Construction

Law Report
JULY 20 07 KEEPING YO U INF O RMED

TIME IS MONEY
The Condominium Developer’s Guide to Delay Claims

“Time is money” is an appropriate motto in

the field of high-rise condominium projects.
Yet, delays are an expected, although
unfortunate, reality of such projects.

Introduction
The developer is at the project’s centre, orchestrating the
progress of the project and dealing with all others involved
in the process including:

■ unit purchasers;

■ contractors;

■ lenders;

■ consultants, which may include architects,

engineers and cost consultants;.

■ the municipality; and

■ Tarion.

A developer is vulnerable to damage from delays because

the project revenue is fixed early in the process by the sale
price of the condominium units. Return on invested equity
is always diminished by delays. Further, some project costs
may be variable and sensitive to delays, such as financing
costs, especially where there is a variable interest rate,
and possibly construction costs, depending on whether
BY IRVING MARKS AND BARBARA GREEN the contracts are “stipulated price” or “cost plus”. When

Robins Appleby & Taub LLP Suite 2600, 120 Adelaide Street West, Toronto, ON M5H 1T1 (416) 868-1080
CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims JULY 2007

project costs are sensitive to delays, the developer’s ultimate  municipality delays
return on investment is also sensitive to delay.  lender delays

In recent years, there has been little litigation driven by ■ Assessing damages in delay claims:
condominium unit purchasers on the basis of delay because  notice requirements
of a strong market and rising prices. Although delay may
 when is a party entitled to damages on
cause these purchasers inconvenience, the delay often does
the basis of delay?
not generate financial losses significant to justify a lawsuit.
Even if a purchaser ultimately backs out of the deal, the  the categories of delay:
developer can often sell the unit to a new purchaser for ■ excusable
more money.
■ non-excusable
While there has been an unprecedented run of rising prices, ■ compensable
market conditions could easily change. If prices fall, even
■ non-compensable
marginally, a delay could cause the developer to suffer
significant losses. In the worst case scenario, all of the  damages arising from delay
purchasers could terminate, leaving the developer to resell ■ foreseeability
all of the units at lower prices. In those circumstances,
■ additional construction costs
the developer would want to hold the responsible parties
accountable for the delay. This paper briefly addresses ■ loss of profits
the remedies available to the developer, and the risks the ■ contract limitations
developer faces as the target of delay lawsuits.
 supporting documents
Delay claims are frequently complicated, requiring an  expert evidence
analysis of complex factual and legal arguments. The
 mitigation of damages
number of parties and different legal relationships between
them often leads to multi-party litigation with numerous ■ Review of some typical terms in construction con-
crossclaims, counterclaims and third party claims. tracts:

 exclusion clauses/disclaimers
The topic of delay claims is so broad that entire textbooks
have been written on the subject. Given the scope of this  penalty claims vs. liquidated damages clauses
topic, the purpose of this paper is to introduce some key  “time is of the essence” clauses
concepts and issues which arise in delay claims from the
 arbitration clauses
perspective of the developer, as well as to provide some
practical tips to protect the developer, even before the  implied terms
project encounters a delay. ■ Defences to delay claims, including:

 “force majeure” clauses

The paper addresses the following topics:
■ Where delays can occur in a project:  concurrent delay

