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RECORD KEEPING FOR DISPUTES
TABLE OF CONTENTS
INTRODUCTION
II.
PAGE
1
HOW TO AVOID AND DECREASE DISPUTES
A.
B.
C.
CONTRACT DOCUMENTS
PREPARATION OF THE BID
DEALING WITH DISPUTES - AVOIDING DELAY
1
4
5
III.
DOCUMENTING DELAY
IV.
EXTRAS AND CHANGES
13
V.
PREPARATION FOR A CLAIM
19
VI.
RIGHT TO INFORMATION
20
VII.
OBTAINING COMPLETION CERTIFICATES
24
8
APPENDICES
- Sample Letter of Request for a
Certificate of Substantial Performance
- Certificate of Substantial Performance
(Prescribed Form)
- Sample Certificate of Substantial
Performance
- Notice of Change
- Supplementary Instruction Form
- Supplementary Contract Conditions
- The Builders Lien Act, SSe 3, 41, and 85
(as amend~C!)
29
30
31
32
33
34
39
RECORD KEEPING FOR DISPUTES
I.
INTRODUCTION
Whether
you
act for an owner, contractor or subcontractor,
adequate records
are essential to prove your case.
respects the suggestions
contained
herein
In many
would
be
more
appropriately given to the parties prior to the tender being
prepared.
It is included in
these
materials so that those
lawyers fortunate enough to have contact
before
the
their
tender
clients
process
of
some
sort
which
lawyers
in
hope to find.
list of the types
become
of
in
In
alread~
place,
this
asking their clients or
other parties at discovery for the types
would
may
and subcontractors
of record keeping system
material should assist
one
advise
defending a claim at a later date.
addition, since many contractors
have
their client
begins will be able to
the types of records
useful in proving or
with
of
records
which
Of course, there is no exhaustive
records
which
will
assist
in
any
particular- action ~.. -
II.
A.
HOW TO AVOID AND DECREASE DISPUTES
CONTRACT DOCUMENTS
Disputes
are
more
likely
to
arise
in
situations where
inadequate contract documents have been executed.
If
you
are
fortunate enough to be consqlted by
an
owner
Page 2
prior to the tender
process,
you
should
ensure
that the
owner is satisfied that the bid documents reflect what
be required to produce the desired result.
employed
not
an
experienced
will
If the owner has
consultant
(engineer)
to
represent him, you should recommend that one be employed.
The bid documents should include:
(i)
The Tender Form (inclUding instructions to bidders);
(ii)
The proposed contract;
(iii)
All specifications for the work including the work
schedule, drawings and the list of specific products
to be used (manufacturer
and
model· number if
possible).
Most
are
contractors
familiar
contract documents pUblished
by
with
the
These documents
at
the
nominal
Association.
contract
do
cost
from
form
the· Canadian Construction
Documents committee (CCDC).
a
standard
are
Saskatchewan
available
Construction
If you wish to alter the terms of the standard
document; it-may be in everyone's best interest to
such alterations
conditions
to
the
by
adding
contract
a
list
document.
of
supplementary
This will draw the
contractor's attention to the changes you require.
During the tender period owners
often
be
asked
for
or
their
consultants will
clarifications to the specifications.
The consultant will reply
to the questions posed and should
send a copy of all questions
and answers -to each contractor
.'
Page 3
bidding
on
the
job.
These
questions
and
answers
are
referred to as "Bid Clarifications" and are usually numbered
sequentially.
the
Bid
contractors should
Clarifications
retain
received and the date
received.
Similarily, the
consultant
to
specifications.
These
the
sequentially
copies
and
copies of each of
they
were
may issue amendments
are
should
usually
be
retained
numbered
by
the
contractor.
disputes
Many
contractor's
arise
scope
from
of work.
large projects where the
misunderstanding
of
the
This is especially so on very
owner may contract directly with a
-
number
work.
a
of "general" contractors for different phases of the
The
first
disputes
source
the
is
of
tender
information
documents,
to
resolve such
including
the
Bid
Clarifications and amendments.
There is no subst!tute
but
even
the
particulars
most
for
clearly
defined specifications
careful consultant may
which can
a
contractor to protect himself
and avoid potential disputes later,
the
preparation of the
tender should begin as early as possible so
adequate
some
cause problems during performance of
the contract. In order for
be
overlook
that there will
time to submit any requests for clarifications
to the consultant.
If the contractor submits a request for
a bid clarification the
day
before
the tenders close, the
.
Page 4
consultant
may
refuse
to
answer
the
questions
since
providing the answer at such a late date may prejudice other
bidders •..
B.
PREPARATION OF THE BID
After
the contractor prepares a bid he should retain all of
the working
documents
documents
should
used
to arrive at the price.
include the price
requirements (including
employed
fixed
when
the
on
the
cost
or
information will
various
site
and
a
schedule
trades
are
to
be
cost
the
expected
work
to
allowance.
It
be
This
should establish the
scope of work contemplated by the contractor
~ssist
of
invaluable from a number of
perspectives if a dispute arises.
the bid and will
labour
the contractor's "mark up" and
administration
prove
materials,
the work to be performed by each of
the trades), the cost of labour,
including
of
These
when preparing
with the calculation of damages at a
later date if required.
It will also assist the contractor
in
clearly
stating his
position when a dispute arises with respect to the
work.
The
subcontractors.
same
recommendations
apply
scope of
equally
to
Page 5
e.DEALING WITH DISPUTES - AVOIDING DELAY
Since timing is critical on most construction projects it is
essential that disputes be resolved
as quickly as possible.
For example, if a contractor or subcontractor
insists
that
certain work is not his responsibility to perform or insists
that
the
work
should
be performed .ina manner other than
that contemplated by the consultant,
the dispute is being resolved.
delays may occur while
Such delays
may affect not
only the contractor, the subcontractor in question,
owner,
but
may
also
affect
the
ability
and the
of
other
subcontractors to perform their work on time.
The
general
contractor's
principal responsibility
coordinate the work so that the
time specified.
is
to
project is completed in the
The eeDe contract
documents
provide
that
when a dispute arises which cannot be resolved promptly, the
consultant
will ..give the necessary instructions to perform
the work immediately.
The
parties
are
then
required to
perform the work according to the instructions and
by doing
the work they will not jeopardize any claim they may have if
the
instructions
contract
are
documents.
in
The
error
or
objective
at
variance with the
is to keep
the
work
moving ahead to completion.
