystal submitted under the T&M Contract. There

is a selection of quotations (the “Time Quotations”) that the defendants say reflect

time Crystal spent finishing work Centura started but did not complete in the areas of

the tower not covered by the Base Contract, and fixing deficiencies in Centura’s

work. As explained, only the latter is relevant at this stage of the analysis. There is

another selection of quotations (the “Materials Quotations”) that the defendants say

reflect costs incurred by Crystal to supply materials related to the work Crystal

performed under the T&M Contract. The Materials Quotations do not, or do not with

clarity, distinguish between materials supplied to fix deficiencies and materials

supplied to finish incomplete work.

[117] The total amount paid to Crystal pursuant to the Time Quotations was

$339,715.00. Of that amount, the defendants say $140,156.75 (40%) pertained to

the fixing of deficiencies. The total amount paid to Crystal pursuant to the Materials

Quotations was $43,594.14. The defendants submit that it would be appropriate to

assume that the same proportion (40%) pertained to the fixing of deficiencies and

thereby conclude that $17,437.65 was spent on the materials used to fix the

deficiencies (40% of $43,594.14).

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[118] The Time Quotations and the Materials Quotations were created by a Crystal

employee named Joseph Chin, with assistance from another Crystal employee

named Teresa Speicher.

[119] Mr. Chin was a project manager for Crystal. He testified that he was

instructed to be on site full time to track Crystal’s work for billing purposes. His

practice was to walk the floors of the tower, document the state of the work in a

notebook (which he no longer has), and interview workers. He would then note, floor

by floor, unit by unit, and room by room what was being done by Crystal’s workers

each day. At the end of each day, Mr. Chin used his notes to create worksheets

describing aspects of the work performed that day.

[120] With help from Ms. Speicher, Mr. Chin translated the information in his

worksheets into the Time Quotations. The worksheets note information such as the

date, the level of the tower, the names of the workers, the hours they worked, and a

very general description of the nature of the work. For example, one of the

worksheets Mr. Chin was specifically referred to during his direct examination

described the work as “L#5 Taping”. Another example described the work as “L#9,

10, 11, 12, 4 Framing & Remedial”.

[121] Mr. Chin testified that he documented the nature of the work in more detail in

his notebook. He testified that sometime after creating the original version of some

of the Time Quotations, Icon asked for more detail about the nature of the work. He

testified that he and Ms. Speicher extracted additional details from his notebook and

she added additional notes, in red font, onto the worksheets. For example, the

worksheet noted above as having the description “L# 5 Taping” also has a notation

in red font that reads: “Refilling sanding of walls due to oversanding by previous dw

contractor which caused too may [sic] defects/scratches on drywall”. That more

detailed description was replicated in what was apparently a second version of the

associated Time Quotation.

[122] Mr. Chin testified that his notes differentiated between repairing defects and

completing unfinished work, but that he did not personally make the distinction.

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Rather, he consulted Mr. Polack or Mr. Brezovski daily or almost daily, and they, or

one of them, made the distinction, which he then recorded in his notes.

[123] Mr. Chin testified that he was also responsible for making notes about

materials delivered to the site for Crystal’s work. He documented the nature of the

materials and the level they were delivered to, and he verified the details by

consulting the orders and packing slips. His notes and the orders and packing slips

provided the foundation for the Materials Quotations.

[124] Ms. Speicher was a project co-ordinator for Crystal at the time Crystal worked

on the Project. From her testimony as a whole, it is apparent that her primary focus

was to ensure that Mr. Chin correctly distinguished between work performed under

the Base Contract and materials used in performing that work, on the one hand, and

work performed under the T&M Contract and materials used in performing that work,

on the other hand. She said she did not have to do much because Mr. Chin was

good at his job.

[125] From time to time, Ms. Speicher was copied on emails from Mr. Brezovski to

Mr. Polack in which Mr. Brezovski instructed Mr. Polack to schedule workers to

perform particular tasks. In those emails, Mr. Brezovski sometimes referred to fixing

things Centura had done incorrectly and completing things that Centura missed.

Ms. Speicher said she would file those emails and then discuss them with Mr. Chin,

who was primarily responsible for categorizing the work.

[126] Ms. Speicher testified that Mr. Chin was primarily responsible for creating the

Time Quotations and the Materials Quotations from information in his notes and

worksheets, but she sometimes assisted him. She said Mr. Chin decided how

particular work should be categorized based on what he saw and how he was

directed at the site. Her evidence about the red comments on the worksheets was

similar to Mr. Chin’s evidence. She testified that about a month and a half after the

work was done, Icon asked for more detail about the nature of the work and she

added the red comments onto the worksheets in consultation with Mr. Chin and from

information in his notes.

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[127] In general terms, the red comments on the worksheets appear to be directed

at distinguishing between work performed to remediate defects in Centura’s work

and work performed to finish Centura’s work. Again, the distinctions were made by

Mr. Brezovski or Mr. Polack on site, and merely recorded by Mr. Chin. Where the red

comments indicate that the work was a combination of finishing and remediating, the

time spent is not apportioned between the two categories. Similarly, the Time

Quotations that pertain to both the remediation of work and the completion of work

do not allocate the amount charged between the two types of work.

[128] Ms. Speicher testified that in advance of the trial she reviewed the Time

Quotations, and isolated those that pertained to remediating Centura’s work and/or

finishing Centura’s work. It was clear that she did not independently assess the

nature of the work; rather, she relied on the descriptions of the work on the face of

the Time Quotations and backup documents. Similarly, in advance of the trial, she

reviewed the Materials Quotations and isolated those that pertained to work done

under the T&M Contract on the basis of coding on the face of them and notations on

the corresponding packing slips.

[129] Mr. Chin and Ms. Speicher were both careful witnesses. I had no difficulty

accepting their evidence. I am satisfied that each of them was diligent in performing

the tasks that ultimately resulted in the Time Quotations and the Materials

Quotations. From their evidence, I find that the Time Quotations and the Materials

Quotations accurately reflect Mr. Chin’s contemporaneous observations of the work

done and materials delivered, and the contemporaneous instructions he received

from Mr. Brezovski and Mr. Polack about whether the work in question involved

fixing defects or finishing incomplete work. However, the fact that Mr. Brezovski or

Mr. Polack characterized certain aspects of Centura’s work as defective and certain

aspects of Crystal’s work as remedial in their out of court dealings with Mr. Chin is

an insufficient foundation upon which to make findings about whether the underlying

problem was actually a defect in Centura’s work that is properly back-charged to

Centura.

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[130] With one exception addressed below, neither Mr. Brezovski nor Mr. Polack

provided evidence at trial that identified alleged defects with sufficient particularity

and certainty for me to conclude that a defect was a deficiency that is appropriately

back-charged to Centura, and to link the deficiency to one or more particular Time

Quotations so as to assess the impact of the deficiency on the value of Centura’s

work.

