Starting in 2012 with Technicore Underground Inc. v. Toronto (City), 2011 ONSC 205, affirmed by the Ontario Court of Appeal 2012 ONCA 597 (“Technicore”), it seemed that Ontario’s jurisprudence with respect to notice of claims in construction contracts had started to bend toward a regime of strict compliance. The recent decision in Clearway Construction Inc. v. The City of Toronto, [2018] O.J. No. 1468 (“Clearway”), however, suggests that Technicore must be understood on its facts rather than standing for an inflexible principle.
The trial court in Technicore found that the notice provision in the contract “operates as a condition precedent to a claim and as a bar to a claim filed after the expiry of the time limit” and, on that basis, granted the owner’s motion for summary judgment. The decision was upheld on appeal with Justice Gillese further noting that “there was no onus on the City to lead evidence of prejudice.” Read together, the trial and appellate court decisions have often been cited for the proposition that failure by a contractor to give notice within the requirements set out in the construction contract will cause the contractor’s claim to fail, without regard to whether the owner was actually prejudiced by the deficient notice (or whether the owner actually caused the contractor damages).
For example, in the subsequent case Ross-Clair v. Canada (Attorney General), 2016 ONCA 205, the Court of Appeal observed that the lower court had relied on Technicore “for the proposition that providing notification of a claim for extras in accordance with the terms of the parties’ agreement is a condition precedent to the consideration of such a claim and ultimately access to the dispute resolution process” and that “if he were to find that Ross-Clair had failed to give the Engineer a written claim [in compliance with the contract], Ross-Clair would not be entitled to any extra payment in respect of the Claim.” The Court of Appeal did not take issue with that simplified interpretation of Technicore and ultimately dismissed the contractor’s claim notwithstanding that the contractor had given at least four notices of claim, the first within ten days of the events giving rise to the claim.
The recent decision in Clearway, however, clarifies that the harsh conclusion reached in Technicore – dismissal of the contractor’s claim on summary judgment – was a function of the facts of the case, and that applying the Technicore analysis to different facts will lead to different results.
Interestingly, the Clearway case considered the same notice provision (with the same parties) as that at issue in the Technicore case, making it essentially a re-run of the analysis on different facts. Both considered the precedent case of Colautti Construction Ltd. v. Ottawa (City of) (1984), 46 O.R. (2d) 236, 5 O.A.C. 74 (C.A.) (“Colautti”), which stands for the proposition that a pattern of conduct between the parties may vary the terms of the contract. While the Court of Appeal in Technicore found that the record not only showed “no pattern of conduct by the parties over the course of the Contract demonstrating that they did not intend to be bound by the Notice Provision," but in fact showed that “the parties acted in compliance with its terms,” the judge in Clearway found that the pattern of conduct between the parties may have varied the terms of the contract pursuant to Colautti.
The trial court judge in Technicore also considered whether constructive notice would save the contractor’s claim, referring to two British Columbia precedents (W.A. Stephenson Construction (Western) Ltd. v. Metro Canada Ltd., 1987 CarswellBC 675, 27 C.L.R. 113 (B.C.S.C,), and Foundations Co. of Canada Ltd. v. United Grain Growers Ltd. 1995 CanLII 3392 (BC SC), affirmed by the British Columbia Court of Appeal 1997 CanLII 4064 (BC CA)), but found that the contractor in the case before her had not provided evidence of “actual or constructive knowledge” of the owner. By contrast, the trial court judge in Clearway found that there was a triable question as to the knowledge of the owner with respect to the facts underlying the claim.
Although in Clearway there were triable questions on both issues (variance of the contract by conduct and constructive notice), it seems likely that either one on its own would be sufficient to defeat a motion for summary judgment.
The owner’s motion for summary judgment having been dismissed, the merits of Clearway case will be addressed at trial (should it get that far). Regardless of the ultimate disposition of that case, the importance of the Clearway decision is that it serves as a reminder that Technicore must be understood on its facts and not cited as a black letter law principle. That more nuanced understanding of Technicore is not only consistent with decisions in other provinces (see, for example, Banister Pipeline Construction Co. v. TransCanada Pipelines Ltd., 2003 ABQB 599, in which the court allowed the contractor’s claim where the owner was “always aware” of the basis of the contractor’s claim and held that it would be “unconscionable” to dismiss the contractor’s claim as a result of a technical non-compliance with the contract), but an affirmation of Corpex (1977) Inc. v. Canada, [1982] 2 SCR 643, where the concern underlying the Supreme Court of Canada’s decision was avoidance of ambush. Where owners have actual or constructive notice of a contractor’s claim (i.e., where there is no ambush) or have not consistently enforced the notice requirements of the contract, they should be mindful of Clearway and cautious about over-relying on an overly simplified reading of Technicore to deny contractors’ claims.