Each of the parties involved in a dispute
~hould
state their
Page 6
position
as
clearly
contract
documents,
as
at
possible,
with
the earliest possible
first contact is invariably verbal.
a
record
of
any
discussions
the
time.
The
The parties should make
and
positions and their understanding
of
reference to the
of
summarize
their
own
the positions of each
other parties. They should then provide
a
written
statement of their position to the other parties.
If the contract
documents do not contain a clause providing
for immediate performance
of the...disputed work and deferral
to later settlement or arbitration, agreement in
writing to
that effect should be obtained.
The
instructions
contractor
given
by
the
consultant
or
for the performance of the disputed work
be given in writing.
general
should
If they are not, the party performing
the work should make a record of the instructions and give a
copy to
th~ consul~ant
or
general
contractor,
as the case
may be, as soon as possible and preferably before commencing
the
work.
This will decrease the likelihood of a
further
dispute with respect to the work to be performed.
The
contractor or subcontractor should make a record of the
date the
work
was
commenced and completed, the labour and
materials employed to complete the work including the trades
employed
and the time
spent
completing
the
work.
This
Page 7
information can be used to quantify any claim for extra work
at a later date.
In addition to the cost -to the contractor, or sUbcontractor,
of performing
the
example,
contractor or subcontractor
the
work,
additional
costs may arise.
in
For
addition
to
recording the cost of the additional work should also record
any effect that
other
extra
work
has
had on completion of
parts of his contract or subcontract.
consider
a
expected
to
time.
the
situation
where
a
concrete
For
subcontractor is
complete a concrete floor within
When the
concrete
subcontractor
example,
a
specified
arrives, a dispute
arises with respect to the amount of reinforcing steel to be
used.
Adding
the
additional
reinforcing
steel
may not
require that additional labourers be employed to install
but
~he
extra time taken to install it may require that the
concrete
finishers
additiona~ finish.~s
time.
it
start
later
and work overtime or that
need to be hired to finish the floor on
On the face of it, no delay has
occurred.
However,
additional costs have been incurred.
If the subcontractor has a record of the number of finishers
and- the
time estimated to do the work upon which he
based
his bid, his claim for additional labour cost is more easily
quantified
regarding
thereby
decreasing
the likelihood of a dispute
the cost of the additional work if the additional
·
'
Page 8
reinforcing
contract.
steel
is
found to be extra
to
the
original
Payroll records will serve to document the labour
cost and, invoices for materials and rentals will provide the
basis for an increased material cost claim. Such information
is invaluable to the lawyer
arbitration or to court.
whether
the
dispute
goes
to
If the subcontractor does not have
a record of the cost assumptions upon which he based his bid
price, his increased cost must be determined by reference to
what would be reasonable if the change had not occurred.
course,
the
attacked
Of
subcontractor's cost assumptions can. always be
as
being
accepted it might
unreasonable
be
but
since
underlying
was
it were unreasonable.
Records of the productivity achieved by
on
bid
difficult to dispute that the initial
price and the assumptions
subcontractor
the
previous
the
contractor
or
similar jobs can also assist in
supporting the reasonableness
of the assumptions underlying
the price.
III.
DOCUMENTING DELAY
Delay can arise
from
events.
These
include
arriving
on
drawings
not
time,
coordination.
where
the
being
a number of events or combinations of
delays
changes
or
available
caused
by
materials
extras
to
the
when
An example of failed
concrete
floor
referred
required
contract,
and
coordination
to
not
earlier
failed
would
be
was
not
Page 9
completed in the specified time thereby preventing machinery
from being installed when required which might further delay
electrical
trades.
contractors,
Failed
finishing
coordination
may
carpenters,
and
also
where
arise
other
the
consultant refuses to accept the work of a subcontractor and
the
subcontractor
takes
extra
time
to
rectify the work
thereby preventing others from proceeding.
From the owner's perspective delay in substantial completion
will prevent the utilization of the building or structure at
the
time anticipated. such delay may give rise to
profits,
extra
location or
inability
rental
increased
to
charges
financing
at
loss
the
owner's
charges
caused
of
present
by
the
complete the sale of his former premises,
to
name a few.
From a contractor's or subcontractor's point
may
increase
administrative
l~~our
costs
costs,
and
equipment
may
even
of
view delay
rental
costs
or
result in the loss of
opportunity to move to another unrelated
job
in
a
timely
manner.
If
the contract and subcontract schedules
the date
there
upon
specify
which work is to be commenced and completed,
is rarely a
occurred.
clearly
question
of
whether
or
not
a
delay
The question is who caused it and what effect it
Page 10
had on the parties.
In order -to assist
the
in
identifying
the cause of any delays
contractor's or subcontractor's job
keep a
daily
log
of
supervisor
activities on the job site.
should
The log
should contain,
- the project identification (site, contract number, etc.)
- the date
- the weather
- the manpower and equipment on site
- the work performed
- discussions with others including the names of those
present
- other trades on site and work being performed by them
- delays, including reasons for the delays and the work
affected.
Often the general
periodic
contractor
meeting,
present.
The
at
which
will
be
may
carry
subcontractor's
more
weight
meeting.
reflect
other
taken
and
than
the
notes of the meeting.
For
should be reviewed
soon as they are received in order to ensure
accurately
or
all of the subcontractors are
this reason, minutes of project meetings
as
weekly
Since they have a wide distribution, the
contents of the minutes
or
hold
minutes of the meeting
distributed later.
contractors
will
the
discussions
that
they
and agreements at the
If the minutes and handwritten
notes taken at the
Page 11
meeting are inconsistent in any way, the person who prepared
the
minutes
should
be
advised
in
writing
of
the
inconsistency and the note should be attached to the minutes
in the job file.
Minutes of project meetings and
your
client's notes of the
meeting are a valuable source of information
of disputes arising out of delay.
for resolution
The minutes will serve to
outline the flow of the job and often the source
will
be
recorded.
of
delays
One frustrating thing about minutes
of
project meetings is that they are rarely written in complete
sentences and often use abbreviations with which you may not
be familiar.
Your
client's
notes of the meeting may help
but often the only thing that can be done is ask your client
to review the minutes with you.
