CSC Construction Tour - Specifer: June 2016

The annual CSC Construction tour in May was a big success!

We met for lunch at the Dublin Crossings Restaurant and then on to explore the Marine Gateway Project. This is a new concept of combining retail and residential in one location. The entire project is built on a geothermal plant which allows buyers to predict and then lock into energy prices for the next 30 years. In cooperation with BC Hydro, tomorrow’s energy bill will be the same as today. The entire project sold out in record time.

Several of the restaurant sites were selected after all residential sites were sold and residents were able to participate in requesting which restaurants to add. Sky trains arrive and depart to the city regularly so the need for a vehicle is drastically reduced. The concept is to be energy responsible and have a better quality of life. Less glass and more thermally efficient panels may lead the way to better building practices in BC.

Thank you to our hosts from Perkins & Will Architecture: Ryan Bragg, Development Lead and Joshua Rudd, Intermediate Designer.

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Sufficiency of Notice: What Types of Details Need to be Included in a Notice of Dispute? - Specifier: June 2016

By Jared Epp, Robertson Stromberg Barristers and Solicitors

Building contracts, like CCDC contracts, frequently require parties who disagree over things like extras to submit particulars of their dispute to an engineer for determination. The findings of the engineer can then be challenged by either party in arbitration. The detail that must be included in these dispute notes was recently discussed by the Ontario Court of Appeal in Ross-Clair v. Canada (Attorney-General).

The Facts

In this case, a general contractor (“Ross-Clair”) was hired by the federal government to build management offices at the Millhaven Institution, which is a maximum security prison located in Bath, Ontario. The parties’ contract set out detailed requirements in terms of how Ross-Clair was to submit claims for extras:

35.3 When the contractor has given a notice referred to in GC 35.2, the contractor shall give the Engineer a written claim for extra expense or loss or damage within thirty (30) days of the date that a Final Certificate of Completion referred to in GC 44.1 is issued and not afterwards.

35.4 A written claim referred to in GC 35.3 shall contain a sufficient description of the facts and circumstances of the occurrence that is the subject of the claim to enable the Engineer to determine whether or not the claim is justified and the contractor shall supply such further and other information for that purpose as the Engineer requires from time to time.

If either the Owner or Ross-Clair disagreed with the findings of the Engineer, they could elect to have the issue determined through binding arbitration. However, arbitration was only available if and after the Engineer made a finding.

A number of issues arose during construction, most of which centered on Ross-Clair’s inability to meet the scheduled completion date, which was January 24, 2009. A number of letters were exchanged between the parties on this issue. These letters later formed the foundation for Ross-Clair’s claim for extras and provide context to the dispute.

1. December 5, 2008 Ross-Clair informs the Engineer that an extension is needed to complete due to delays caused by the owner and that Ross-Clair has incurred additional costs of $1,437,976. Ross-Clair indicates it will provide a breakdown of these costs in the future. 
2. December 16, 2008 the Engineer advises Ross-Clair that it needs more information before it can process a claim for extras. 
3. February 27, 2009 the Owner reminds Ross-Clair that it has failed to complete the project on time. 
4. March 2, 2009 Ross-Clair informs the Owner that Ross-Clair is entitled to an extension due to owner caused delay. RossClair also attaches a document listing the sub-contractors it owes money to for the project. These costs total $1,437,976. 
5. April and May 2009 both the Owner and Engineer request that Ross-Clair provide additional documentation in support of its extras claim. 
6. October 6, 2009 the Owner grants Ross-Clair an extension to complete without prejudice to the right to object to the extra costs Ross-Clair is claiming. 
7. March 31, 2011 Ross-Clair claims additional costs of $766,700. 
8. April 2, 2011 the Owner advises Ross-Clair that its letters did not contain enough information for the Owner to be able to process the claim for extras. 
9. February 10, 2012 the Engineer certifies the project as being complete. 
10. May 28, 2013 Ross-Clair provides the Owner with a detailed report breaking down its claim for extras.