 developer delays  exclusion clauses

 general contactor delays ■ A checklist for success

 subcontractor delays

 consultant delays

Robins Appleby & Taub LLP 2 (416) 868-1080

CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
Where Delays Arise in a Condominium Project
and Who May be Liable
Delays can occur at any time and at more than one stage
of development and construction of a condominium project.
A delay at one step often leads to delays at other steps
because the steps are so inter-dependent. Typical stages of
such a project include:
■ The developer purchases land suitable for the
project.
■ A concept or design for the project is developed.
■ The developer obtains the necessary zoning
and development approvals from the municipal
authorities.
■ Tarion registration.
■ Unit pre-sales.
■ The developer obtains project financing.
■ The project is constructed.
■ Unit purchasers take interim occupancy.
■ The condominium is registered.
■ Final closing.
a) Delays Caused by the Developer
The relationship between a condominium unit purchaser
and the developer, both with respect to delays and more
generally, is governed by the terms of the Agreement of
Purchase and Sale. For new condominium units, the Ontario
New Home Warranty Program Act also sets out a regime
of permissible delays and limitations on the purchaser’s
potential claims on the basis of delay.1
A contractor is entitled to assume that the work will be
completed in the time provided for in the contract, and to
arrange other projects accordingly. Even if the contract
does not provide a specific completion date, the developer
must not do, or fail to do, anything to delay the contactor
in carrying out the work. A developer who causes delay by,
for example, directing work to be performed in a sequence
different than originally planned, imposing testing beyond
what is necessary, or interferes in some similar fashion,
could be liable for interference.2 Other examples of delay
caused by the developer include:
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■ excessive changes in requirements or design;
■ defective or insufficient plans;
■ the failure to obtain necessary work permits; and
■ the failure to provide or approve drawings in a
reasonable time.
Where some part of the construction must be carried out
by or on behalf of the developer before the contractor can
perform its work under the contract, any delay in the work
amounts to a breach of contract for which the developer
may be liable. However, if a contractor is delayed because
other contractors have defaulted and the developer is
not responsible for the delay, the developer will not be
responsible for paying damages to the contractor arising
from the delay unless the contract states that the developer
must prevent such delays.3
When the developer causes delay, it commonly grants an
extension of time to the contractor to complete its work.
If the contractor accepts the extension from the developer
without claiming damages for the delay, this may amount to
a “waiver” (or an acceptance) of the developer’s breach and
may prevent the contractor from later claiming damages
from the developer for delay.4
b) Delays Caused by a Contractor
A contractor who is responsible for delay in the completion
of work will be in breach of its contractual obligations and
may be liable to the developer for damages. A sufficient
delay may also enable the developer to terminate the
contract altogether.5 In addition to the contractor’s duty
to perform the work pursuant to the terms of the contract,
the contractor may have additional obligations under the
contract, such as compliance with statutory rules and
regulations and by-laws. If the contractor fails to fulfil these
obligations, this constitutes a breach of contract.6 Other
examples of delay caused by the contractor include:
■ contractor management and performance
problems;
■ contractor management and performance
problems;
■ failure to properly staff the job;
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
■ failure to order materials and equipment in a
timely fashion; and
■ the unavailability of labour, material or
equipment.
A contractor who incurs additional costs because of its
own delay is not entitled to recover such costs from the
developer.7
If a contractor knows in advance that it will not be able to
complete its work in a timely fashion, it may apply to the
developer for an extension of time. If the developer grants
the extension and the work is completed within the extended
time period, the contractor will not be considered to have
breached the contract. If the delay was solely the fault of
the contractor, the developer is not required to grant an
extension.8
Standard form construction contracts have timelines
that specifically address the issue of delay. For instance,
General Condition 6.5 of the stipulated price contract in
CCDC 2-1994 contains a specific delay section, attached
as Appendix “A”.9
c) Delays Caused by Subcontractors
Delay caused by the subcontractors or the contractor’s
suppliers is the contractor’s responsibility as far as the
developer is concerned.10
d) Delays Caused by Consultants
If work performed by a consultant is not timely or is
deficient, which leads to delay, the developer may have a
claim in contract or professional negligence against the
consultant. Examples of this are: design deficiencies, delay
in approval of change work orders, and delays in payment
certification.
e) Delays by the Municipality
Practically speaking, it may be difficult and expensive to
successfully sue a municipality for causing development
delays. However, Courts have held municipalities liable for
delays in unique circumstances. An application can be made
to Court under section 8 of the Building Code Act, 1992 to
require issuance of a building permit or demolition permit.
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JULY 2007
For instance, in Axelrod v. City of Toronto, the Court ordered
a municipality to issue demolition permits to a developer
after its refusal to do so without proper grounds.11
Legal proceedings against a municipality will likely cause
further delays given that the judicial process is frequently
slow.
f) Delays by the Lender
The rights between a developer and its lender, typically
a large financial institution, are governed by the lending
commitment agreement between them. A developer may
have limited contracting freedom with a lender as the
lending agreements are frequently geared towards protecting
the latter’s interests. Delays by a lender in making proper
advances could result in a failure to pay contractors and
the registration of construction liens. However, depending
on the terms of the agreement, a developer may have a
claim for breach of contract and damages for loss of profits
in circumstances where the lender failed to abide by the
terms of their agreement which results in project delays.