In addition to
the
the
daily log and contract meeting minutes,
follo~ing doc~ents
should
be
maintained
in
the job
file:
Correspondence:
All correspondence
should be kept in the job file.
contractors
to
relating to the project
It is
the practice of some
file· correspondence on the
company with whom they are corresponding.
basis
of
the
since contractors
often work with each other on more than one job at a time, a
particular
file
may
contain
many
irrelevant
pieces
of
page 12
correspondence.
Therefore
correspondence, or
ask
the
contractor
copies, on the job file.
to
place
Correspondence
often contains summaries of the matters in dispute including
the factual assumptions· upon which the writer's position is
based.
Memos to the file:
Job
supervisors should be encouraged to
write memos to the job file
whenever
an event occurs which
could affect the performance of the project.
often
directed
at
The memos are
one particular point· and therefore
may
contain more information on the point than the daily log.
Photographs:
Photographs are useful to show the progress of
the job as well as the quality
to
be
of workmanship.
used to help document delay,
Photographs
should
be
taken
at
they
each
If they are
must
step
be
dated.
in the job's
progress and in particular when paYments are requested so as
to record
~he de9~ee
Inspection
of completion of the work at that time.
Reports:
inspections
by
the
Most
contracts provide for
consultant.
These
required prior to approval of a paYment
The
inspection
are
was
completed.
most
often
under the contract.
reports will help to define
which certain. work
periodic
The
the
job
dates
by
supervisor's
daily log should include a record of any consultants on site
in
order
to
identify
when
reports
may
have been made.
"
Page 13
General contractors will also inspect work periodically
a
record
of
discussions
when
at
those
the
time
inspections
took
should be made.
inspection reports will help
and
place and any
Copies
of
the
to identify both the length of
a delay and its cause.
IV.
EXTRAS AND CHANGES
Extras
and changes
similar for
record
to
a
contract
keeping
(or
purposes.
subcontract)
are
A change is usually
initiated by the owner through the consultant and may result
in a change in the contract price.
For
example,
an owner
may decide that more expensive fixtures be installed or that
a larger parking lot be built.
In these cases there
is
no
question that what is being requested is different than that
called
for in the specifications included with the contract
documents.
On
larger contracts the procedure
usually
included
in
CCDC contract documents
for
changes
the contract general conditions.
contemplate
is
The
that no changes in the
work shall be proceeded with without a
by the owner.
making
written order signed
The procedure is that the
owner, through the
consultant, provides a written description
of the change to
the contractor who in turn submits a price to the consultant
for approval.
Negotiations on the price
m~y
take
place at
Page 14
this
point.
change
A
order
is
then issued and work can
give
rise to a change in the
commence.
A
change
order
will
often
contract price and a change in the time
for
completing the
The change notice will provide a space
contract.
for
the
contractor to include a percentage mar.kup on the cost of the
work.
The "normal"
percent.
The
markup
allowed
by
consultants is ten
contractor should be aware that
markup will often
administrative
be
costs
the
allowed
insufficient
to cover the additional
incurred
preparing
in
the
price,
coordinating the work and the delay caused in completing the
Therefore,
contract.
change
the
contractor
when
sUbmitting
should
type
on
the price for
the face
the
of
the
document, a clause such as the following:
"The compensation allowed by this change
order does not include any amounts for
changes in the sequence of work, delays,
disruptiQ~s and/or impact costs,
and the
right is expressly reserved to make claims
for any and all of these related items of
cost prior to any final settlement of this
contract."
Such a clause should protect the contractor
from
claims by
the owner that the contractor has been fUlly compensated for
the
work
by the price given.
which this defence
by
For an example of a case
the owner was successful see:
Construction Co. v. Carling O'Keefe Breweries of Canada
(1987), 23 C.L.R. 143 (B.C.S.C.).
in
Doyle
Ltd~
Page 15
Extras to a contract are handled in a similar fashion except
that the' request for approval of an extra is often initiated
by the contractor or a subcontractor
consultant
change
who
order
in
after
turn
will
II.C.)
presented
to the
request a price and issue a
negotiation Qf
earlier (infra, section
and
the
price.
As
noted
an extra may arise out of a
dispute regarding the scope of the work
and
resolution may
be deferred to a later date.
The courts have commented
on
entitlement
to
payment
extras as follows:
"Generally speaking, in my opinion, the
following rules should apply:
Rule 1. An item specifically provided for
in the contract is not an 'extra'.
Rule
2.
When the plaintiff supplied
material of a better quality than the
minimum
quality
necessary
for
the
f~lfilmeRtof the contract,
without any
instructions,· express or implied, from the
defendant to do so, he is not entitled to
charge the extra costs as an 'extra'.
Rule 3.
When the plaintiff did work or
supplied materials not called for by the
contract (plans or specifications) without
instructions,express or implied, from the
defendant,
or
the
consent
of
the
defendant, he is not entitled to charge
this additional work or materials as an
'extra' •
Rule 4. When the plaintiff did work or
supplied materials not called for by the
contract on the instructions, express or
implied for the defendant, he is en~itled
for
Page 16
to charge for additional work or materials
as an I extra I •
What amounted to instructions from the
defendant
is
dependent
on
the
circumstances relating to each item. If
the defendant, without giving definite
instructions, knew the plaintiff was doing
extra work or supplying extra materials
and stood by and approved of what was
being done and encouraged the plaintiff to
do it, that, in my opinion, amounts to an
implied instruction to the plaintiff, and
the defendant is liable."
Re Chittick and
Taylor (1954), 12 W.W.R. 653 (Alta.), at p.
654.
"Extra work, entitling the contractor to
additional payment, must be work which is
substantially different from, and wholly
outside the scope of the work contemplated
by
the contract:
Goldsmith, Canadian
Building Contract (3rd ed., 1983), p. 83.
Although there appears to be no generally
accepted definition of "extra work", it
has been suggested that in a lump sum
contract it may be defined as work not
expressly or impliedly included in the
work for which the lump sum is payable.
If
work is included in the original
ccmtract ,. _ sum,
the contractor cannot
recover extra'payment for it, although he
may
not
have anticipated
that
the
additional work
would
be
necessary:
Keating, Building Contracts (3rd
ed.,
1969), p. 63.