Ultimately, the Owner refused to pay Ross-Clair’s claim for extras. However, the Owner also instructed the Engineer not to make a finding in response to Ross-Clair’s May 2013 report, thereby depriving Ross-Clair of the ability to seek arbitration. Ross-Clair then sought a court order requiring the Engineer to rule on its claim for extras.

The Results

In considering this issue, the Court discussed whether or not the letters prepared by Ross-Clair gave the Engineer sufficient information about the claim for extras. At the outset, the Court noted that the detailed report submitted by Ross-Clair in May 2013 could not be considered because it was delivered, contrary to GC 35.3, more than 30 days after the Final Certificate of Completion was issued. This meant that the details of Ross-Clair’s claim were limited to what it set out in its 2008 and 2009 letters.

In considering whether or not these letters had enough detail to satisfy the notice requirements in the parties’ contract, the Court stressed the fact that the contract needed to be interpreted as a whole. This meant that the provisions in the contract, which regulated how extra work would be priced (ex. costs of labour, materials, costs to hire sub-trades, over-head mark-up costs) needed to be outlined and detailed in the claim for extras, as without it the Engineer would not have the information needed to make a meaningful decision.

The court was also very concerned with the fact that Ross-Clair had not responded to the Owner or the Engineer’s request for more information until May 30, 2013, which was more than 12 months after the project was completed. Given these circumstances, Ross-Clair was not allowed to advance its claim for extras.

Conclusion

The decision reached in Ross-Clair is significant for a number of reasons including:

1. It reiterates the importance of ensuring that the strict notice provisions, in terms of dispute notes, be followed. Had RossClair provided its detailed report for extras within 30 days of completion, the court might have required the Engineer to rule on whether or not these extra costs were legitimate; 
2. It confirms that “one-liner, emailed” notices of dispute are often not good enough. Rather, contractors must, and can be expected to, take care to alert the owner as to when extra costs have been incurred as well as to provide the owner with meaningful information as to what these extra costs consist of. For example, if a contract states that extras will be paid on a cost-plus basis, it may not be enough for a contractor to say it is been delayed and it has suffered a certain amount of damages. Rather, detailed breakdowns of labour and material costs, as well as a specific explanation as to why these costs were incurred, should be provided in the initial dispute note; and 
3. It highlights the importance, particularly for an owner, of having a diligent engineer on site. Had the Engineer not told Ross-Clair that it needed more details to process its claim, the court may have had more sympathy for Ross-Clair’s plight.

Ultimately, Ross-Clair serves as a reminder to contractors that they need to take care in completing notices of dispute, and also reminds engineers and project managers that they can demand information that they need to fairly evaluate requests for additional payment both in terms of whether or not the extras are legitimate and what the cost of the extras might be.

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Be Careful What You Wish For: When a Breach of 'Contract A' May not be Worth Contesting - Specifier: April 2016

The Alberta Court of Queen’s Bench has recently issued yet another Contract A/Contract B decision, but this one has an interesting twist to it. In Elan Construction Limited v. South Fish Creek Recreational Association (2015 ABQB 330), the Court confirmed, if not strengthened, what we already knew about the bidding process – that the Owner must evaluate all bids fairly, consistently and in accordance with the stated evaluation criteria and the reasonable expectations of bidders, and that exclusion clauses will not save the Owner when they have clearly departed from these obligations. However, despite successfully showing that the Owner breached these obligations for Contract A, the Contractor in this case learned that sometimes a win is not always a win.

What happened?

In 2010, South Fish Creek Recreational Association (“Fish Creek”), a collective group of non-profit sports and community associations, decided to move forward with a project to add 2 additional ice surfaces and a multi-purpose room to an existing recreation facility. The budget was approximately $19 million, and the Consultant (Quinn Young Architects) prepared an Invitation to Bid and Instructions to Bidders for the project. Only pre-qualified bidders were invited to bid, which included, among others, Elan Construction Limited (“Elan”) and Chandos Construction Ltd. (“Chandos”).