[131] At the time of the trial, Mr. Polack was working for Optima Building Systems,

a drywall contractor related to Centura. He previously worked for Crystal and was

Crystal’s Progress Superintendent when Crystal was working on the Project.

Mr. Polack agreed that there were deficiencies in Centura’s work, but his evidence in

this respect was vague. Mr. Polack acknowledged that he was aware, at the time

Crystal took over Centura’s work on the Project, that it was important for Crystal to

track the work that was being done so it could be accurately assigned to either the

Base Contract or the T&M Contract, and that he knew the amount paid to Crystal for

repairing deficiencies in Centura’s work would be back-charged to Centura. He

testified that he and Mr. Chin both provided information about the nature of the work

being performed by Crystal, but his evidence did not go further and did not link any

of the Time Quotations to any particular defects.

[132] Mr. Brezovski testified that at the time Crystal was working on the Project, he

reviewed Mr. Chin’s worksheets to ensure that Crystal’s work was properly tracked

and documented. In his direct evidence, he explained that in addition to reviewing

Mr. Chin’s worksheets, he sent emails directing Mr. Polack to fix particular things

that Centura had done wrong and finish things Centura had left incomplete, and he

copied Ms. Speicher with at least some of those emails to assist her in categorizing

and billing for Crystal’s work. He testified that shortly before the trial, he reviewed all

of the Time Quotations and removed any that could possibly pertain to work other

than remediating or completing Centura’s work. However, he did not link any of the

Time Quotations to any particular defects. In cross-examination, he admitted that

some of the Time Quotations he isolated shortly before trial should not, in retrospect,

have been included because they pertained to work that fell within the Base Contract

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or because they reflected a redesign and should have been considered an extra. He

also acknowledged that in his review of the Time Quotations before trial he did not

distinguish between work performed by Crystal to finish Centura’s work in the areas

of the tower that fell within the T&M Contract and the work performed by Crystal to

repair defective work. As mentioned, some of the Time Quotations concern both the

fixing of deficiencies and the finishing of incomplete work, and do not allocate the

amount charged between the two. Mr. Brezovski acknowledged that he did not track

how much time Crystal’s workers were spending repairing defects as distinct from

the time they spent finishing incomplete work.

[133] Again, that Mr. Brezovski characterized particular work, in general terms, as

remedial in his discussions with Mr. Chin on site and in his emails to Mr. Polack, is

an insufficient foundation upon which to find that the work in question was in fact

required to correct defects in Centura’s work. Further, the fact that some aspect of

Centura’s work had to be repaired or changed does not necessarily mean that the

work was defective in the sense that the associated cost is properly back-charged to

Centura as a deficiency. For example, a wall could have been damaged by another

trade or a design change could have resulted in a need for reframing. Without more

particularized evidence about the nature of the problem that led to the work reflected

in the Time Quotations, it is impossible to conclude that the defence has established

on a balance of probabilities that the views Mr. Brezovski expressed to Mr. Chin and

Mr. Polack five years before trial were correct.

[134] The complaint about Centura’s framing for closet bypass doors is a good

example of this problem. It appears that a significant amount of the remedial framing

reflected in the Time Quotations may concern this issue. Mr. Brezovski

characterized this work as remedial in his dealings with Mr. Chin. However, the

evidence about why the closet door openings had to be reframed is ambiguous.

[135] Mr. Brezovski testified that Centura made a mistake with the framing of the

closet openings, but did not testify that he had personal knowledge of the cause of

the problem. He explained that he or Dylan Wood (his assistant) would normally

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supply the rough opening heights to the framing contractor. He said the widths are

fairly standard but the heights depend on the hardware used.

[136] Mr. Polack said that he received instructions from Icon to change the opening

heights for the closet doors. He said he was not initially given a reason, but he also

said he was told to change the framing to fit a particular “device” and he believes

that was when he learned what heights to use. A February 12, 2016 email from

Mr. Wood to Mr. Polack advises that the rough opening height was to be 84 inches

on some levels and 84 and a quarter inches on other levels. Mr. Polack said he did

not personally have a door schedule against which to check the heights although he

was able to look at one on Mr. Brezovski’s laptop. He said he had to do his

“homework” to find out what kind of hardware was involved. He said that Mr. Dylan’s

instruction that the heights should be 84 inches or 84 and a quarter inches “didn’t

show the channel”.

[137] Mr. Bowie’s testimony on this topic was not reliable, but the documents

establish that:

 in May 2015 Icon sent Centura a rough opening sheet provided by the door

supplier that stipulated a “finished opening” height of 80 inches, and warned

that “net door height [for bypass doors] will vary depending on which

track/hardware manufacturer you are using”;

 in September 2015, Mr. Wood sent the same document to Mr. Bowie; and

 on October 9, 2015 Mr. Bowie sent an email to Mr. Wood titled “”RO Double

Check” to which was attached the same document plus a table indicating a

rough opening height for bypass closet doors of 80 and one half inches.

[138] On this record, even if I could accurately identify which amounts charged on

which Time Quotations pertain to the reframing of closet door openings, I am unable

to find that Centura framed the door openings in a manner that was inconsistent with

the specifications it had been given. In other words, it has not been established that

the closet doors had to be reframed because Centura made a mistake. It is equally

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possible that there was a change to the “device” that resulted in a need to change

the heights.

[139] In his August 23, 2018 report, Mr. King also addressed deficiencies.

However, his evidence on this point did not fill the evidentiary gap. He reviewed

most, but not all, of the Time Quotations. He categorized the ones he reviewed as

relating to incomplete work, deficient work, or both, but he provided little explanation

of the basis for his categorization. He did not explain whether or on what basis he

concluded that any particular work deviated from the requirements in the drawings

and specifications, or failed to meet industry or prevailing standards. He relied

heavily on the descriptions of the work in the Time Quotations as “remedial”. For the

Time Quotations that pertained to both deficient and incomplete work, he “estimated’

the portion pertaining to deficiencies, but the basis for his estimates was not

apparent.

[140] As observed in Turano’s Home Improvement Inc. at para. 54, expert evidence

may be necessary to make findings about whether particular deficiencies have been

proved, such as with respect to highly technical matters concerning applicable

standards of construction, but there are some deficiencies so obvious that

conclusions can be made without expert evidence. I am satisfied by the evidence of

Mr. Brezovski and Mr. Polack that, speaking generally, there were some deficiencies

in Centura’s work. I am satisfied about the nature of some of those deficiencies by

the evidence of Mr. Adlington, Mr. Duxbury, and Mr. Sim. The problem is that, with

the one exception alluded to above, no link between those and the Time Quotations

or Materials Quotations has been established. In the circumstances, there is an

inadequate evidentiary foundation upon which to assess whether and to what extent

particular deficiencies caused a reduction in the value of Centura’s work and to

quantify that reduction.