For instance, in National Trust Co. v. Saks, the developer
was successful in its claim against the lender for breach of
contract when the latter wrongfully disregarded the terms of
the loan agreement by demanding that the developer make
cash equity injections to pay cost overruns.12
Assessing Damages in Delay Claims
The following section explores the topic of the computation
of damages in delay claims and how notice provisions in
the contract and the duty of the innocent party to mitigate
its losses impact the claim. In addition, the significance of
proper documents and expert evidence on delay claims is
briefly reviewed.
a) Notice Requirements: A Possible Precondition
to a Damages Claim
Construction contracts frequently require that a specific
form of timely notice be given to the defaulting party as
a precondition to preserving the innocent party’s right to
claim compensation for delay. It is essential that the notice
requirements of a contract be strictly adhered to in order
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to preserve the right to claim damages. Particulars must
be given in a timely fashion so that the defaulting party is
notified that a claim will be advanced against it for costs
related to delays but has the opportunity to take protective
measures.13
b) When is a Party Entitled to Damages on the
Basis of Delay?
A delay can be categorized as “excusable” or “non-
excusable”. To decide which category a delay falls into,
the construction contract is reviewed first to determine
whether it permits the delay and whether it provides for
entitlement to compensation or an extension of time in the
circumstances.
An “excusable” delay is a delay for which the claimant
is entitled to an extension in the contract time, or
compensation for the delay, or both. If there is entitlement
to compensation, as well as an extension in the contract
time, the delay is a “compensable excusable delay.” If the
claimant is only entitled to an extension of the contract time,
the delay is a “non-compensable excusable delay”. Delays
not caused by a party, such as acts of G-d, severe weather,
and natural disasters such as floods or fires, are generally
considered “non-compensable excusable delays”. When such
delays occur, the developer typically is required to give the
contractor an extension of time to perform the contract,
but this does not permit the developer to make any claim
for additional costs arising out of the delay, or to terminate
the contract on that basis. A “non-excusable delay” is one
for which the party is entitled to neither an extension in the
contract time nor any monetary compensation.14
The usual remedy sought by a party to a building contract
is damages for breach of the contract. A claim for breach
of contract may only be made against the party with whom
the contract was made. If the breach is of such a nature
that there is a “repudiation” of the contract (ie: the breach
goes to the root of the contract or there is a substantial
failure of performance or the breaching party has indicated
its intention to no longer be bound by the contract), the
innocent (ie: non-breaching) party may elect to accept the
repudiation and treat the contract as terminated by the
breach. In these circumstances, the innocent party may
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recover damages for breach of contract, and the breaching
party is excused from any further performance under the
contract. The developer may terminate the contract and
retain other forces to complete the contractor’s work.15
However, if the innocent party does not accept the repudiation,
the breaching party is not excused from further performance,
and the innocent party can still claim damages for the
breach of contract.16 Whether in any given circumstances
the breach is sufficiently fundamental so as to amount to a
repudiation is in each case a question to be determined in
light of the particular terms of that contract.17
c) Damages Arising From Delay
In order to recover damages, the innocent party must be
able to establish that there has been a breach of duty or
contract, that it suffered a loss, and that the loss is a result
of the breach of contract or negligence. The purpose of
awarding damages is to put the injured party, as far as
money can accomplish this, into the same position as if the
innocent party’s rights had not been violated.
Typical heads of damage for a delay claim made by a
developer include:
■ additional construction costs
■ overhead and carrying costs, such as interest and
property tax during the period of delay
■ liquidated damages (depending on the terms of
the contract)
■ diminution of value of the project
■ loss of profits
i) Foreseeability
Even if a delay amounts to a breach of contract, not all
damages are necessarily recoverable. Damages are only
recoverable if they arise naturally from the breach or, in
some circumstances, if they could reasonably have been
within the contemplation of the parties when they entered
into the contract. All other damages will be considered too
remote. For instance, if a developer requires a building to be
completed by a certain date, and its purpose is to generate
income, a contractor who fails to complete its work in time
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
will be liable to the developer for damages for loss of profits
only if the contractor actually knew that the building was
required for such purpose, or if that purpose was reasonably
within the parties’ contemplation.18
ii) Additional Construction Costs
Since the purpose of a damages award is to grant full
compensation, but not a windfall, if the developer is the
innocent party, the cost of completing or correcting the work
over and above the contract price is the proper measure
of damages in many cases, especially when the contractor
failed to perform the work. It is usually more expensive
to call in another contractor during the course of work to
complete it, and such additional costs must be paid by the
defaulting contractor if the developer reasonably incurred
such costs. In other cases, the proper measure of damages
is based on the loss in the value of the land.19
iii) Loss of Profits
Where a contractor can prove that it suffered a loss as a
result of the developer’s breach, the measure of damages is
the net loss occasioned by the breach.20 Where a contractor
can establish that it has lost profit as a result of the owner’s
breach of contract, it will be entitled to recover lost profit as
damages.21 A contractor is also entitled to claim damages
for idle equipment and for office overheads as a result of
the delay. Further, if the scope of the contractor’s work
is significantly changed by the owner during construction,
the contractor will be entitled to the increased costs as
damages.22
Loss of profit claims are complex and usually involve an