To alleviate Fish Creek’s concerns about roping itself into a project using a contractor with a shoddy reputation, the Consultant outlined four criteria in the Instructions that would form the basis of the bid evaluation: price, completion date, experience and references. Each category was assigned a specific number of points for evaluation purposes.

Ultimately, the project was awarded to Chandos, and Elan voiced its protest, claiming that the project was awarded based on criteria not disclosed in this evaluation matrix. As a result, Fish Creek found themselves heading to the courthouse for an alleged breach of Contract A.

The Court agreed with Elan, finding that Fish Creek did, in fact, significantly depart from the evaluation criteria outlined in the Instructions, specifically:

On completion date:

• While the Invitation bolded August 1, 2011 as the desired substantial completion date, the Consultant internally split the points in this section between substantial completion date and date for completion of deficiencies. Then, he created a complex formula for awarding these points. He first excluded several bidders from the completion date analysis (one for being an ‘outlier’ from the rest of the dates, and others for unexplained reasons), and used the remaining dates to create an average completion date, which was used as a baseline for awarding points to the remaining bidders. The same analysis was applied to the points for the deficiencies completion date. None of this, the Court explained, was communicated to the potential bidders, and the Court held that the combination of all these actions actually worked against Elan, who reasonably assumed that the highest points would be awarded to those who could commit or come closest to the August 1 date.

On experience:

• In awarding points, Fish Creek placed considerable weight specifically on arena building and LEED experience, though neither of these were referenced in the bid documents. 
• Following submission of the bids, Fish Creek decided to conduct interviews with Elan and Chandos, though this requirement was not disclosed in the bid documents either. Adding further insult to injury, Elan was informed that the interview must take place on August 18, despite the fact that Elan’s site superintendent and project manager were unable to attend on those dates. 
• And, just prior to the interview, Chandos substituted the site superintendent shown in its bid with a ‘ringer’ in the arena building department, and as anticipated, his references and qualifications proved quite charming to Fish Creek during the interview process. Given that amendments to the bids were only allowed prior to the bid closing date, the Court found this substitution to be a significant breach that could not be passed off as an ‘informality’ waived by the exclusion clauses in the bid documents.

Naturally, Fish Creek argued that their exclusion and privilege clauses in the bid documents were wide enough to provide a full defence to any breaches claimed by Elan, particularly because they required Elan to “waive any right to contest any legal proceedings regarding the decision of the Owner to award points under the criteria noted below.” However, the Court disagreed, and re-affirmed that such clauses do not detract from the Owner’s obligation to treat bidders fairly and to disclose all criteria that will be used to evaluate the bids.

As a result, the Court confirmed that Fish Creek did, in fact, breach Contract A. And, the surrounding facts clearly supported Elan’s claim that, but for Fish Creek’s breaches, Elan would have been awarded the contract for the project.

Before you pop the champagne…

Let’s hope that Elan read the Court’s decision from back to front, as it would have saved them from the inevitable letdown in the damages analysis undertaken by the Court. Anyone who has spent $100 at the fair throwing baseballs at milk jugs, only to be presented with a one-eyed stuffed bear as the prize, will have a taste of Elan’s bitter disappointment in this department.

Elan presented the Court with a ‘lost profit’ damage calculation using their historical figures, which supported a 5% profit margin on similar projects. Their lost profit on the project, they argued, was approximately $700,000.