[141] The exception arises out of Mr. Brezovski’s evidence and concerns the “tape

and fill” aspect of Centura’s work on levels three and five of the tower. It was

apparent from Mr. Brezovski’s testimony that he had personal knowledge of and a

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specific recollection about this issue. He said that after Centura was terminated, the

painter rejected levels three and five for poor workmanship. This was memorable for

him as he had never before had a painter reject an entire floor. He testified that

Crystal had to re-mud the walls on those levels and this was a lot of work. Even

Mr. Bowie admitted that Centura had been using a taping crew that was the worst he

had seen, and that crew was working on level three on Centura’s last day on the

site. On this evidence I find that the “tape and fill” aspect of Centura’s work on levels

three and five was not performed in a good and workmanlike manner and had to be

remediated by Crystal.

[142] I have reviewed the Time Quotations and, from the descriptions of the work

noted on them, I accept that those numbered 104, 108, 113, and 126 pertain entirely

to correcting “tape and fill” on levels three and five. The total charged in those is

$5,940 before GST. Time Quotations 100 and 132 appear to pertain in part to this

deficiency, but there is no acceptable evidentiary basis for allocating a portion of the

amount charged on those to this deficiency. Similarly, the record does not establish

which, if any, of the Materials Quotations pertain to materials supplied by Crystal to

remediate the “tape and fill” on levels three and five. Accordingly, I find that the

defendants have established that deficiencies in Centura’s tape and fill work

decreased its value by $5,940 plus GST ($6,237).

[143] To recap, Centura has established that, before accounting for deficiencies,

the work it completed up to the termination of the Contract had a value of

$1,037,692.95 including GST ($794,000 plus 5% GST for Base Contract Work and

$194,279 plus 5% GST for Extras). From that amount there must be deducted

$6,237 to reflect deficiencies in the tape and fill on levels three and five and

$455,879.33 which Centura has already been paid. This leaves $575,576.62 owing

to Centura for the work it completed up to the termination of the Contract.

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What, if anything, is Centura entitled to be paid in respect of the

Interference Claim?

[144] The Interference Claim concerns damage Centura says it suffered as a result

of 601 Main’s breach of the Contract in failing to provide it with proper access to and

control of the site. Again, Centura says Icon’s mismanagement caused a number of

events and conditions that interfered with its ability to complete its work in a timely

way and caused it to incur increased costs.

[145] As I have said, Centura’s complaints included but were not limited to the

following: other trades were delayed which impacted Centura’s ability to ramp up its

workforce, floors were not turned over to Centura in a ready state which prevented

its production crews from completing their work efficiently and led to them leaving

the site, the skip used to move workers and material up the tower was inadequate,

the correct shower design was provided late resulting in the need for significant

reframing, the reflected ceiling drawings were incomplete which led to further

reframing, Icon prioritized the work in the commercial space leased to the Bank of

Montreal which disrupted Centura’s schedule and work sequencing and interfered

with its ability to retain production crews on site and achieve efficiencies in its work,

and spray foam installation was delayed which prevented Centura’s work from

progressing.

[146] In support of this aspect of its claim, Centura relied on the evidence of

Mr. Bowie and additional evidence of Mr. Stregger. In a report labeled “Review of

Impact on Schedule and Costs …” (“Impact Report”), Mr. Stregger assumed the

accuracy of the complaints underlying the Interference Claim as noted in Mr. Bowie’s

memorandum (which I mentioned in the credibility section of these reasons) and

then expressed the following conclusions:

 the Project was not proceeding in an organized manner;

 he did not have sufficient information to “accurately calculate the delay and

impact to the schedule”, but based on his experience the cumulative effect of

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the problems “likely added 20% to 30% to time for Centura to complete their

work”;

 “a delayed start can affect the scheduled time frame by a further 15% to

20%”; and

 the “inefficiency and delays and interference added between 28% to 38% to

the cost of the work”.

[147] Although it is far from clear, the last of those conclusions appears to have

been based on what Mr. Stregger was told about Centura’s actual costs to complete

the work which, in his Review of Value Report, he calculated as representing an

overrun of about $414,000 before GST. He said it was appropriate to discount the

overrun by between 15% and 25% to “account for normally expected inefficiencies

[by Centura] in organizing the work”. It is on this basis that Centura quantified this

aspect of its claim at about $310,000.

[148] The defendants’ position is that Centura failed to establish that the

defendants caused any delay or are responsible for any event that resulted in

Centura incurring increased costs. They say Mr. Stregger’s evidence on this point

can be given no weight. In any event, the defendants submitted that, among other

contractual bars, GC 6.5.4 of the Contract precludes recovery unless Centura

provided notice of a claim for cost impacts within 10 working days of the

commencement of the delay or impact in question, and Centura failed to provide any

such notice. They also say that Centura’s recourse is expressly limited by the

second sentence of GC 6.5.10 to “payment only in respect of the Work completed up

to the date of termination” (emphasis added) and the Interference Claim does not fall

within that limiting language.

[149] Whether GC 6.5.10 has the effect of precluding the advancement of

Centura’s Interference Claim is an interesting question but not one that has to be

answered. This is because there are three other problems with the Interference

Claim, the latter two of which are fatal.

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[150] First, proof of the complaints of interference and delay underlying Centura’s

Interference Claim depends heavily on the testimony or Mr. Bowie (and the accuracy

of his memorandum). For reasons already expressed, the credibility of his testimony

was seriously undermined and the memorandum is unreliable.

[151] Second, proof of the damages said to have flowed from the complaints of

interference and delay depends heavily on Mr. Stregger’s Impact Report and it does

not provide a reliable basis upon which I could assess the cost impacts of any of the

complaints that may have been established.

[152] The foundation for Mr. Stregger’s opinions that the cumulative effect of the

problems “likely added 20% to 30% to time for Centura to complete their work”; “a

delayed start can affect the scheduled time frame by a further 15% to 20%”;

“inefficiency and delays and interference added between 28% to 38% to the cost of

the work”, and between 15% and 25% should be allocated to “account for normally

expected inefficiencies [by Centura]” is stated in the most general terms as his

“experience”. This significantly limited my ability to assess the strength of the

foundation and therefore the soundness of the opinions. For this reason, this aspect

of Mr. Stregger’s evidence can be given little, if any, weight.

[153] In addition, even assuming the soundness of Mr. Stregger’s opinion that the

cumulative effect of the problems added between 28% and 38% to the cost of

Centura’s work, his evidence does not provide a basis upon which I could quantify

the cost impact of one or some of the complaints. It would be necessary to do so

given that Centura acknowledged that not all of the complaints were proved at trial.

Mr. Stregger did not attempt to quantify the cost impact of any of the complaints on

an individual basis. Rather, he merely calculated the cost overrun (purely a

mathematical exercise once he had assessed the value of the Base Contract Work

and Extras) and discounted it by the 15% to 25% that he said should be allocated to

“account for normally expected inefficiencies [by Centura]”. Assuming,

notwithstanding the problems with Mr. Bowie’s evidence, I could find that some of

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the complaints were proved, determining any associated cost impact would be an

entirely arbitrary exercise.

