It frequently comes as a rude surprise to construction industry participants that notice provisions under construction contracts are often strictly enforced by the courts.
There is a lack of recognition that notice provisions under a contract are very specific and are usually narrowly defined. Sending emails advising generally of additional costs, delays and project complaints may be entirely insufficient to constitute notice under a contract.
A great example of this is provided by the court case Campbell Construction Ltd. v. Abstract Construction Inc. The court found that various emails “grumbling” about project issues were not sent to the prescribed email address, and therefore did not constitute notice under the contract.
In this case, Campbell Construction entered into a standard form construction subcontract with Abstract Construction (ACI) to work as a concrete subcontractor on a development project in Victoria. ACI was the general contractor on the project and Abstract Ventures (AVI) was the property owner and developer.
The project suffered delays, and Campbell Construction was required to pour concrete during the winter months, which resulted in additional costs. Those led to disagreements between Campbell Construction and ACI. Eventually, the former filed a builders lien, commenced a legal action to enforce it and sought damages for breach of contract and unjust enrichment.
The subcontract included a dispute resolution clause that prescribed arbitration as the mandatory means to resolve any disputes arising on the project, and required the parties to exchange notices in writing that outlined their respective positions with regard to the disagreement. It also included two email addresses, one for Campbell Construction and one for ACI, and further required that all notices in writing be sent directly to these emails.
In response to the B.C. Supreme Court action, ACI argued that the parties were required to engage in alternate dispute resolution and sought a stay of proceedings—a legal mechanism that would temporarily halt Campbell Construction’s action. The court was asked to consider whether ACI had provided proper notice in writing to Campbell Construction that it intended to take the dispute to arbitration and, if so, whether such notice had been sent to the prescribed email address.
As is the case on most construction projects, the parties had exchanged emails throughout the course of the project, many of which referenced the delays and claims for additional costs. However, the court found that ACI’s emails were insufficient to trigger the dispute resolution clause in the subcontract.
The emails concerning the delays amounted to mere “grumbles,” according to the court. ACI had failed to particularize the nature of their claim and the grounds upon which it was based in these “grumbling” emails.
With respect to the additional costs claimed by ACI, the court found that while these emails had properly particularized ACI’s claim, they were not sent to the prescribed email address for Campbell Construction under the subcontract.
The lesson of the decision is to ensure that notices are sent in strict compliance with a contract. Emails between project managers may not meet contractual notice provisions if they fail to provide the particularization required by the contract, and are not delivered to the prescribed email address.
If resisting a claim for additional costs or time under a construction contract, check to see whether the claimant strictly complied with the notice provisions. If they did not, a company may be able to argue that the alleged notice emails were really nothing more than project grumbling.
Norm Streu is associate counsel with Harper Grey LLP and past chair of the Vancouver Regional Construction Association. Chris Hirst is a partner and leader of the construction and engineering practice group at Alexander Holburn LLP. This article was prepared with the assistance of Matthew Carabetta, articled student.