analysis of actual profits as against budgeted or projected
profits. The question is how much profit would have been
realized “but for” the delay. The analysis usually includes
a discount for the risk that the projections might not have
been achieved even if there were no delays.
iv) Contract Limitations
Many contract clauses provide that if there is a delay,
recoverable damage will be computed in accordance with a
particular formula or only using specified heads of recovery.
In Goodfellow’s Trucking Ltd. v. New Brunswick, the Court
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ordered damages to be paid pursuant to the method selected
by the parties and set out in the contract.23
d) Supporting Documents
Supporting documents are critical in proving that there
was a delay, that it was caused by the Defendant, that the
Plaintiff suffered compensable damages as a result of the
delay, and that a particular measure of damages is proper
in the circumstances.
The following are suggestions of steps and documents
that should be maintained throughout the course of the
project:
■ The developer should have a well-established
project schedule and maintain accurate and
timely records of all delays, as they occur, and
how the delay impacted upon the project. This
will assist the developer to corroborate any
consequential losses resulting from the delay.
■ Immediately put the responsible parties on
notice of the need to comply with a specific
deadline and that they will be held responsible
for any delay.
■ Keep clear and accurate records of all contracts
related to the project.
■ Maintain detailed accounting records since the
losses will be financial.
■ All staff involved in the construction project
should keep detailed records of daily events
during the course of construction.
■ Photos and video footage showing the status of
a construction project on any given day are often
helpful in proving delay claims, as well as logs
and journals which recorded details of events
that transpired on site.
■ Keep all correspondence, as well as written notes
of discussions.
■ Any problems related to delays in the
construction schedule should be addressed during
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meetings. Minutes of those meetings should be
circulated to attendees for approval.24
e) Expert Evidence
In order to establish a claim for delay of any significant size,
expert evidence will be necessary. It is strongly recommended
that the expert be retained in the early stages of litigation
so that the expert can assist in the preparation of pleadings,
assist with the discovery process, assist counsel to prepare
the case for trial, and appear as a witness at trial.
At trial, experts are permitted to give evidence of the proper
method to be adopted in assessing a delay claim as a matter
of industry practice, and testify as to any exceptions to
that method which should be made in the case. The expert
may also express an opinion about the type of effect that is
generally caused by the delay of one branch of a construction
project upon other branches of the project. The expert can
also provide factual evidence about construction techniques
and practice.25 Expert accounting evidence will also be
required to establish a loss of profit claim.
f) Mitigation of Damages
In the case of a breach of contract, the innocent party
is required to mitigate (minimize) its damages by taking
reasonable steps to protect itself from further loss. In other
words, the innocent party must behave in a reasonable
manner with a view to ensuring that its damages resulting
from the breach are as minimal as possible, which includes
seeking the most economical and efficient way of making up
for a delay. It may also include the least expensive method
of returning the innocent party to the same position. For
instance, the developer must attempt to replace a contract
as quickly as possible where a contractor has failed to
complete. The onus is on the party asserting that the
innocent party has not mitigated its damages to prove that
it did not do so.26 The innocent party’s failure to mitigate
could significantly reduce the damages ultimately awarded
to it by the court.27
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Tips and Traps of Common Construction
Contract Clauses: Strategies for Examining
Contractual Terms
The terms of the contract have clear implications on delay
claims. For instance, what does the contract say about
delivery dates? Are the dates firm? Does the contract make
“time of the essence”? Set out below is a brief analysis
and practical tips regarding some common construction
contract terms, including: exclusion clauses, penalty and
liquidated damages clauses, “time is of the essence”
provisions, arbitration clauses, as well as the effect of
implied contractual terms.
a) Exclusion Clauses/Disclaimers
Construction contracts frequently contain clauses which
attempt to limit or exclude a party’s liability if certain events
occur. Often, a developer includes such a provision stating
that in no, or only limited, circumstances will it be liable to
the contractor. If a developer seeks to exclude its liability for
delay in respect of its own breaches of contract, it may do
so but it is mandatory that the disclaimer expressly provides
that it includes the developer’s own breach of contract.
Language such as “the developer shall in no circumstances
be responsible to the contractor for damages resulting from
the delay of the contractor’s work operations” has been
found to be insufficient because it fails to include in express
language the situation where the developer has breached its
contractual obligations.28
By contrast, in Perini Pacific Ltd. v. Greater Vancouver
Sewerage & Drainage District (No. 2), the Supreme Court
of Canada held that the addition of the more specific phrase:
“whether or not such delay may have resulted from anything
done or not done by [the developer] under the contract” was
an effective exclusion clause as this was exactly the kind of
loss which precluded the claim according to the language
of the contract.29
Because exclusion clauses and disclaimers are strictly
construed, it is necessary that clear and unambiguous
language be used. If there is ambiguity, an exclusion
clause will be read strictly against the party for whose
benefit it was inserted. Therefore, the best tool to attack an
exclusion clause is to have it strictly construed against the
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interest of the party who put it forward, on the grounds of
ambiguity.30
There is no rule that necessarily invalidates an exclusion
clause in the event of a fundamental breach or other type
of breach of contract.31 In deciding whether to enforce
an exclusion clause in the face of a fundamental breach
of contract, the court will decide whether doing so would