[154] Third, and in any event, I agree with the defendants that Centura failed to

provide the notice required by GC 6.5.4 and, as a result of that failure, Centura is

precluded from recovering compensation for cost impacts.

[155] GC 6.5.4 of the Contract states:

The Trade Contractor waives any claim for extension of Contract Time or

compensation for costs incurred as a result of an Excusable or Owner

Caused Event unless the Trade Contractor provides a notice in writing of the

claim to the Construction Manager within 10 Working Days after the

commencement of the delay or impact. A notice in writing shall describe the

event, the date the delay or impact commenced, the anticipated duration of

the delay or impact, the effect on the Contract Time and all steps taken or

available to mitigate the delay or impact.

[156] In its material respects GC 6.5.4 requires:

 written notice of a claim for costs incurred as a result of the event in

question;

 that is delivered within 10 working days of the commencement of the

event;

 that describes the event;

 that identifies the date the event commenced;

 that identifies the anticipated impact; and

 that identifies the steps taken or available to mitigate the impact.

[157] It is well established that contractual provisions like GC 6.5.4 are

preconditions to a contractor’s right of recovery and the failure to comply with them

bars the contractor from recovering: see for example Corpex (1977) Inc. v. Canada,

[1982] 2 S.C.R. 643; Doyle Construction Co. v. Carling O’Keefe Breweries of

Canada Ltd. (1987), 23 C.L.R. 143 (B.C.S.C.); aff’d (1988), 27 B.C.L.R. (2d) 89.

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[158] The purpose of a notice provision like GC 6.5.4 is not in dispute. It is to

enable the owner to consider the claim and its financial consequences, and to

protect its own position by doing such things as gathering information and taking

mitigating steps: Doyle Construction Co.

[159] Whether a notice provision like GC 6.5.4 has been satisfied is a question of

substance and not form, and even where the technical requirements have not been

met, a “notice defence” will be rejected where the purpose of notice has been

achieved through less formal means: TNL Paving Ltd. v. British Columbia (Ministry

of Transportation and Highways), [1999] B.C.J No. 1708 (S.C.) and Golden Hill

Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460.

[160] The cases I was referred to on the issue of notice turn on their particular

facts. The task is to determine whether, on the facts of this case, irrespective of the

technical form of any notice, the defendants were alerted to Centura’s intention to

pursue a claim for costs incurred as a result of a myriad of events, in time and with

enough information for them to consider the financial consequences and attempt to

protect their position.

[161] Centura says that it notified 601 Main or Icon “on numerous occasions, of

delays, interference, increased costs, and an intention to recover them”. In this

respect Centura relies on several emails and one letter with the following dates (all

in 2015): July 9, August 21 (two emails), August 24, September 10, September 15,

September 29, October 5, October 19, October 20, October 21 (two emails),

October 22, October 23 (two emails), October 28, October 30, December 15,

December 18, December 29, January 14, and January 15 (two emails). Centura

submits that these communications fulfill, in substance, any notice requirement.

[162] In my view, none of the communications noted above on its own, or in

combination with others, meets the substance of the requirements of GC 6.5.4. It is

not necessary to address each of them. I will give some examples:

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 The July 9 email identifies a number of issues that Centura asserts have

delayed the progress of its work, but it does not suggest or imply that Centura

intends to advance a claim for costs incurred as a result. Most, if not all, of the

issues occurred more than 10 days before. No anticipated cost impacts are

identified.

 The September 10 email contains the statement that “any delay also means

additional costs to us” but read in context it was not providing notice of

Centura’s intention to advance a claim for costs but rather was an observation

intended to reassure Icon that Centura was motivated to ensure it was not the

cause of delay.

 The October 30 letter does not suggest or imply that Centura intends to

advance a claim for costs. Rather, it is a defence to a notice of delay issued

to it.

[163] None of the communications identified by Centura served to crystalize a

position with respect to a particular delay or impact in a manner that would have put

601 Main or Icon on notice of the need to consider the claim and its potential

financial consequences, and protect its own position. Rather, to the extent the

communications contain complaints about delays or impact, they amount to no more

than the kind of “grumblings” that Locke, J.A. in concurring reasons in Doyle

Construction Co. found were insufficient to meet the notice requirements for

advancing a claim for impact costs.

[164] For these reasons, the Interference Claim is dismissed.

Have the defendants established that Centura breached the Contract

and, if so, what damages flow from the established breach(es)?

[165] The defendants’ claim damages for breach of contract in the amount of

$673,539.60 plus GST which is comprised of:

 $157,341.60 representing the difference between the amount they ultimately

spent on the steel stud, drywall, and insulation scope of work on the Project

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(most of which was paid to Crystal, as Centura’s replacement), and the

amount they say they would have had to pay Centura to complete the work;

and

 $516,198 representing the additional costs they incurred as a result of a four-

month delay in completing the Project which they say was caused by

Centura.

[166] In their Amended Counterclaim, the defendants allege that Centura’s delays

and deficiencies constituted a breach of the Contract. It is said that this entitled the

defendants to terminate the Contract pursuant to “section 6.5.10, 7.1.2 and 7.1.7” of

the Contract and, alternatively, pursuant to “the common law doctrine of

Fundamental Breach”. However, the express contractual terms said to have been

breached are not identified in the pleadings.

Did Centura breach the Contract?

[167] As already discussed, in addition to the obligation to perform the work in

accordance with the specifications and drawings contemplated by the “Contract

Documents”, it is an implied term of a construction contract that the work is to be

done in a good and workmanlike manner and, to the extent discussed above in the

section dealing with the alleged deficiencies, Centura breached that term.

[168] I turn now to delay. The defendants’ position is that the Recovery Schedule

was the governing schedule from November 4, 2015 to the date of termination, and

it wiped the slate clean so to speak. The defence submitted that the whole point of

the Recovery Schedule was to get Centura back on track and, accordingly, delays

prior to the Recovery Schedule became irrelevant. This was also the position

adopted by Centura’s witnesses, Mr. Bowie and Mr. Pengelly, in their testimony.

They said the Recovery Schedule was intended to take into account all delays that

had occurred to the point the Recovery Schedule was agreed to, regardless of who

caused them.

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[169] As discussed, there is no dispute that the progress of Centura’s work was

delayed by at least 30 days as at January 23, 2016. It appears to be the defence

position that Centura breached the Contract by failing to meet the milestone dates in

the Recovery Schedule, but the focus of the submissions was on whether Centura

was at fault for the acknowledged delay as opposed to whether a breach of the

Contract giving rise to liability for damages had actually been established.