Keating has also suggested (at p. 62)
that, in order to recover payment for work
as an "extra", the contractor must prove:
(1) that the "extra" work was not included
in the work for which the lump sum is
payable;
(2) that there was a promise,
expressed or implied, to pay for the work;
(3) that any agent who authorized the work
was authorized to do so; and (4) that any
condition precedent to
payment. has been
fulfilled."
Page 17
Ron's
Trucking
and
Hauling
Ltd.
v.
city
of
Estevan
(1985), 11 C.L.R. 148 (Sask. Q.B.) at p. 151.
"In
the
interpretation
of
building
contracts the general rule is that all
work
which
is indispensable for the
completion of the project falls within the
contract notwithstanding that it is not
specifically mentioned. See: Halsbury's
Laws of England, 4th ed., para 1175. It
does not seem to me to matter that extra
work or materials may be required by
virtue of the nature of the terrain or to
satisfy the
lawful requirements of a
municipal authority.
Those are matters
which a contractor must anticipate and
investigate before agreeing to a price or
embarking on the work."
McMillan Bros.
Ltd.
v. Alex Smith Decorating Ltd. and Alex
Smith Rentals Ltd. (1980)
6
Sask. R. 301 (Sask. Dist. ct.)
at p. 303.
When
the
construction
containing. specific
of
pr~visions
for
of
the
not
be
by
However,
not governed by contracts containing such
In all cases,
provide
contracts
available
way the contract is administered.
many projects are
clauses.
by
the pricing and approval
extras much of the documentation will
virtue
does
is governed
project
but
procedures
especially
for
where the contract
extras or changes,
the
following information regarding extras and changes should be
recorded in the job file.
- a description of the extra or change
Page 18
- all discussions regarding the extra or change including a
record of all those persons present while the discussion
took place.
- any agreements regarding the extra or change including
acknowledgements that the work is an extra or a change and
the agreed price.
- the date upon which ~he extra work was commenced and
completed and the materials and labour
expended to
complete the extra.
At
the earliest opportunity the contractor or subcontractor
should
provide a written description of the agreed extra or
change to
the owner or contractor, as the case may be, with
a record of the agreed price and a clause similar to the one
already noted
costs.
reserving
the
right to claim for additional
-
The owner or contractor
should be asked to sign the
agreement.
As with the initial contract price, a record should also
kept
of
change was
be
the way in which the price quoted for the extra or
determ~~ed.
This will help to define the scope of
work contemplated by the contractor or subcontractor.
As noted earlier
changes
and
extras
to
a contract often
result in additional costs to the contractor which
are
not
adequately compensated by the agreed price.
The completion date of the contract may be moved back giving
rise
to
additional expenses for
supervis~ry
personnel
or
Page 19
equipment rentals.
The
delay in completing one part of the
job may move the date for performance of another part of the
job into· winter months thereby reducing labour productivity,
A contractor or subcontractor
in
may be forced to perform work
a different sequence than that
(commonly
called
"disruption")
originally
or
may
contemplated
be forced to hire
additional labour to complete the contract on time (commonly
c~lled
"acceleration").
arise for
reasons
other
The same types of costs
than
assessing
the
quantum
accurate
in
claim see:
of
in
The records will assist in .
of damages
a review of the concept
assist
keep
of all costs incurred and the cause of the cost
the performance of the contract.
For
also
changes or extras. For this
reason the contractor .or.sub.contractor .must
records
can
including impact costs.
impact
costs
which
will
identifying the records required to prove such a
Revay,
Stephen G. "Calculating Impact Costs" 27
C.L.R. 239.
v.
PREPARATION FOR A CLAIM
The foregoing has outlined some basic types of records which
should be kept by contractors and subcontractors.
are
contacted
by
a
contractor
When you
or subcontractor about
potential claim, you should ask that
a
the following material
be supplied to you:
(a)
The client's written analysis of . the claim covering
Page 20
both the strengths and weaknesses of the claim.
(b)
A chronology of events with
documents.
(c)
A list of all documents which may be relevant and
copies of the documents in chronological order.
These
should
include;
the
client's
price
calculations, the work schedules, the daily logs,
relevant correspondence and memos, job site meeting
minutes, labour records, photographs, completion
certificates, statutory declarations and inspection
reports.
(d)
The name, phone number and address of the principal
contact person from
whom
you
will
receive
instructions.
(e)
A list of potential witnesses such as employees,
ex-employees and others who were on the job.
( f)
A recommended
required.
(g)
A
list
of
all parties including
contractor and subcontractors.
(h)
Written statements from key witnesses ..
(i)
copies of all contract documents including: all
tender documents including bid clarifications, the
prime
contract, the relevant subcontracts
and
changes orders.
(j)
The rele~ant performance
bonds.
.-
(k)
A record
received.
VI.
of
expert
or
to supporting
referenc~
experts
and
which
the
may
be
owner,
labour and material
all invoices submitted
and
payments
RIGHT TO INFORMATION
Sections 82 and 83 of The Builders' Lien Act provide methods
for obtaining information
action.
prior
to
the commencement of an
Page 21
section 82 of The Builders'
claimants
right
or
beneficiaries
Lien
of
Act
grants
a trust under the Act
to' demand information from other
claimant or
beneficiary
to
a
owners, lien
trust
parties.
A
the
lien
under the Act may by
written request require from the owner or his agent:
(i)
The terms of the contract and the state
between the owner and the contractor;
(ii)
The name and address of the financial institution in
which the holdback trust account has been opened
including the account number;
(iii)
A statement as to the particulars of credits to and
paYments from the holdback trust account including
the dates and the balance at the time the information
was given;
(iv)
A copy of any labour and material paYment bond posted
by the contractor;
(v)
Where the owner is the Crown, the names and addresses
of lien claimants who have given claims of lien to
the Crown pursuant to Section 52 of the Act.
A
of accounts
lien claimant or beneficiary to a trust under the Act may
also
request
from
a
mortgagee
or unpaid vendor or their
agent:
(i)
The terms of the mortgage or agreement for sale;
(ii)
A statement showing the amount advanced under the
mortgage
and the dates of those advances with
particulars of arrears in paYment and interest;
(iii)
A statement showing
agreement for sale
interest.
the
and
amount secured under the
any arrears in payment and
Pursuant to Section 82(2) the owner may, by written request,
require from a subcontractor when a . claim
of lien has been
Page 22
registered or a written Notice of Lien has been
received by
him and from a contractor at any time:
(i)
The terms of any subcontract inclUding the names of
the parties, the price, the state of accounts between
the parties and this information is to be verified by
statutory declaration.