be “unconscionable” or so unreasonable that the parties
could not have intended this result. “Unconscionability”
usually arises in situations where there is a vast disparity
of contractual bargaining power between two parties to
the contract so that the imposition of the disclaimer was
essentially forced upon a party (usually the contractor) with
no real commercial choice but to accept the term. Where
there is equality of bargaining power, the courts will usually
give effect to the bargain.32
b) Penalty Clauses vs. Liquidated Damages
Clauses
Construction contracts sometimes contain clauses which
provide for the payment of a stipulated sum of money per day
for any delays in completing the work beyond the completion
date in the contract. Such clauses may be characterized as
either a liquidated damages clause or a penalty clause.
Penalty clauses are void and unenforceable because a party
cannot legally provide in a contract for the payment of a
penalty.33 For example, a late payment clause of $1,500.00
per day in a contract worth $59,000.00 to install new
foundations and pillars and to replace 13 existing buildings
on new structures was held to bear no relation to reality,
nor was it a genuine attempt to make a pre-estimate of the
damages likely to occur. It was therefore held to be a penalty
clause and void.34
Parties to a contract are, however, permitted to provide
for a pre-estimate of damages which are likely to arise
in certain circumstances and to agree on the payment of
liquidated damages in such circumstances. In order for a
liquidated damages clause to be considered valid, it must
provide for payments which bear a relation to reality and
must be a genuine attempt to make a pre-estimate of the
damages which are likely to occur. The amount should not
be excessive. Otherwise, the Court will view this as a penalty
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clause. Further, the developer will likely have to prove that
it suffered actual damages in the amount of the claimed
liquidated damages.35
Liquidated damages provisions for delay in completion are
inapplicable if the contractor never started the work under
the contract, as they apply only once work has begun.36
c) “Time is of the Essence” Provisions
Where a construction contract makes time “of the essence”,
the breach of an obligation calling for performance at a
specified time may amount to a breach of an essential
element of the contract which can be treated by the innocent
party as discharging the agreement and relieving against
performance by the innocent party.37 In contracts where
time is of the essence, even a 10-minute delay has been
held to be a breach of this term.38 Therefore, when a time is
of the essence clause exists in a contract, strict compliance
with time limits is imperative. Therefore, when a time is of
the essence clause exists in a contract, strict compliance
with time limits is imperative.
d) Arbitration Clauses
Construction contracts often contain arbitration clauses,
such as the one set out in General Condition 8.2 of the CCDC
Stipulated Price Contract, attached as Appendix “A”. It is
strongly recommended that all contracts in a given project
be consistent with respect to arbitration provisions. Either
all project contracts should contain an arbitration clause, or
none should have this clause. This consistency may prevent
procedural problems and a multiplicity of proceedings given
that section 7(1) of the Arbitration Act, 1991 provides that
a court proceeding must be stayed in favour of arbitration
when there is an agreement to arbitrate.
Further, any arbitration clause contained in the construction
contracts should specifically exclude arbitration where a
developer has been sued and wishes to commence third
party proceedings. Otherwise, the main action could proceed
in court while the third party claim proceeds by arbitration,
resulting in a multiplicity of proceedings and potentially
inconsistent results.
However, these concerns are not usually an issue when
a developer has entered into a General Contract with a
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general contractor. In this situation, the developer has no
direct relationship with the subcontractors so any delay
claims would be governed solely by the contract between
the developer and the general contractor (and the developer
would not need to bring claims against the subcontractors
for delay).
The prevalence of arbitration in construction cases (and
other commercial cases) has lead to a dearth of recent
reported court cases on these issues. While this may benefit
the immediate parties (lower costs, speed and privacy), it
deprives subsequent parties and their lawyers the benefit
of guidance from decided case law.
e) Implied Terms
Since it is almost impossible to foresee all situations that
may arise during the course of construction to provide for
all of them in the contract, the court will sometimes have
to imply a term to address a situation when the parties did
not deal with it expressly.
In the absence of an express provision in a contract, it is an
implied term of a construction contract that the developer
will do everything reasonable to allow the contractor to
complete its work, such as making timely payments and
refraining from interfering with the contractor’s work which
may result in delay in its completion.39
Defences to Delay Claims
Depending on the circumstances, there may be some
available grounds to reduce or eliminate a delay claim. Set
out below is a brief analysis of some common defences:
“force majeure” clauses, concurrent delay as a defence,
and disclaimer clauses.
a) “Force Majeure” Clauses
Frustration of a contract occurs when its performance
becomes impossible due to a supervening event caused by
neither party, and not within their contemplation. Many
condominium construction contracts contain a force
majeure clause to address these situations. Section 6.5.2 of
the CCDC-2 1994, set out in Appendix “A”, is an example
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of such a clause. If the event occurred without the clause
in the contract, the contract would be frustrated and the
parties no longer bound to perform their future contractual
obligations.
In order to rely on a force majeure clause as a defence
to a delay claim, the circumstance which occurred should
not have been foreseen and could not have been prevented.
Strict compliance with the notice provisions set out in
the contract has been held to be a condition precedent to
invoking a force majeure clause.40
b) Concurrent Delay
Concurrent delay occurs when two or more causes of delay
operate at the same time. If different parties are responsible
for different concurrent delays, the court will generally
assign a percentage of fault to each responsible party. A
court will do the best it can to apportion responsibility on
