A Delay Claim Founded on an Estimated Completion Date

The Dispute

A homeowner hired a builder to renovate the house he had just bought, adding bedrooms and bathrooms upstairs and extending the back for a new kitchen and deck. He expected to move in about seven months later. Stop-work orders and permit amendments delayed the project. While he waited, he paid rent elsewhere, as well as utilities and insurance on a house he could not occupy.

The Parties’ Positions

The builder claimed the balance outstanding on its unpaid invoices, together with contractual interest at the monthly rate the contract specified. It maintained that the schedule initially set out in the online project management platform was an estimated schedule, that possible changes are not shown there because they are impossible to predict, and that the targeted end date was only a target given factors outside its control. It relied on the extension provision, under which the substantial completion date was to be extended where construction was delayed by a stop work order issued by a court or other public authority or by a cause beyond the manager’s control.

The owner counterclaimed for the cost of renting a home and the extra utility and insurance expense, abandoning the part of that claim above the monetary limit so it could be heard in the Provincial Court of British Columbia. He contended that the builder had negligently misrepresented a completion date on which he relied, and that the delay in completing the construction had caused him loss. He also maintained that the contract had been breached and performed negligently and that the work was deficient. He disputed paying the whole of the management fee and interest from the dates the invoices were issued, his evidence being that he had never been told before signing that the schedule was merely a target.

The Court’s Decision

The court did not find that the builder had made a representation that the completion date would be no later than the estimated month, or that it had been negligent in estimating a completion date. The contract provided for extension of an estimated substantial completion date on a stop work order or a cause beyond the builder’s control, and the court found the delay was occasioned by circumstances beyond that control. The court found no evidence that the work was defective or deficient, and held that the evidence did not establish repudiation.

The counterclaim was dismissed and the builder obtained judgment for the balance of its invoices with contractual interest, although legal fees are not recoverable by a party in a proceeding under the Small Claims Act. The owner therefore bore the accommodation and carrying costs of the overrun in full, and remained liable for the sum he had withheld.

Key Lessons for Owners and Construction Managers

• Record in the contract how the completion date may move. The schedule sat in an online project management platform while the contract carried an estimated substantial completion date extendable for stop work orders and causes beyond the manager’s control.
• Do not rely on an oral assurance about timing that the executed contract does not carry. The owner’s evidence was that he had never been told before signing that the schedule was merely a target, and the court did not find that a representation was made.
• Settle who applies for a permit amendment and who carries the delay. A structural change agreed on site required an amendment that took about a year from the stop work notice to approval, and the extension provision moved the substantial completion date by the length of such delay.
• Establish the measure of loss in evidence before advancing a deficiency or delay claim. The court found no evidence that the work was defective or deficient, no evidence of extra costs or unilateral changes, and none that changes to the scope of work went unapproved.

The outcome of this matter turned on the terms of the construction contract and on the evidence before the court at trial. A similar dispute may resolve differently.

ATAC LAW acts for owners, construction managers and contractors in construction contract disputes in British Columbia, from the first notice of delay through to trial.

Mike C. Stewart acted for the owner at trial.