(ii)
A copy of any labour and material paYment bond posted
by a subcontractor
with
the
contractor or a
subcontractor with another subcontractor.
The persons of whom the requests are made have 10
from
the
that
failure
to
comply
could result in
liability for damages caused by the refusal to
the
owner
may
withhold
another
reply and in
further paYments
contractor who refuses to comply or instruct
or
days
date the information was served on them to reply.
The Act provides
addition
ten
to
a
the contractor
subcontractor to withhold payment from
another
party who refuses to comply.
Section 83 of the Act allows an Examination for Discovery of
a person who has verified a claim
of
lien
that
has
been
registered or, on application, Examination for Discovery
of
a person other than the person who has verified the claim of
lien
that has been registered. It should be noted that only
one examination
to this section.
on
a claim of lien can take place pursuant
Section
90
provides
that
the
evidence
given at the Examination may be used in evidence against the
party on whose behalf the person was examined and all
parties
of
like
interest.
Leave
of -the
other
court must be
Page 23
obtained
in
order
to
action is commenced.
wide
ranging
as
examine
the party again after
Therefore the examination should be as
if
an
action had been
Examination for Discovery can
be
held
commenced.
on
at
days' notice without an order of the Court.
given
to
the
the
person
to
be
The
least seven
Notice
must be
examined, every other person
against whose estate or interest
in land a lien is claimed,
the contractor and the payer of the lien claimant.
The availability of the section 82
and 83 opportunities for
information should be distinguished.
request
for
Section
a
claim
of lien or delivered a Written
Notice of Lien whereas Section
83
only
allows Examination
for Discovery of a person who has verified
has been registered.
Lien does
allows a
information to be delivered to a subcontractor .
who has registered
that
82
a
claim of lien
Delivering a written
Notice
of
not fall within the definition of "registered" in
the Act.
In
the
addition
contract
obtaining
to
the
provisions of The Builders' Lien
documents
information.
may
For
provide
example,
opportunities
the
CCDC
Act
for
contracts
contain the following clause:
"The
consultant
may, upon reasonable
request and at his discretion, provide to
a subcontractor information as to the
percentage
or
quantity
of
the
subcontractors
work
which
has
been .
Page 24
certified
pa~ent."
for
If such a request
is
made to the consultant and is denied,
it is· open to a subcontractor
section
made
The section
for
make an application under
for production of records
82 (6)
contract.
to
provides
inspection
documents, books
or
of
all
records
relating
to
the
that an application may be
contracts,
relating
to
subcontracts,
the contract or
sUbcontract or to the payment of the contract or sUbcontract
price.
Access to those records should be sufficient to gain
the information sought.
VII.
OBTAINING COMPLETION CERTIFICATES
Section
of
3
determining
completion
of
a
Generally speaking substantial
rules
for
contract
or
completion
is
when the improvement to be made under the contract
or subcontract
purpose
Builders' Lien Act provides
substantial
subcontract.
achieved
The
15- ready
intended.
for
use or is being used for the
When this point
should
has
been
refer
reached
to
the
the
contractor
or
subcontractor
other
provisions
of
Section 3 to determine whether a request can
be made for a certificate of substantial performance.
Section
41 of The Builders' Lien Act is in the
being amended.
process
of
In addition the regUlations will be amended
and should be included
in
the
November.· 1989 Saskatchewan
Page 25
Gazette.
The
following
sections
which
should
discussion
be
deals
with
the
proclaimed in force January
new
1,
1990 •.· .
Briefly a contractor or subcontractor
the
payment
certifier
(consultant) for a
substantial performance.
and
the
certificate
of
In the case of a subcontractor if
there is no payment certifier,
owner
may make a request to
the
request
is made of the
contractor and in the case of a contractor,
the request is made of the owner.
If the payment certifier
(or
the
owner and/or contractor)
refuses or fails to certify substantial
performance
the
the
7
days
subcontractor
an
arbitrator
application· to
sUbcontr~ct
specified
as
in
the case
pursuant
the
m~y
to
Act,
contractor
or
be may refer the question to
Section
Court for an order
is substantially
within
that
performed.
85(1)
or
make
an
the
contract
or
The
date
of the
decision of the arbitrator or the court is deemed to be
the
Page 26
of
date
substantial
determined to
be
a
performance
different
unless
date
by
that
the
date
is
court or the
arbitrator.
When
the
refuses
payment
certifier
(or owner and/or
to issue a certificate of
the contractor
substantial
performance
or subcontractor should request that reasons
be given for the
decision.
given in writing.
If
the
Preferably the reasons would be
reasons
are given verbally the
contractor or subcontractor should reoord
completely
contractor)
those
reasons as
as possible and as soon after the discussion
those
possible so that
reasons
as
can be used as part of the
-
material to be forwarded to the arbitrator or as part of the
material used in support of an application to court.
section 45 of
The
Builders' Lien Act allows payment of the
holdback portion of a
days
after
subcontract.
the
subcontract
~date
of
This is a useful
If
the
be paid out 40 clear
substantial performance
of
the
provision for subcontractors
employed on large projects which
complete.
to
may
subcontractor,
take
such
contractor, is employed at the beginning of
many
months to
as the excavating
the
job, there
is no reason why he should have to wait until the completion
of
the
entire
project
before receiving the remaining
percent of the subcontract value.
10
Page 27
sections
41
Builders'
and
Lien
85
Act,
(as amended) and
Section
a sample
of
certificate of substantial
letter
a
certificate
Saskatoon
of
Engineering
of
request
The
for
a
performance, the prescribed form
of the certificate of substantial
of
3
performance, and a sample
substantial performance
Consultant
are
used
by
a
included
in
the
section
of
the
Appendix to this section of the materials.
Also
included
materials
is
in the
a
Appendix
sample
of
to
a
this
"Notice
of
Change",
a
Supplementary Instruction Form and a sample of Supplementary
Conditions to the CCDC standard contract 2 which are used by a Saskatoon Engineering Consultant.
Please
note
that
the
recent amendments to The
Lien Act apply only to contracts
thereunder
and
subcontracts
Builders'
arising
which were entered into on or after the day
the
amendments come into force.