an estimated basis, on the basis of expert evidence. If the
court cannot decide how to apportion the fault, an equal
percentage of the blame will be assigned to each party.41
Concurrent delay is frequently used as a defence to a delay
claim. If a party can successfully assert a concurrent delay
so that the court apportions the concurrent delay, the party
might be able to reduce such a claim by the percentage of
concurrent delay for which the claimant is responsible. For
instance, in Alberta Engineering Co. v. Blow, the contractor
brought an action for the balance of the contract owing. The
owner counterclaimed for delay on the basis that the project
was delivered several months after the agreed completion
date and the owner lost rental income as a result. The
contractor asserted that the owner was responsible for some
concurrent delay. The court attributed over a quarter of the
concurrent delay to the owner, thereby reducing the owner’s
claim for rent.42
Further, if a party can prove that an excusable but non-
compensable delay ran concurrently with the compensable
delay, the party can try to entirely defeat the delay claim
on the grounds that the non-compensable delay overrides
the compensable delay such that only an extension of time
is permitted.43
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Proving a concurrent delay may reduce or defeat the delay
claim even when the defending party is not asserting a delay
claim itself.44
c) Exclusion Clauses
Exclusion clauses, also known as disclaimers, are a possible
defence to a delay claim, as set out above.
Conclusion and Checklist for Success
Preparation in advance is the key to a successful delay claim
and will assist in the defence of any such claim. Below is
a short checklist to assist the developer to prepare itself.
These steps are summarized in greater detail above, and
should be considered and, where applicable, undertaken
from the outset of the project and on an on-going basis
throughout the project:
■ take care in the review and co-ordination of all
project contracts;
■ establish and maintain a project schedule;
■ maintain records of construction progress;
■ maintain proper accounting records;
■ comply with all contractual notice provisions;
■ act reasonably to mitigate losses; and
■ be prepared to devote the time, attention and
money necessary to win. Litigation is expensive
and it may end up becoming the developer’s next
project! „
Robins Appleby & Taub LLP
JULY 2007
APPENDIX “A”
GC 6.5 DELAYS
6.5.1 If the Contractor is delayed in the performance of
the Work by an action or omission of the Owner,
Consultant, or anyone employed or engaged by them
directly or indirectly, contrary to the provisions of
the Contract Documents, then the Contract Time
shall be extended for such reasonable time as the
Consultant may recommend in consultation with
the Contractor. The Contractor shall be reimbursed
by the Owner for reasonable costs incurred by the
Contractor as the result of such delay.
6.5.2 If the Contractor is delayed in the performance of
the Work by a stop work order issued by a court
or other public authority and providing that such
order was not issued as the result of an act or
fault of the Contractor or any person employed or
engaged by the Contractor directly or indirectly,
then the Contract Time shall be extended for such
reasonable time as the Consultant may recommend
in consultation with the Contractor. The Contractor
shall be reimbursed by the Owner for reasonable
costs incurred by the Contractor as the result of
such delay.
6.5.3 If the Contractor is delayed in the performance
of the Work by labour disputes, strikes, lock-outs
(including lock-outs decreed or recommended for its
members by a recognized contractors’ association,
of which the Contractor is a member or to which the
Contractor is otherwise bound), fire, unusual delay
by common carriers or unavoidable casualties, or
without limit to any of the foregoing, by a cause
beyond the Contractor’s control, then the Contract
Time shall be extended for such reasonable time
as the Consultant may recommend in consultation
with the Contractor. The extension of time shall not
be less than the time lost as the result of the event
causing the delay, unless the Contractor agrees
to a shorter extension. The Contractor shall not
be entitled to payment for costs incurred by such
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
delays unless such delays result from actions by
the Owner.
6.5.4 No extension shall be made for delay unless notice in
writing of claim is given to the Consultant not later
than 10 Working Days after the commencement
of delay, providing however, that in the case of a
continuing cause of delay only one notice of claim
shall be necessary.
6.5.5 If no schedule is made under paragraph 2.2.9 of
GC 2.2 - ROLE OF THE CONSULTANT [ie: the
Consultant will furnish Supplemental Instructions
to the Contractor with reasonable promptness or
in accordance with a schedule agreed to by the
Consultant and the Contractor], no claim for delay
shall be allowed because of failure of the Consultant
to furnish instructions until 10 Working Days after
demand for such instructions has been made and
not then, unless the claim is reasonable.”]
GC 8.2 NEGOTIATION, MEDIATION, AND
ARBITRATION
8.2.1 In accordance with the latest edition of the Rules
for Mediation of CCDC 2 Construction Disputes,
the parties shall appoint a Project Mediator
.1 within 30 days after the Contract was
awarded, or
.2 if the parties neglected to make an appoint-
ment within the 30 day period, within 15
days after either party by notice in writing
requests that the Project Mediator be ap-
pointed.
8.2.2 A party shall be conclusively deemed to have
accepted a finding of the Consultant under GC
2.2 - ROLE OF THE CONSULTANT and to have
expressly waived and released the other party from
any claims in respect of the particular matter dealt
with in that finding unless, within 15 Working Days
after receipt of that finding, the party sends a
notice in writing of dispute to the other party and
to the Consultant, which contains the particulars
Robins Appleby & Taub LLP
JULY 2007
of the matter in dispute and the relevant provisions
of the Contract Documents. The responding party
shall send a notice in writing of reply to the dispute
within 10 Working Days after receipt of the notice
of dispute setting out particulars of this response
and any relevant provisions of the Contract
Documents.
8.2.3 The parties shall make all reasonable efforts to
resolve their dispute by amicable negotiations and
agree to provide, without prejudice, frank, candid
and timely disclosure of relevant facts, information,
and documents to facilitate these negotiations.
8.2.4 After a period of 10 Working Days following
receipt of a responding party’s notice in writing
of reply under paragraph 8.2.2, the parties shall
request the Project Mediator to assist the parties