[170] Although Centura admitted that the progress of its work was delayed, it

argued that the Recovery Schedule was abandoned soon after it was established for

reasons that were not its fault and, as a result, time had been put “at large”. Centura

acknowledged that it continued to have an obligation to complete its work within a

reasonable time, but submitted that it was no longer obliged to meet the specific

milestone dates in the Recovery Schedule. Centura cited the “prevention principle”

in support of its submission that time had been put at large: see Perini Pacific Ltd. v.

Greater Vancouver Sewerage and Drainage District (1966), 57 D.L.R. (2d) 307

[Perini] at paras. 33-38.

[171] I have doubt about whether the principle applied in Perini has application here

because it is said to apply where a contractor’s failure to complete work by a

specified date is brought about by the act of the other party to the Contract. For

reasons discussed below, I am not persuaded that 601 Main was the cause of the

delay that occurred after the Recovery Schedule was established. In other words, I

am not persuaded that any act of the defendants prevented Centura from meeting

the dates stipulated in the Recovery Schedule. However, it is my view that Centura’s

failure to meet those dates did not amount to a breach of the Contract because, in

my view, the Recovery Schedule ceased to apply once it became apparent that the

schedule for the mechanical and electrical rough-in could not be met.

[172] GC 3.5.4 provides that “[t]ime is to be considered of the essence and the

Trade Contractor agrees to perform the Work in accordance with the Construction

Schedule and the master Project Schedule”. The definitions of Construction

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Schedule and Project Schedule are less clear than one would wish. In the Contract’s

supplementary conditions, “Project Schedule” is defined as:

the project schedule prepared and submitted by the Construction Manager

pursuant to GC 3.5.1. Master Schedule, Master Project Schedule,

Construction Schedule or Schedule shall all refer to Project Schedule.

[173] The Recovery Schedule is not a schedule submitted by the Construction

Manager pursuant to GC 3.5.1. Rather, it is a schedule provided by Centura in

response to a demand under GC 3.5.8. Nevertheless, even though GC 3.5.4 does

not expressly refer to a recovery schedule, in my view it must be implied, given that

time is expressly made of the essence, that having provided a schedule in response

to a demand under GC 3.5.8, the trade contractor is contractually obliged to meet it

for so long as it is the governing schedule.

[174] However, the Recovery Schedule was expressly conditional on the feasibility

of the schedule for the mechanical and electrical rough-in. This was fundamental, as

much of Centura’s work (insulation, drywall or boarding, and tape and fill) follows

completion of the mechanical and electrical rough-in. Mr. Brezovski, the Icon

representative with the most knowledge of what was happening on site, testified that

he was not consulted by the defendants about the dates in the Recovery Schedule.

He said that he saw it after it had been agreed to and quickly formed the view that it

was unrealistic. He said he thought it was unrealistic for all the trades and, in

particular, that the time allocated for the mechanical and electrical rough-in was

inadequate. From his evidence and other evidence concerning the cause of the

delay that occurred after the Recovery Schedule was established (which is

discussed below), I find that very soon after the Recovery Schedule was established

it became apparent to both parties that the mechanical and electrical rough-in

schedule was not feasible.

[175] Pursuant to GC 3.5.3, Icon was obliged to monitor the progress of the work

and update the “Project schedule” on a monthly basis. It did not do so. Accordingly,

when it became apparent that the condition on which the Recovery Schedule was

based could not be met, there ceased to be any current milestone dates for Centura.

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As discussed below, the evidence does not support the conclusion that in the period

after the Recovery Schedule was established, Centura breached any remaining

obligation to complete its work within a reasonable time.

[176] For these reasons, the delay in the progress of Centura’s work in the period

after the Recovery Schedule was established did not constitute a breach of the

Contract.

What if any damages flow from the breach of contract?

[177]

I have found that, to the extent discussed above in the section dealing with

the alleged deficiencies, Centura breached the implied term obliging it to perform its

work in a good and workmanlike manner. I have also found that the delay in the

progress of Centura’s work in the period after the Recovery Schedule was

established did not constitute a breach of the Contract. However, in case the latter

finding is wrong and because of the potential significance of the fundamental breach

argument, I have analysed the defendants’ damages claim as if both breaches of

contract had been established. The question then is whether the defendants have

proved that the damages they claim actually flowed from one or the other of these

breaches of contract. In my view, they have not.

[178] The increased costs to complete the steel stud, drywall, and insulation scope

of work on the Project (the first category of damages claimed) were incurred as a

result of the decision by 601 Main to terminate the Contract and engage Crystal as a

replacement for Centura. The Contract was terminated under GC 6.5.10, which I

have found is a no-fault provision. Accordingly, the basis actually relied on by the

defendants as justifying the termination of the Contract precludes them from

recovering the first category of damages because those damages flowed not from

any breach of the Contract by Centura, but from 601 Main’s choice to exercise its

termination right under GC 6.5.10.

[179] The defendants argued that Centura’s breaches of contract amounted to

“fundamental breach” which provided an alternative justification for termination. If

that is so then the incremental increased costs of completing Centura’s work might,

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subject to mitigation arguments, be recoverable as damages flowing from the

breach.

[180] In Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 at

paras. 144 to 149, Cromwell J. discussed the general principles of contract law

relating to repudiation, which has sometimes been referred to, as by the parties in

this case, as “fundamental breach”:

144 The term repudiation refers to the situation in which a breach of contract

by one party gives rise to the right of the other party to terminate the contract

and pursue the available remedies for the breach: J. D. McCamus, The Law

of Contracts (2nd ed. 2012), at pp. 676-78. This occurs when one party

actually breaches the contract in some very important respect and is said to

thereby repudiate the contract. If the other party "accepts" the repudiation,

the contract is over. If the other party does not accept the repudiation, the

contract continues (subject to various other doctrines). In either case, the

non-breaching party can pursue the available remedies which may vary

depending on whether that party has accepted the repudiation or affirmed the

contract.

145 There is a wealth of learning about the types of breach that constitute

repudiation. Without getting into the details, we may say in brief that a breach

is a repudiation of the contract if it is a breach of a contractual condition or of

some other sufficiently important term of the contract so that there is a

substantial failure of performance: S. M. Waddams, The Law of Contracts

(6th ed. 2010), at para590; McCamus, at pp. 676-77.

146 I pause here to deal with three problems of terminology that can cause

confusion.

147 The first relates to the word "repudiation"; it is used in at least two

different senses. Sometimes it refers to the conduct of the breaching party in

committing a breach that is sufficiently serious to give the non-breaching

party the right to treat the contract as over. At other times the term is used to

refer to the choice of the non-breaching party, faced with this sort of serious

breach, to treat the contract as over. I will use the word "repudiation" to refer

to the acts of the party alleged to be in breach. I will refer to the choice of the

non-breaching party to treat the contract as over as "acceptance" of the

repudiation.