(The next page is 29 )
Page 29
SAMPLE LETTER
PERFORMANCE
REQUESTING
A
CERTIFICATE
Date:
To:
OF
SUBSTANTIAL
---------
[Owner, Owner and General Contractor or Payment
Certifier (Consultant)]
project:
Address of Project:
Request for certificate of Substantial Performance
Pursuant
to
Section
41 of The Builders' Lien Act
we request that you either:
1.
2.
complete and return the enclosed
Substantial Performance
within
days)* days of receipt; or,
Agree to arbitration
following person.
of
this
certificate of
seven (or ten
request
by
the
Proposed Arbitrator:
Arbitrators Address:
Our address for service is
Yours truly,
(contractor or subcontractor)
(NOTE:
be sure to include the certificate of Substantial
Performance and be sure that the work or contract for which
certification is being requested is clearly specified in
it. )
* section 41(1) of the current unamended Act provides ten
days for the payment certifier
to
determine whether
substantial completion has been achieved.
.
page 30
FormC
CERTIFICATE OF SUBSTANTIAL PERFORMANCE
OF CONTRACTOR SUBCONTRACT
(Su bsection 41 fl) ofthe Builders' Lien Act)
This is toc:ertify that the
"""":"'"
(state whether contract or subcontract)
in relation to the following services or materials:
_
(Short description ofsen-ices or materials)
to the following improvement:
(Short description ofimprol:ement)
to the following land:
(Ciuic address ofland or legal description)
is substantially performed.
Day/Month/Year
(Payment qertifier,ifany)
Date certificate signed
(Ifno payment certif&er,
certificate must be signed
by owner and contractor
jointly)
(
Contractor
Owner
Name of OWner:
Address for Service:
_
_
Name of Contractor fifcertifying substantial performance ofa contract) :
Name of Subcontractor fifcertifying substantial performance ofa subcontract) :
Name of Payment Certifier:
(Where there is a payment certif&er)
Address of Payment Certifier:
(Where there is a payment certif&er)
_
_
Mac:PHEDRAN & ROBB ENGINEERING LTD.
STRUCTURAL CONSULTANTS
3022 LOUISE STREET
SASKATOON, SASKATCHEWAN S7J 3L8
Phone (306) 477-0655
CERTIFICATE OF SUBSTANTIAL PERFORMANCE
PROJECT:
Page 31
DATE:
FILE No.:
OWNER:
CONTRACTOR:
CONTRACT DATED:
THIS IS TO CERTIFY that, based on our observations at the site at intervals appropriate to
the stage of construction, the Work described in the above Contract has been, to the best of
our knowledge, information and belief, Substantially Performed as defined in the Contract
Documents. This certificate is issued in the context of the General Conditions of -the
Contract.
)
This Certificate does not constitute an acceptance of any Work not in accordance with the
Contract Documents or any Work not completed as required by the Contract Documents.
The date of this Certificate shall be taken as commencement of the Lien Period and of the
twelve (12) month Warranty Period.
The Contractor shall continue towards Total Performance of the Work without delay. Contract payments are subject to- a retention to cover Work not Totally Performed.
MacPHEDRAN " ROBB ENGINEERING LTD.
)
Distribution:
Mac:PHEDRAN '" ROBB ENGINEERING LTD.
NOTICE OF CHANGE
PROJECT
Page 32
CHANGE No.
FILE No.
CONTRACTOR
DATE
THIS IS NOT AN AUTHORI~TION FOR EXTRA WORK. The COllttaetor ,hall forward the price chance to the Project Coordinator U lOOn U pouible, and Wore any work ia commenced. It approved by the Owner, a CHANGE ORDER wW be iaaueci.
THIS IS AN AUTHORIZATION FOR EXTRA WORK. The COlltractor ,hall forward the price change to the Project Co-ordinator u
pollible. Wbea approved by the Owner, a CHANGE ORDER wiU be iaaued.
SOOIl U
DESCRIPTION:
DISTRIBUTION:
.
-
MacPBEDRAN " ROBB ENGINEERING LTD.
CONTRACTOR'S REPLY
(A complete breakdown ot all quotuiolll to be attached.)
EXTRA
OWN WORK
MARKUP (
WORK BY OTBERS
MARKUP (
TOTAL
CREDIT
%)
%)
••
••
•
OWN WORK
WORK BY OTBERS
TOTAL
.'
-
••
•
NO PRIg ClWfGE
DATE
CONTRACTOR'S SIGNATURE
_ _ _ RECOMMENDED
_ _ _ NOT RECOMMENDED
DATE
MacPBEDRAN "ROBB ENGINEERING LTD.
CHANGE ORDER
THIS IS AN AUTHORIZATION TO PROCEED WITH THE CHANGES OUTLINED ABOVE. WORK TO BE PERFORMED ANT
FOR IN ACCORDANCE WITH TO TERMS OF TBE CONTRACT.
DATE
OWNER'S AUTHORIZED SIGNATURE
).ID
Mac:PHEDRAN & ROBB ENGINEERING LTD.
Structural Consultants
3022 Louise Street
Saskatoon. Saskatchewan S7J 3L8
Phon. (306) 471-0655
Page 33
Fax: (306) .71-1995
SUPPLEMENTARY INSTRUCTIONS
Dace
TO:
_
FUe No.
_
Inscruccion No.
_
PROJECT:
You an requac.d co ClUTY out: ch. foUowinr supplement:ary inst:ruct:iol1l co t:h. cont:ract: which shall noc be .construed as
auchoNinr a chanr. in t:h. cont:ract: amount:. Should ch. contraccor hold t:hat: cha. inat:ruct:ions involve a change in the
concract: amount: h. shall notifY che consulcant: in wricinr wichin cen (10) days of che above dace before proceeding wich the
worle.
MacPHEDRAN &
Pu
~OBB
ENGINEERING LTD.
--'-_
SUPPLEMENTARY CONDITIONS
SECTION 00800
Page 1
1
AGREEMENT - ARTICLE A-4 (c)
page 34
Interest shall be lot.
2
DEFINITIONS ITEM #2
Insert after " •.• consists of ••• " in the first line,
" ••• the Instructions to Bidders, ••• ".