to reach agreement on any unresolved dispute.
The mediated negotiations shall be conducted in
accordance with the latest edition of the Rules for
Mediation of CCDC 2 Construction Disputes.
8.2.5 If the dispute has not been resolved within 10
Working Days after the Project Mediator was
requested under paragraph 8.2.4 or within such
further period agreed by the parties, the Project
Mediator shall terminate the mediated negotiations
by giving notice in writing to both parties.
8.2.6 By giving a notice in writing to the other party,
not later than 10 Working Days after the date
of termination of the mediated negotiations under
paragraph 8.2.5, either party may refer the dispute
to be finally resolved by arbitration under the latest
edition of the Rules for Arbitration of CCDC 2
Construction Disputes. The arbitration shall be
conducted in the jurisdiction of the Place of the
Work.
8.2.7 On expiration of the 10 Working Days, the
arbitration agreement under paragraph 8.2.6 is not
binding on the parties and, if a notice is not given
under paragraph 8.2.6 within the required time,
the parties may refer the unresolved dispute to the
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
courts or to any other form of dispute resolution,
including arbitration, which they have agreed to
use.
8.2.8 If neither party requires by notice in writing given
within 10 Working Days of the date of notice
requesting arbitration in paragraph 8.2.6 that
a dispute be arbitrated immediately, all disputes
referred to arbitration as provided in paragraph
8.2.6 shall be
.1 held in abeyance until
(1) Substantial Performance of the Work,
(2) the Contract has been terminated, or
(3) the Contractor has abandoned the Work,
whichever is earlier, and
.2 consolidated into a single arbitration under
the rules governing the arbitration under
paragraph 8.2.6.
Robins Appleby & Taub LLP
JULY 2007
Endnotes
1. Ontario New Home Warranty Program Act, R.S.O.
1990, c. O.31
2. Immanuel Goldsmith and Thomas G. Heintzman,
Goldsmith on Canadian Building Contracts, 4th
(Toronto: Thomson Carswell, 1988) at 5-9
3. Ibid.
4. Esposito, Anna M. and Maria Tassou, “Overview of
Construction Delay Claims and Delay Damages” in
Construction Delay Claim: Following the Critical Path,
Ontario Bar Association, Continuing Legal Education
[CLE Program] (2006: Toronto, Ontario) at 3.
5. Anderson Industrial Doors Ltd. v. Genstar Construction
Ltd. [1985] CarswellBC 768 (B.C.S.C.)
Supra, note 2 at 5-16
6. Supra, note 2 at 5-18
7. Josyln & Olsen Contractors Ltd. v. Bouey [1976]
CarswellAlta 21 (A.C.A.)
8. Supra, note 4 at 4
9. “CCDC” stands for “Canadian Construction Documents
Committee”, which is a joint committee comprised of
owners and representatives of various institutes. The
italicized terms are defined terms in the contract.
10. Supra, note 2 at 5-17
11. [1984] CarswellOnt 519 (Div. Ct.); (1984) 13 D.L.R.
(4th) 634 (H.C.J.); varied at [1985] O.J. No. 2664
(H.C.J.)
12. [1998] CarswellOnt 2554 (O.C.A.)
13. Supra, note 4 at 9
W.J. Kenny, Cook Duke Cox (Edmonton-Calgary), Delay
Claims at 37(source unknown)
For further reading on the issue of the importance
of timely notice on such claims, please see: Esposito,
Anna M. and Maria Tassou, “Overview of Construction
Delay Claims and Delay Damages” in Construction
Delay Claim: Following the Critical Path, Ontario
Bar Association, Continuing Legal Education [CLE
Program] (2006: Toronto, Ontario) at 9 to 12.
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims
14. Supra, note 4 at 2 and 3
15. Torbray (Town Council) v. Metro Enrg. & Const. Ltd.
(1980) 30 Nfld. & P.E.I.E. 298 (Nfld. T.D.)
16. Supra, note 2 at 6-3 and 6-4
17. Ibid, at 6-5
18. Smith v. Tennant (1890), 20 O.R. 180
Can. Foundry Co. v. Edmonton Portland Cement Co.
(1918) CarswellAlta 157
(P.C.).
19. Supra, note 2 at 6-9 and 6-10
20. Pendivic Contracting Co. v. International Nickel Co.
[1975] CarswellOnt 299 (S.C.C.)
21. Lowe v. Robb Engineering Co. [1905] CarswellNS 11
(N.S.S.C.)
22. Shore & Horowitz Construction Co. & Franki of
Canada Ltd. [1964] CarswellOnt 70 (S.C.C.)
23. [2003] CarswellNB 587 (N.B.Q.B.); aff’d at [2005]
CarswellNB 411 (N.B.C.A.)
24. Supra, note 4 at 12 and 13
25. Cogar Estate v. Central Mountain Air Services Ltd.
[1992] CarswellBC 305 (B.C.C.A.)
26. W.J. Kenny, Cook Duke Cox (Edmonton-Calgary),
Delay Claims at 41 (source unknown)
27. Some cases which address the duty to mitigate and the
effect of mitigation on a claim for damages are: Rice
v. Sockett [1913] CarswellOnt 425 (O.C.A.); Sault
Ste. Marie (City) v. Proctor & Redfern Ltd. [1986]
CarswellOnt 785 (H.C.J.); and Westland Investment
Corp. v. Carswell Collins Ltd. [1996] CarswellAlta 29
(Alta Q.B.).
28. Westcounty Construction Ltd. v. Nova Scotia [1985]
CarswellNS 124 (N.S.T.D.)
D.J. Lowe (1980) Ltd. v. Nova Scotia (Attorney
General) [1993] CarswellNS 152
Mueller, Warren H.O. “Contractual Exclusion and
Limitation of Delay Claims” 47 C.L.R. (3d) 5 (2005)
at 4 and 22 (note: page references are to ecarswell).
Robins Appleby & Taub LLP
JULY 2007
For a lengthier discussion on this topic, please see this
article at pages 3 and 4 (ecarswell).
29. [1967] CarswellBC 187 (S.C.C.)
30. W.J. Kenny, Cook Duke Cox (Edmonton-Calgary),
Delay Claims at 32 (source unknown)
31. A fundamental breach can be defined as a breach going
to the root of the contract, or one based on performance
that is totally different from that which the contract
contemplated.
32. Syncrude Canada Ltd. v. Hunter Engineering Co.
[1989] CarswellBC 37 (S.C.C.)
W.J. Kenny, Cook Duke Cox (Edmonton-Calgary),
Delay Claims at 32 (source unknown).
Some other cases that have considered the effect
of exclusion clauses in the context of construction
delay claims are: Alden Contracting Ltd. v. Newman
Bros. Ltd. [1997] CarswellOnt 3734 (Gen. Div.) and
Summitville Consolidated Mining Co. v. Klohn Leonoff
[1989] CarswellBC 697 (B.C.S.C.). For further reading
on the topic of exclusion clauses, please see: Mueller,
Warren H.O. “Contractual Exclusion and Limitation
of Delay Claims” 47 C.L.R. (3d) 5 (2005).
33. Covert v. Janzen (No. 2) [1908] CarswellSask 128
(S.C.A.)
Macdonald v. Northwest Biscuit Co. [1924]
CarswellAlta 84 (A.C.A.)
34. H.A.R. Construction Ltd. v. DeMerchant Construction
[1989] CarswellNB 68 (N.B.Q.B.)
35. Calgary v. Janse-Mitchell Const. Co. [1919]
CarswellAlta 156 (S.C.C.)
36. Lembke v. Chin Wing [1912] CarswellBC 208
(B.C.S.C.)
37. 1473587 Ontario Inc. v. Jackson [2005] CarswellOnt
712 (S.C.J.); aff’d at [2005] CarswellOnt 3282
(C.A.)
38. Union Eagle Ltd. v. Golden Achievement Ltd., [1997]
A.C. 514 (Hong Kong P.C.), referred to with approval in
1473587 Ontario Inc. v. Jackson [2005] CarswellOnt
712 (S.C.J.) and in Harris v. McNeeley (1998) 21
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CONSTRUCTION LAW REPORT “Time is Money” The Condominium Developer’s Guide to Delay Claims JULY 2007