148 The second terminological clarification deals with the term "fundamental

breach". The types of breach that are sufficiently serious to constitute

repudiation are often referred to as "fundamental" breaches. However, use of

the term "fundamental breach" can cause confusion because it is also used in

the distinct context of deciding whether a contractual provision excluding or

limiting liability is effective in the face of a radical departure from the

contractual obligations: see, e.g., Tercon Contractors Ltd. v. British Columbia

(Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras.

104-23. To avoid that confusion, I prefer to refer to breaches of this nature as

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breaches of "sufficiently important terms" or "repudiatory" breaches: see, e.g.,

McCamus, at p. 651.

149 The final point of terminology is concerned with "anticipatory" breach. An

anticipatory breach "occurs when one party manifests, through words or

conduct, an intention not to perform or not to be bound by provisions of the

agreement that require [page568] performance in the future": McCamus, at p.

689; see also A. Swan, with the assistance of J. Adamski, Canadian Contract

Law (2nd ed. 2009), at s.7.89. When the anticipated future non-observance

relates to important terms of the contract or shows an intention not to be

bound in the future, the anticipatory breach gives rise to anticipatory

repudiation. The focus in such cases is on what the party's words and/or

conduct say about future performance of the contract. For example, there will

be an anticipatory repudiation if the words and conduct evince an intention to

breach a term of the contract which, if actually breached, would constitute

repudiation of the contract.

[181] In applying those principles, Cromwell J. explained, at para. 164, that a

repudiatory breach that entitles the non-breaching party to treat the contract at an

end, may be established on the basis of an actual breach that meets the importance

threshold (substantial failure of performance) and also by conduct that, in all the

circumstances, shows that the breaching party does not intend to be bound by

important terms of the contract in the future.

[182] In my view, even if both breaches of contract had been established, they

would not have amounted to repudiatory breach under either of those bases.

[183] As discussed, the damage the defendants established in relation to the

claimed deficiencies is almost insignificant. While Centura’s failure to meet the good

and workmanlike standard amounted to a breach of contract, it clearly did not

amount to a substantial failure of performance.

[184] Similarly, even if Centura’s failure to meet the Recovery Schedule was a

breach of the Contract, it could not be characterized as a substantial failure of

performance because Centura contributed in only a minor way, if at all, to the delays

that occurred after the Recovery Schedule was established.

[185] The primary cause of the delay in Centura’s work after the Recovery

Schedule was established was delay in the completion of the mechanical and

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electrical rough-in which set off a chain of delay. It was the primary cause of a delay

in completing the firestopping and passing the associated inspections, which in turn

delayed the commencement of the insulation phase of Centura’s work.

[186] The evidence was overwhelming that the mechanical and electrical trades

were not able to meet the rough-in schedule upon which the Recovery Schedule

was based. As mentioned, Mr. Brezovski testified that he thought the Recovery

Schedule was unrealistic for all the trades, including the mechanical and electrical.

Although he maintained that delay in Centura’s framing back in June and July

pushed everything back (including the mechanical and electrical rough-ins), there is

no dispute that the slate was wiped clean when the Recovery Schedule was

established in early November. In addition, on November 12, 2015, Icon requested

design changes to the framing (ultimately charged as an extra by Centura and

approved as such by Icon) that delayed the mechanical rough-in.

[187]

There is some evidence that deficiencies in some of Centura’s framing

contributed to the firestopping initially failing some inspections, but it was clear from

Mr. Brezovski’s evidence that delays associated with firestopping were minor; the

firestopping could not be finished until the mechanical and electrical rough-in was

complete, and Centura could not start the insulation phase of its work (spray foam

and batt insulation) until the firestopping had passed inspection.

[188] There was a lot of evidence related to Icon’s request that Centura change the

spray foam product Centura intended to use because of a concern that it was not

compatible with some piping that was being used in the heating system. Rather than

simply making the change, Centura spent time trying to obtain evidence that would

demonstrate that the product it originally intended to use was in fact compatible with

the piping. The defence characterized this as resulting in the biggest delay following

the establishment of the Recovery Schedule. However, as explained, Centura could

not start applying the spray foam until the firestopping had passed inspection. That

did not happen until mid-December (largely because of the delay in completing the

mechanical rough-in) and the spray foam issue was resolved by December 8, 2015.

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[189] In summary, although Centura spent time trying to secure approval of its

preferred spray foam product, its efforts in that regard did not delay the

commencement of its spray foam application work. The delay in passing the

firestopping inspections contributed in only a minor way to the overall delay that

occurred after the Recovery Schedule was established. The primary cause of that

overall delay was delay in the mechanical and electrical rough-in.

[190] I return to the second basis upon which a repudiatory breach may be

established; that is, conduct that, in all the circumstances, shows that the breaching

party does not intend to be bound by important terms of the contract in the future.

[191] Citing Fox (c.o.b. Griffin Construction Services) v. Rindje, [1995] B.C.J. No.

773, 58 B.C.A.C. 108 (B.C.C.A.), the defendants submit that an owner’s loss of

confidence in a contractor justifies termination for repudiatory breach. Of course, that

may be so where on the facts of the case in question it has been shown that the

contractor did not intend to be bound by important terms of the contract in the future.

That is not the case here.

[192] Although there were deficiencies in Centura’s work at the time of the

termination, I accept Mr. Adlington’s evidence to the effect that his pre-board and

post-board inspections were a form of quality control. In other words, Centura

intended to correct the deficiencies. In addition, irrespective of the delays Centura

may have caused before the Recovery Schedule was established, once the

Recovery Schedule was in place Centura intended to complete its work promptly. I

have already found that Centura played a minor role in the delay that occurred after

the Recovery Schedule was established. According to Mr. Brezovski, once the

Recovery Schedule was in place, Centura’s complaints virtually stopped, Mr. Bowie

displayed a sense of urgency, and Centura’s manpower increased. In all the

circumstances, it cannot be said that at the time the Contract was terminated,

Centura’s conduct suggested that it did not intend to be bound by important terms of

the Contract in the future.

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[193] For these reasons, GC 6.5.10 provided the only justification for the

termination of the Contract. The increased costs to complete the steel stud, drywall,

and insulation scope of work on the Project (the first category of damages claimed

by the defendants) were incurred as a result of 601 Main’s choice to exercise its

termination right under GC 6.5.10 and did not flow from any breach of the Contract

by Centura.

[194] The final question is whether, assuming Centura beached the Contract by

failing to meet the Recovery Schedule which I have found it did not, that breach

caused the defendants to incur additional costs associated with an overall delay in

completing the Project (the second category of damages they claim). In my view,

again assuming Centura beached the Contract by failing to meet the Recovery

Schedule, it has not been established that this caused the overall delay. For the

reasons I have already explained, the establishment of the Recovery Schedule

rendered the prior delays irrelevant and Centura played only a minor role in the

delay that occurred after the establishment of the Recovery Schedule. The

evidentiary record fails to establish a casual link between that minor delay and what

the defence characterizes as a four-month delay in obtaining the Final Occupancy

Permit.