But the Court reminded them that a damage award must place them in the same position as if the breach had not occurred. And what position would that be? Well: 

• One of Elan’s listed subcontractors had actually underestimated the scope of work required, and on the evidence presented, the Court found that Elan would have been forced to absorb at least some of the cost associated with this error. 
• Both Elan and Chandos had listed the same masonry and paving subcontractors in their bids. Chandos testified that it incurred additional cost on the project to replace both of these subcontractors (the former because they were deemed ‘too high risk’ to contract with, and the latter because they fell into receivership). The Court was persuaded that Elan could not have escaped these additional costs either. 
• Chandos suffered severe losses due to unexpected weather conditions, as 2010 just happened to be an unusually cold and early winter in Calgary. Based on the evidence presented, the Court found that Elan would also have incurred these inevitable costs.
• Finally, there were major delays on the project due to various unanticipated design issues, all of which proved costly for Chandos. Once again, the Court found no reason why Elan would have escaped similar costs of this nature. 

All things considered, Chandos provided evidence showing that it had actually suffered a substantial loss on the project, and the Court found that Elan, too, would have incurred a substantial loss as opposed to a profit had they been awarded the contract instead. So, while Elan celebrated its successful breach of Contract A claim, the celebration quickly turned sour when the Court awarded them nominal damages of $1,000. 

What can we learn from this?

Consultants should keep this case in mind when preparing bid documents and evaluating submitted bids. Specifying rigid evaluation measurements may prove dangerous, as the Courts will scrutinize these criteria closely to ensure the ‘integrity of the bidding process’ is upheld at all times. 

And while its unsettling to believe that you were treated unfairly during a bidding process, Contractors should put careful thought into the hypothetical outcome of the project had it been rightfully awarded to them. In other words, be careful what you wish for – you just might get it.

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Specs Overrule Drawings... REALLY - Specifier: March 2016

By Keith Robinson, FCSC, RSW, CCS, LEED AP

As specifiers, we are called into many uncomfortable meetings with a request to clarify exactly what was intended by the written words that we create as a part of the Project Manual... and are often left with the uncomfortable feeling that the only reason we are at these meetings is to be “the person” to blame where a satisfactory conclusion has not otherwise come to fruition. This is not an unusual feeling for anyone that has been assembling or administering construction specifications for any amount of time, but this particular interpretation is used way too often and without sufficient thought about how this hierarchy exists. Hence the ~ (tilde) and ¿ (upside down question mark) in the title indicating the sarcastic bent of the word really in the title line and in other instances in this article.

There is no doubt about the “Order or Priority of Documents” arising in the event of conflict within the Contract Documents, which is defined in our standard CCDC forms of contract. The issue with this statement is the difference of our “general understanding of conflict” versus the “legal interpretation of conflict”.

Since I am not a lawyer; the discussion presented is merely an opinion. The word “conflict” as used in the contractual instance is the legal interpretation where there is a breach of contract. Essentially someone is about to be sued, and the conflict refers to the process of resolving the dispute. The word “conflict” as used by the general (non-lawyer-ish) understanding is any disconnect between the specifications and the drawings, a disagreement between facts and an individual’s interpretation of the documents, or any perceived disagreement (or argument) during the administration of the project that doesn’t actually form a breach of contract (but has the potential if not resolved amicably).

It is important to accept that there needs to be a line in the sand; a point of decision making, to enable fair and equal interpretation of the documents. The specification is being used as the tool for this demarcation based on the accepted order of priority. The question and sarcastic inference at the start of this column comes about when the specification is inconsistent with the graphic representation (drawings) and where we need to move the discussion to a more controversial line of discussion. What happens when the drawings are correct and we do not want the spec to rule? What about the unintentional disconnects that occur when the drawing notes are too specific – should the drawing notes be considered a specification? If drawing notes are specifications – then what happens to the book (specifications)?

Our standard CCDC forms of contract offer us backup to support of the graphic representation and accompanying notes by stating “Contract Documents are complementary, what is required by one is required by all”. We humbly march forward feeling self confident that we are justified in switching the ruling documentation (in the eyes of the constructor) from the specification to the drawing, and now we are steering towards a conflict in the true legal sense... a potential for breach of contract.