R.P.R. (3d) 291; aff’d at (2000) 47, O.R. (3d) 161

(O.C.A.)

39. W.J. Crowe Ltd. v. Pigott Construction Ltd. [1963]

CarswellOnt 64 (S.C.C.)

Smith v. Johnson Brothers Co. [1953] CarswellOnt

100 (H.C.J.) Irving Marks is the senior partner of
thelitigation group. Irving has extensive
W.A. Stephenson Construction (Western) Ltd. v. Metro
experience in all aspects of business litigation
Canada Ltd. [1987] CarswellBC 675 (B.C.S.C.)
in the superior and appellate courts.
Supra, note 4 at 4 and 5.
Barbara Green is a senior associate in the
40. Some cases which have considered the effect of a force
litigation group, focusing on commercial
majeure clause are: Perini Pacific Ltd. v. Greater
litigation with an emphasis on real property
Vancouver Sewerage & Drainage District [1966]
disputes, commercial leasing, condominium
CarswellBC 182 (B.C.C.A.), aff’d at [1967] S.C.R. 189
litigation, banking litigation and corporate
(S.C.C.) and World Land Ltd. v. Daon Development
disputes.
Corp. [1982] CarswellAlta 131.

Supra, note 2 at 1-66.

Supra, note 4 at 5 - 7.

41. Korban Inc. v. Pigott Construction Ltd. [1993]

CarswellOnt 825 (Gen. Div.)

Supra, note 4 at 15

For further reading on the subject of concurrent delay,

please see: Grenier, Glenn. “Evaluating Concurrent
Delay - Unscrambling the Egg.” 53 C.L.R. (3d) 46
(2006).

42. [1914] CarswellAlta 165 (Alta T.D.)

Grenier, Glenn. “Evaluating Concurrent Delay -

Unscrambling the Egg.” 53 C.L.R. (3d) 46 (2006) at
8. provides expertise in all areas of business law
including commercial real estate, municipal
43. Grenier, Glenn. “Evaluating Concurrent Delay -
and property tax assessment, banking and
Unscrambling the Egg.” 53 C.L.R. (3d) 46 (2006) at
insolvency law, tax law and estate planning,
8.
commercial litigation and corporate law.
44. Ibid, at 11

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