3
DEFINITIONS ITEM #8
ADD:
When a PORTION of the work is taken over, accepted, and
is being used by the Owner, that PORTION may be define
as "the Work" for the purposes of beginning guarantees,
maintenance by the Owner, release of holdbacks, on the
PORTION.
4
ADD To GC 1.4
The Contract Documents are of the abbreviated type and
may include incomplete sentences.
omissions of worgs
or phrases such as "The Contractor shall", ."Conformity
therewith", "an" and "all" are intentional.
Omitted
words and phrases. shall be supplied by inference in the
same manner as if they were in full~ .
When the words "approved", satisfactory", "undirected",
"SUbmitted", "inspected", or similar words or phrases
are used it shall be assumed that the word "Consultant"
follows the verb as obj ect of the clause, such as
"approved by the Consultant".
5
GC 5.2
Change the words "five working days" to read "within
the time specified by the Consultant".
6
GC 5.3
Change the words "in the five working days specified"
to read "within the time specified by the Consultant".
7
GC 5.6
Change the word "If" to the word "AS".
8
GC 11
After "Owner" in 11.1 (b) ADD:
"or the Consultant",
SUPPLEMENTARY CONDITIONS
SECTION 00800
Page 2
..
ADD: . - GC 12.7
9
Page 35
The charges determined by methods 12. 1 (a) or l2.l(c)
shall be computed on an estimated cost plus a
percentage fee as determined from Chart #1.
Items
generally covered by the percentage fee shall be:
1) head office expenses.
2) the salaries of
superintendents,
engineers,
timekeepers, accountants, clerks, watchmen and
similar personnel normally employed directly on the
work.
(Wages of workmen and foremen and the
assessments thereon for Workers' Compensation,
Unemployment Insurance, vacation with pay and
Canada Pension payments, etc., are part of the
actual cost);
3) use of temporary offices, sheds, etc., including
cost of telephone, light, power, and heat used
therein;
4)
insurance premiums; and
5) licenses and permits, exc;ept when these are special
for a particular item of work.
The cost of related changes involving both extras and
credits shall be applied against one another and th~.
percentage fee applied to the NET difference.·
Unrelated changes shall be considered separately.
Credits may be figured at the actual "cost" and need
not include a credit for overhead and.profit originally
included in the stipulated Sum, but, neither shall a
percentage fee be applied to the "cost" of a credit to
reduce the credit.
Quotations for Changes shall include an
itemized
detailed breakdown of costs including a materials list
with the cost of each item, number of hours of labour,
etc. . '
CHART #1
Value of Change
($)
o -
300
600
900
3,000
5,000
10
299
599
899
- 2,999
- 5,000
+
Contractor on Subs
Subs on Sub-Subs
(t)
17
15
13
11
9
negotiable
On Own
(t)
20
18
16
14
12
negotiable
ADD GC13.7
The second and all subsequent applications for payment
shall be accompanied by a statutory Declaration on the
form included in these Contract Documents.
SUPPLEMENTARY CONDITIONS
SECTION 00800
Page 3
7
11
GC 14.2
Page 36
Change " ••• five (5) days .•• " to read"
(15) days ..• "in the second line.
•••
Fifteen
12
GC 14.3
12.1
After the first sentence ADD:
"With his application, the Contractor will provide a
list of the work which the Contractor is aware is
incomplete or deficient".
12.2
After the second sentence ADD:
"If it is found that the list submitted by the
Contractor is excessively incomplete and the consultant
disapproves of the application then sUbsequent
inspections and assessments of Substantial Performance
will be at the Contractor's expense (ConSUltant's,
Owner's, and their staffs' time at current per diem
rates)".
13
GC 14.7
After the first sentence ADD:
"With his application, the Contractor will provide a
written declaration that the work noted as incomplete
or deficient at the time of Substantial Performance has
been completed or corrected".
After the second sentence ADO:
"If it is found that the work has not been completed or
corrected and
the
Consultant
disapproves
the
application, the subsequent inspections of the Work
until .Total . Performance shall be at the Contractor's
expense (ConSUltant's, Owner's and their staffs' time
at current per diem rates)".
Second last line change the words .••. "five days"
to read ••• "fifteen days".
14
GC 14.12
ADO:
(d)
(e)
15
failure of the Work to comply· with
requirements of the Contract Documents,
incompleteness of the Work.
the
GC 15.3
ADD the word "unscheduled" prior to the words "changes
in such taxes".
SUPPLEMENTARY CONDITIONS
SECTION 00800
Page 4
+ .....-
). 16
GC 24.1
Page 37
Add the following at the end of 24.1
"and further shall correct at his own expense any and
all original accepted work which was not in fact in
conformance with the requirements of the Contract
Documents, and in such event the guaranteed period is
begun again at the date when the non-conforming work is
replaced, repaired or otherwise made to conform and
continued thereafter for the same per iod as the
original guarantee.
Any materials, fixtures or
equipment requiring excessive servicing during the
guaranteed period will be considered defective".
17
GC 25.1
ADD:
"The Contractor shall be responsible to carry out and
complete the Work in accordance with the Contract
Documents and failure ,on the part, of the Consultant or
Owner to observe any defect or deficiencies in the work.
will
not
relieve
the
Contractor
of
this
responsibility".
18
ADD:
GC 27.4
standard specifications referred to throughout the
Specifications shall form a part of the Contract
Documents and shall be read in conj unction therewith.
Where standard specif ications other than Canadian
Standards Association (CSA) are named, equivalent eSA
Specifications shall take precedence and shall govern
wherever applicable. Whenever any product is specified
in accordance with an ASTM Standard, CSA Specifications
or other Association Standard, the Contractor, if
requested, ~~hall present an affidavit from the'
manufacturer certifying that the product complies with
the particular standard specification. Where necessary
and requested, or specified, supporting test data shall
be SUbmitted to sUbstantiate compliance. Codes,
standards,
bylaws,
statutes
and
Manufacturer's
Association specifications or instructions mentioned in
the Contract Documents refer to the latest revisions·
thereof at time of calling for tenders unless otherwise
specifically designated.
19
ADD:
GC 32.6
Warranty Period Inspection - ten months after the
written acceptance of the Building, the Contractor, the
Owner, and the Consultant shall together inspect the
building to determine any deficiencies in materials or
workmanship which have occurred or·'become apparent
since acceptance.
.
.