In arriving at a more reasoned approach to interpreting the contract documents, we need to understand what a specification is and what a drawing is. Strange as those notions are given that we are an association of specification writers. It is the start of a historical tour of events leading to the interpretation of the working-drawings and specifications that we have today.

Some of the earliest interpretations of the word “drawings” are referenced in the late 1700’s and early 1800’s (1) as “the workingdrawings contain the graphical information placed on sheets of vellum or other reproduction” with the intent that everything else on the drawing sheet are considered words. Those words had specific context leading to our predecessors (2) and to our current interpretation of the order of priority of documents. The current interpretation was derived from the following concerns (quoted in the language of the time) in the late 1800’s:

• Of the exactness requisite in the practical profession of architecture, and how far it is influenced by the correctness of specifications and working-drawings
• Of the disputes and expenses which arise from badly drawn specifications
• Of the trouble and vexation which an architect occasions to himself by a badly drawn specification; and on the propriety of general clauses in specifications
• Of marginal references in specifications and contracts, their convenience, and their tendency to insure the correct performance of the work; and of the care with which specifications should be copied into contracts
• Of the advantages which would result, if copies of the working-drawings and specifications for all works, were deposited somewhere for the public and private reference
• Of the evil and depressing influence which bad building has upon architecture
• Of the influence which contracting for the erection of buildings has upon architecture 
• Of the present state of architectural mechanical knowledge 
• Of the question, “Have we improved in our Practical Building through specifications?”

Seems we are challenged with similar concerns in today’s construction environment and causes one to ponder from this historical information, “Why haven’t we seen progress in our documentation in the last 125 to 150 years to address these concerns?” Fortunately, both of these publications laid out the principles of interpretation that are used by CCDC, and which we are familiar with in today’s common usage of the order of precedence of the documents:

• Words add clarity and content to graphical representations and working-drawings.
• Words are understood in their general and popular usage. 
• Words commonly accepted by trade usage are understood as standard or technical terms and have precedence over general or popular usage.
• Specific and defined terms take precedence over standard or technical terms. 
• Typed words take precedence over printed words (think of old style drawing methods where words were hand printed). 
• Handwritten words take precedence over typed or printed words (handwriting is considered as reflecting the immediate thoughts selected by the parties themselves to express their joint understanding of the meaning of words).

The disconnect in today’s interpretation is that the word “drawing” is taken to be the “sheet of paper” that we bind together as a set of working-drawings rather than the graphical content on those sheets as was the original interpretation. When words are added to the graphical content, they become an integral component of the specification information that adds clarity to the drawings. Words printed on the drawing must match the words written into the specification...this disconnect arises by our failure to recognize that drawing notes are specifications.

This becomes a bigger issue given our need to add more detail to the drawing notes than is necessary to convey clarity or content, especially considering the weight provided to the specification under contract. The more detailed the drawing notes are, the greater the likelihood of creating discrepancies and potential for disputes as a result of those discrepancies.

So what is the solution to this dilemma? Communication, another word that everyone thinks they perform effectively, but which so often fails in the process of delivering the message. The ultimate irony is that we are failing to communicate because of our need to provide overly descriptive notes on our working drawings and failing to forward a message, speak with or otherwise send smoke signals to the person responsible for the written words that actually take precedence, and ultimately provides the communication to the person that delivers the finished project.

Do we assume that the specification isn’t as good as the contract gives it credit? Do we overcompensate by adding descriptive text and sequential context to drawing notes that ignores the flow of communication that is supposed to occur between the drawings and the specification? This becomes a self fulfilling conclusion... the specification is no good, because no one thought to communicate the project requirements into the written document... so the contractual significance of the specification is lost to the big recycle bin in the back rooms, basements and back alleys of so many buildings.

Sounds like an action plan for BIM concepts and software – a solution finally sounds like a discussion for a different column.