Did Centura file a claim of builders lien in an amount that it knew or

ought to have known was exaggerated and, if so, are the defendants

entitled to damages for abuse of process?

[195] On March 4, 2016, Centura filed a claim of builders lien, pursuant to the

Builders Lien Act, S.B.C. 1997, c.45 (the “BLA”), for $1,136,593, which purportedly

represented Centura’s then view of the magnitude of the Contract Value Claim and

the Interference Claim. On or about April 14, 2016, by consent, the lien was

cancelled and security in the amount of $1,136,593 was paid into court in place of

the lien.

[196] Subsequently, the defendants applied to cancel the lien pursuant to s. 25(2)

of the BLA. They argued, among other things, that it was grossly overstated because

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the Interference Claim could not be sustained in light of Centura’s failure to give

notice as required by the Contract.

[197] On August 21, 2016, Abrioux J., then of this Court, dismissed the application

to cancel the lien but, pursuant to s. 24 at the BLA, he reduced the quantum of

security posted to $550,000: Centura Building Systems (2013) Ltd. v. 601 Main

Partnership, 2017 BCSC 1727.

[198] The Court of Appeal allowed Centura’s appeal: Centura Building Systems

(2013) Ltd. v. 601 Main Partnership, 2018 BCCA 172. Savage J.A. agreed that the

only inference consistent with the record and the reasons is that Abrioux J.

discounted the Interference Claim in its entirety. The Court held that he erred by

“ventur[ing] into a difficult analysis of the claim on the merits, including contractual

interpretation without considering the context, rather than applying the cautious

approach directed by the authorities” (para.46). The “cautious approach” is one that

recognizes that a determination on the merits cannot be made, in a summary way,

on an application to cancel a claim of lien or reduce security (para.34).

[199] On the application before Abrioux J., Centura relied on an internal costs

analysis and the evidence of Mr. Stregger. According to the internal analysis, the

actual costs incurred by Centura to complete its work up to the date of termination,

plus overhead and profit, amounted to about $1.6 million. From the reasons of the

Court of Appeal (para. 9), it appears that Mr. Stregger’s evidence was that the

amount owing under the Contract, including in respect of approved or pending

change orders, was $706,037, and that Centura had incurred a cost overrun of

$412,409.44 due to interference and delays.

[200] In the Amended Counterclaim, the defendants assert that:

1. the lien was in an amount Centura “knew to be false and grossly

overstated”, contrary to s. 45 of the BLA;

2. Centura’s filing of the lien was “a calculated attempt to secure litigation

advantages and coerce concessions from 601 Main that it was not entitled

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to” and this amounts to an abuse of the Court’s process that is deserving

of rebuke in the form of an award of punitive or aggravated damages; and

3. in addition, or in the alternative, pursuant to s. 19 of the BLA, the

defendants are entitled to an award of damages for the improper filing of

the lien.

[201] Section 45 of the BLA creates an offence:

45 (1) A person who knowingly files or causes an agent file a claim of lien

containing a false statement commits an offence.

(2) A person who commits an offence under subsection (1) is liable to a fine

not exceeding the greater of $2,000 and the amount by which the stated

claim exceeds the actual claim.

[202] Section 19 of the BLA creates a civil remedy for filing a lien against land “to

which the lien claim does not attach”:

19. A person who files a claim of lien against an estate or interest in land to

which the lien claimed does not attach is liable for costs and damages

incurred by an owner of any estate or interest in the land as a result of the

wrongful filing of the claim of lien.

[203] In final argument, defence counsel clarified that the defendants’ claim in

relation to the alleged “over-liening” is grounded in the tort of abuse of process,

apparently conceding that s. 45 does not create a civil remedy and s. 19 is limited in

its application to wholly invalid liens and does not apply to allegedly inflated ones.

[204] The elements of the tort of abuse of process are (a) a wilful misuse or

perversion of the court’s process for a purpose extraneous or ulterior to that which

the process was designed to serve, and (b) some damage flowing therefrom:

Border Enterprises Ltd. v. Beazer East, Inc., 2002 BCCA 449, paras. 51-53.

[205] The essence of the defendants’ abuse of process claim is that Centura’s lien

was so obviously grossly inflated by the amount Centura sought in the Interference

Claim that the only reasonable inference is that Centura deliberately inflated it “to

cause the defendants economic hardship in an effort to improperly pressure on [sic]

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the defendants to gain a litigation advantage”. As I understood it, this position was

based on the submission that:

1. Centura knew that it did not give the notice required by GC 6.5.4 of the

Contract to advance the Interference Claim and, given the reasons of Abrioux

J. on the defence application to cancel the lien, Centura ought to have known

that, as a result of the failure to give that notice, the Interference Claim was

bound to fail; and

2. the Interference Claim depended on Mr. Stregger’s evidence (in particular, his

calculation of the cost overrun and conclusion that the majority of it could be

attributed to delay caused by the defendants) and Centura knew or ought to

have known that his analysis was wrong.

[206] It almost goes without saying that the fact that the Interference Claim did not

succeed is not enough to ground a claim for damages for abuse of process.

[207] I found that Centura’s failure to give the notice required by GC 6.5.4 was fatal

to the Interference Claim. However, as Savage J.A. observed at para. 42 of his

reasons for allowing Centura’s appeal of the order reducing the security, “the

question of whether [this kind of] notice has been given – and the purpose of the

notice has been achieved – is a contextually driven substantive inquiry”. As he noted

at para. 40, there was evidence that Centura made a number of complaints about

delay. In the circumstances, the question of whether the purpose of the notice

provision had been met could only be determined by a consideration of all the

evidence admitted at trial. Accordingly, in my view, it cannot be said that Centura

knew or ought to have known that the Interference Claim would fail because it had

not given formal notice under GC 6.5.4.

[208] Similarly, the shortcomings in Mr. Stregger’s evidence, while significant, do

not, in my view, provide an adequate foundation upon which to find that Centura

knew or ought to have known the Interference Claim would fail. The defendants

highlighted what they characterized as three fundamental problems with

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Mr. Stregger’s evidence that they say should have or must have alerted Centura to

the weakness of the Interference Claim. However, in my view, the impact of those on

the weight to be given to Mr. Stregger’s evidence was minimal.

[209] First, the defendants submitted that Mr. Stregger wrongly assumed that

Centura’s costs were equally distributed throughout the duration of the project and

he admitted they could have been frontloaded. This did not affect my assessment of

his evidence because it was not established that the costs were frontloaded.