SUPPLEMENTARY CONDITIONS
SECTION 00800
Page 5
19
continued
Page 38
The Consultant will notity the Contractor to rectify
deticiencies listed within the two months prior to the
end of the one-year warranty period.
Immediately before the end of the one-year warranty
period provided by the contractor, the Consultant, the
Owner and the Contractor shall make a tinal inspection
to assure that the items recorded at the ten-month inspection have been corrected by the Contractor.
20
ADO:
GC 37 - CONTRACT TIME
37.1
Time is ot the essence.
37.2
Extension to the Contract Time for changes
or
delays'wi'l! 'only be" 'allowed tor those which are
"cri tical" as in critical Path
Method of
Construction Scheduling.
The onus
to provide
that an activity is "critical"
will be on the.·
Contractor.
- End of section -
Page 39
The Builders' Lien Act (as amended).
3(1)
For the purposes of
this
Act, a
subcontract is substantially performed:
contract
or
(a)
when the improvement to be made under that
contract or subcontract or a substantial part
of the improvement is ready for use or is being
used for the purposes intended; and
(b)
when the improvement to be made under the
contract
or
subcontract
is
capable
of
completion or, where there is a known defect,
correction, at a cost of not more than the
aggregate of:
(i)
3% of the first $500,000 of the contract
price or subcontract price;
(ii)
2% of the next $500,000 of the contract
price or subcontract price; and
(iii) 1% of the
balance of the contract price
or subcontract price.
(2)
For the purposes of this Act:
(a)
where the improvement or a substantial part of
the improvement is ready for use or is being
used
for the purposes intended
and
the
remainder
of
the
improvement
cannot be
completed expeditiously for reasons beyond the
control - of the contractor or subcontractor, as
the case may be; or
(b)
where the owner and the contractor or the
contractor and SUbcontractor, as the case may
be, agree not to co~plete the improvement
expeditiously;
the price of the services or materials remaining to
be provided and required to complete the improvement
shall be deducted from the contract or subcontract
price in determining substantial performance.
"
Page 40
41(1)
(1.1)
At the request of the sUbcontractor, the payment
certifier or, if there is no payment certifier, the
owner and the contractor jointly shall, within seven
days after the day of the request:
(a)
determine, pursuant to section 3, whether the
subcontract has been substantially performed;
and
(b)
where he, she or they determine that the
subcontract has been substantially performed,
certify the substantial performance by signing
a certificate in the prescribed
form and
delivering it to the subcontractor.
A request pursuant to subsection (1):
(a)
may be made in
regulations; and
(b)
shall include a declaration by:
(i)
the subcontractor; and
(ii)
the payer on the subcontract;
that
the
performed.
(1.2)
(1.3)
the form prescribed
subcontract
has
been
in
the
SUbstantially
At the request of the contractor,
the payment
certifier or, if there is no payment certifier,' the
owner shall, within seven days after the day of the
request:
(ar
determine" pursuant to section 3, whether the
contract has been substantially performed; and
(b)
where he or she determines that the contract
has been substantially performed, certify the
substantial
performance
by
signing
a
certificate
in
the
prescribed form
and
delivering it to the contractor.
A request made pursuant to subsection (1.2):
(a)
may be made in the
regulations; and
form
prescribed
in
the
(b)
shall include a declaration by the contractor
that
the
contract has been substantially
performed.
Page 41
(2)
Where a contract or subcontract has been certified to
be sUbstantia~ly performed, the payment certifier, by
personal serv1ce or by registered mail within seven
days after the day the certificate was signed, shall
give a copy of the certificate:
(a)
to the owner and the contractor; and
(b)
to all persons providing services or materials
in
the
performance of the contract
or
subcontract and who have requested the payment
certifier in writing, by personal service of a
request, with a return address, to give them a
copy of the certificate;
and where there is no payment certifier the owner
shall give a copy of the certificate in accordance
with clauses (a) and (b).
(2.1)
The contractor or, where there is no contractor, the
owner shall post a copy of the certificate described.
in subsection (2) in a prominent spot on the main job
site.
(4)
Where a dispute arises with respect to a refusal or
failure to certify substantial performance that has
not been referred to an arbitrator pursuant to
section 85, the court may, on the application of any
person, order that the contract or subcontract is
SUbstantially performed.
(5)
Where, pursuant to this
Act, the court or an
arbitrator determines that a contract or subcontract
is substan~ially performed, the decision of the court
or the arbitrator, as the case may be, has the same
effect as a certificate of substantial performance
under subsection (1) or (1.2), as the case may be,
and the owner shall give and post copies of the
decision as required of a payment certifier and
contractor
with respect to a certificate under
subsection (2) and (2.1).
(6)
For the purposes of this Act, the day on which a
contract or subcontract is SUbstantially performed is
deemed to be:
(a)
the day on which the certificate is
pursuant to subsection (1) or (1.2); or
signed
(b)
where, pursuant to this Act, the court or an
arbitrator determines that··the contract or
Paqe 42
subcontract is sUbstantially performed, the day
on
which
the
decision of the court or
arbitrator is rendered;
. unless:
(7)
(c)
the certificate expressly indicates a different
day as the day of substantial performance; or
(d)
the
day
of
substantial
performance
is
determined to be a different day by the court
or by an arbitrator.
Where a copy of the certificate of substantial
performance is given by registered mail, it is deemed
to be given when the addressee actually receives it,
or two clear days after the day of registration,
whichever is earlier, which time shall be included in
the days allotted for giving the certificate.
.
85(1)
Subject to subsection (1.1), where a dispute arises
at any time during the construction of an improvement
with respect to the payment of money, the dispute,
with the consent of the parties to the dispute, may
be referred to a single arbitrator chosen by the
parties.
(1.1)
Where a dispute arises:
(a)
at any time during the construction of an
improvement with respect to the failure or
refusal _to certify substantial performance
pursuant-to section 41; or
(b)
with respect to the payment of moneys to a
contractor or subcontractor who has obtained a
certificate of substantial performance with
respect to his or her contract or subcontract;
the person making the request, by personal service of
a written notice in the prescribed form, may require
that the dispute be referred to an arbitrator.
(1.2)
Where the parties to the dispute are unable to agree
on an arbitrator within three days of service of the
notice pursuant to .. subsection (1. 1), the person
making the request may apply to the person specified
in the regulations
for
the designation of an
arbitrator.
.
.