[210] Second, the defendants submitted that Mr. Stregger wrongly assumed that

the Contract price reflected accurate costs estimates and the evidence established

that Centura knew it had under-budgeted. In other words, the evidence established

that Centura knew the cost overrun was caused at least in part by a Contract price

that was too low from the outset. In my view, this significantly overstates the

evidence on this point. Mr. Stregger acknowledged that this was a potential issue by

discounting the cost overrun to “account for normally expected inefficiencies [by

Centura]”. Further, the evidence of Jorge Beja, who was responsible for overseeing

the estimating work that went into Centura’s tender on the Project, was to the effect

that only one cost issue arose after the tender was submitted (quoting on the wrong

gauge of certain steel studs) and, according to him, the impact on the budget was

only between $20,000 and $25,000. Mr. Beja’s evidence was not undermined on

cross-examination or shown to be unreliable, and I accept it.

[211] Third, the defendants submitted that the cost overrun was calculated by

Mr. Stregger to include “the additional costs incurred to complete change orders, but

no allowance was made to increase the budget number by the amounts budgeted

for completion of those change orders”. I believe this statement is incorrect. In

calculating the cost overrun, Mr. Stregger subtracted the amount he was told

represented Centura’s actual costs to complete the work, including the costs

incurred to complete change orders, from the value of the Base Contract Work and

Extras (which he referred to as “change orders (approved and pending)”.

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[212] The defendants cited Guilford Industries Ltd. v. Hankinson Management

Services Ltd. (1973), 40 D.L.R. (3d) 398 (B.C.S.C.) [Guilford] and Tylon Steepe

Homes Ltd. v. Pont, 2009 BCSC 253 [Tylon], but in my view those cases are not

helpful comparators.

[213] In Guilford, the court awarded general damages and exemplary damages for

abuse of process related to the filing of a builders lien. It was found that the lien

proceedings were “completely devoid of any legal foundation”, that a representative

of the lien claimant “knew perfectly well that there was not the slightest hope of

succeeding on the lien claim”, and that the lien was filed it to “obtain a settlement by

means of legal ‘blackmail’”. There was evidence that the representative of the lien

claimant spoke about “throw[ing] on enough liens to keep us tied up for three years”

and also said “Give me $100,000 and I’ll get off your back”. In addition, no evidence

was presented to indicate that the lien claimant had done any work on the lands in

question and if any work was done it was of no value whatsoever.

[214] In Tylon, the issue was whether a builders lien should be cancelled under

s. 25 of the BLA on the basis of being “frivolous, vexatious, or an abuse of process”.

It was not a case in which damages were awarded for the tort of abuse of process.

The lien was filed for $255,982.00 but $211,571.00 of that amount had already been

paid. Even then, the court declined to cancel the excessive lien as an abuse and

instead ordered it secured with reduced security.

[215] In this case, it cannot be said that the Interference Claim was devoid of any

legal foundation. Rather, the evidence in support of it was inadequate. The

question of whether the purpose of the notice requirements in GC 6.5.4 had been

met could only be answered in the context of all the evidence at trial, including Mr.

Bowie’s evidence. In addition, Mr. Bowie’s evidence was fundamental to establishing

the complaints of interference and delay. His evidence suffered from my concerns

about his credibility. The Interference Claim also depended on Mr. Stregger’s

evidence and I found that it did not provide a reliable basis upon which to assess the

actual cost impact of any particular event or circumstance that may have interfered

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with Centura’s work. However, it was not established that the people at Centura who

made the decisions with respect to quantifying the lien claim knew or ought to have

known that the evidentiary foundation for the Interference Claim was materially

inaccurate, untrue, or otherwise unreliable.

[216] For these reasons, I am not persuaded that Centura knowingly overstated the

amount of the lien claim. The defendants’ abuse of process claim is dismissed.

What is the appropriate rate and method for calculating interest to be

paid on any amounts found owing to either party?

[217] A 5.3.1 of the Contract provides:

Should either party fail to make payments as they become due under the

Contract or in an award by arbitration or court, interest at the following rates

on such unpaid amounts shall also become due and payable until payment:

(1) 2% per annum above the prime rate for the first 60 days.

(2) 4% per annum above the prime rate after the first 60 days.

Such interest shall be compounded on a monthly basis. The prime rate shall

be the rate of interest quoted by HSBC for prime business loans as it may

change from time to time.

[218] Centura seeks interest in accordance with that provision. However, no

submissions were made with respect to when interest would start accruing.

Specifically, it is not clear to me whether Centura seeks pre-judgment contractual

interest or post-judgment contractual interest, or both. Of course, it was not practical

for submissions to be made in advance about whether, given the findings I have

made, it could be said that 601 Main “fail[ed] to make payments as they [became]

due under the terms of the Contract”.

[219] The defendants submit that if Centura is owed any amount in respect of

unpaid work, it should only be entitled to interest in accordance with the Court Order

Interest Act, R.S.B.C. 1996, c.79. However, that submission appears to have been

based on the assumption that Centura would be found liable “for all of the costs

necessary to complete the project, which were far in excess of any amounts for

which [Centura] had not yet been paid”.

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[220] In my view, before making any order for interest other than an order that

interest is to be paid in accordance with the Court Order Interest Act, the parties

should have an opportunity to make submissions that reflect the findings I have now

made. If either party wishes to do so they may make arrangements to speak to the

issue of interest provided that, within 60 days of release of this judgment, they

submit a request to appear for that purpose. If neither party does so then interest

shall be paid on the amount awarded to Centura in accordance with the Court Order

Interest Act.

What is the appropriate costs award?

[221] At the conclusion of the trial, I granted the parties leave to make additional

submissions on costs following release of this judgment. If either party wishes to do

so they may make arrangements to speak to costs provided that, within 60 days of

release of this judgment, they submit a request to appear for that purpose.

Conclusion

[222] 601 Main was entitled to terminate the Contract under GC 6.5.10, which is a

“no fault” termination provision. In other words, pursuant to GC 6.5.10, 601 Main had

the right to terminate the Contract for a delay in the performance of Centura’s work

of more than 30 days, irrespective of the cause of or fault for the delay.

[223] Centura has established that, before accounting for deficiencies, the work it

completed up to the termination of the Contract had a value of $1,037,692.95

including GST ($794,000 plus 5% GST for Base Contract Work and $194,279 plus

5% GST for Extras). From that amount there must be deducted $6,237 to reflect

deficiencies in the tape and fill work on levels three and five and $455,879.33 which

Centura has already been paid. This leaves $575,576.62 owing to Centura for the

work it completed up to the termination of the Contract.

[224] Centura’s Interference Claim is dismissed.

[225] Centura breached the implied term of the Contract obliging it to perform its

work in a good and workmanlike manner. However, the only damage that has been

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established as flowing from that breach is $6,237 paid to Crystal to correct

deficiencies in the “tape and fill” aspect of Centura’s work. That amount has been set

off against the amount owing to Centura for the work it completed up to the

termination of the Contract.

[226] The delay in the progress of Centura’s work did not constitute a breach of the

Contract.

[227] The defendants’ abuse of process claim is dismissed.

[228] The parties have leave to make additional submissions on interest and costs,

as detailed above.

“Warren J.”