(1)  Handbook of Specifications, Practical Guide to the Architect, Engineer, Surveyor and Builder in drawing up Specifications and Contracts for Works and Constructions; T. L. Donaldson Ph.D., published by Atchley and Co., published in 1860. Also viewable online, University of Michigan HathiTrust Digital Library

(2)  Specifications for Practical Architecture; Frederick Rogers, Architect, published by Crosby Lockwood and Co., published in 1886. Also viewable online, Internet Archive 

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Spray Foam 101 - Specifier: December 2015

By: Scott Ruffett, CTR, LEED Green Assoc., ICYNENE

Over the last several years, provincial energy codes have changed to reflect the demand for more energy efficient buildings. The use of modern, cost effective insulation materials such spray applied foam insulation (SPF) can assist the building designer meet these new code requirements. Providing energy efficient buildings creates an opportunity to reduce energy consumption, lower our utility costs, improve occupant comfort and indoor air quality, and reduce pollution and greenhouse gases.

Choosing the right SPF product can be a challenge. Designers should carefully consider the project requirements to ensure a smooth and successful completion. Whether designing to meet minimum code requirements for thermal performance (R-Value) in a wall, roof or floor, or in a more complex commercial airbarrier system application, there is an SPF product that meet your project’s needs.

The two main SPF options for building designers are classified as light-density and medium-density. Both product types are excellent insulators providing superior air-sealing qualities and can be used in commercial, residential, new construction or renovation projects.

R-values for light-density products range between R-3.5 to R-4.1 per inch. These products can be considered air-barriers and require a vapour barrier in most applications. Light-density foams expand up to 100 times the liquid volume and are known for filling voids and cracks within the cavity making them an ideal choice for building reclamation and renovation projects or in details where there is a large and complex amount of framing that would difficult to insulate with traditional materials.

Medium-density foams have higher thermal performance, are air barriers as well as vapour barriers (VB in applications greater than 50mm). R-values of medium-density foams are higher than light density foams, ranging from 5.11 per inch to over 6 per inch. Medium-density foams are robust and can be used as a component of the building envelope. Furthermore, medium-density spray foams provide a water resistant barrier in cavity wall details. Other common applications are stud wall cavities, interior side of roof applications, below grade interior or exterior applications or under pour in place concrete floor slabs.

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Does Delay by Contractor Justify Termination by Owner? - Specifier: October 2015

By: Bill Preston, Q.C.

A recent Ontario case, Urbacon Building v. City of Guelph, tackled this question and concluded that: it may be possible, but damned unlikely. This case arose out of the following language of GC 7.1.2 of the current standard CCDC contract documents:

7.1.2 Contractor neglects to prosecute Work properly to a substantial degree and if the Consultant has given a written statement that sufficient cause exists to justify such action, Owner may give the Contractor Notice in Writing and instruct the Contractor to correct the defaults in the 5 Working Days immediately following, or provide a satisfactory schedule.

Briefly, the facts were as follows:

• City wishes to, in 2 phases, build a Civic Admin and Provincial Admin complex which will incorporate an old Fire Hall as a heritage site.
• The initial Contract Budget was approximately $40M in 2006.
• The City had engaged Moriyama and Tishina to provide a detailed prescriptive design.
• In July/06 Urbacon signed a CCDC2 – 1994 contract to achieve Substantial Performance by May/08.
• Soon after promptly starting, Urbacon and its trades discovered that the design documents were terrible while the Owner was insistent on continually making Changes.
• Thus, by December/07 the parties had signed an Extension Agreement –
• Extend Substantial Performance schedule to August 15, 2008 though Urbacon sought to September 30, 2008.
• City pay an additional $534.6K.
• Consultant respond to Request for Change Order (RCO) and Request for Information (RFI) in 5 days.
• Landscaping Work was removed from Substantial Performance requirements.
• Nonetheless, relations between the parties continued tense and by the summer of 2008:
• The Consultant would not distribute its copies of Site meeting minutes until the eve of the next meeting.
• Site meetings frequently focused on scheduling and the language used “would not be heard at a church social”.
• Consultant was way behind on the 5 day response requirement concerning Change Orders (CO), Change Directives (CD), RFIs and RCOs.
• Urbacon was issuing Written Notices of Delay and Claims for dollars together with schedule extensions.
• So, on September 4 and 5, 2008 the City’s Property Manager, who had some prior experience with terminating contractors, demanded that the Consultant issue a written statement of “Sufficient Cause” to terminate Urbacon.
• At this point, Urbacon’s initial base Scope of Work was 98% complete while it’s performance of issued COs and CDs was 78% performed and there were still some COs and CDs which the Consultant had not yet issued.
• Further, the City later during the trial admitted that at the time of its request for the Consultant’s written statement of Sufficient Cause:
• Urbacon would likely obtain Substantial Performance by early November.
• The Mayor was publically acknowledging that the Project delays were “inconsequential”.
• And, the City had no evidence that a delayed Substantial Performance to November would cost it any additional expenses.
• Further, the trial Judge concluded that the City then ought to have known that it could not find an alternate contractor to come in an obtain Substantial Performance sooner than Urbacon.
• Yet, on September the 5th the Consultant issued its letter of “Sufficient Cause”using much of the Property Manager’s proposed wording and a very sparse description of Urbacon’s defaults.
• And, on September 19, 2008 the City, rejected Urbacon’s responsive schedule to obtain Substantial Performance, and sent out the City Police to refuse Urbacon and its trades access to the site!

I trust now you see my conclusion: the facts in this case make neither the Consultant nor the Owner look very sympathetic. And, the Judge so concluded by ordering that the City’s termination was unlawful and that it must thus pay Urbacon damages usually measured by its lost economic opportunity because it was denied an opportunity to complete the Project and have the City pay the full adjusted Contract Price including reasonable value for unissued COs and CDs.

Conclusion

What makes this case worth discussing is the Judge’s answers to the below three central issues arising out of the language used by CCDC in GC 7.1.2.

How serious must the Contractor’s Default be to be “a Substantial Degree”?

1. The answer involves a circumstantial balance: is it better to leave the Owner to collect delay damages from the unpaid Contract Price it is still withholding, or better to permit the Owner to find another contractor to complete sooner than what it appears the Contractor will complete?
2. Thus, where the construction services market will take time for another contractor to come up to speed, likely the balance will favor the conclusion that there is no default to a Substantial Degree.
3. While, if there are serious defects or deficiencies which are being covered up, the Consultant’s written statement of “Sufficient Cause” should detail these so that the contractor is not blindsided.
4. Finally, given CCDC has adopted the words “a Substantial Degree” which originate from ancient cases, the Court should adopt the following words from these ancient cases:
   
   “So serious and fundamental a default as to undermine the thing the Owner bargained for.”
   
   What level of detail must the Consultant provide in its Written Statement?
5. This document is critical to the validity of the Owner’s termination process and thus Judge’s will quickly second guess the Consultant’s judgment.
6. Thus, the Consultant must clearly detail each act or omission it relies upon so that the Contractor has a fair opportunity to provide a responsive schedule contemplating rectification of each defect/deficiency.
   
   When the Consultant is considering issuing a written statement of Sufficient Cause, what ought to be its Attitude?
7. Keep in mind that the CCDC documents prescribe “the Consultant will not show partiality”.
8. Judges, particularly since a recent Supreme Court of Canada decision, will thoroughly second guess the Consultant’s attitude to assure that it is not favoring the party who pays its fees and/or may soon be proffering another design project.
9. Clearly, the Consultant should never let the Owner draft its written statement.

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CSC Fair Wine Draw Winners - Specifier: January 2015

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Industry Organizations - Specifier: January 2015

DIVISION 01: GENERAL REQUIREMENTS
Construction Waste Management – BuildSmart (www.metrovancouver.org/buildsmart)

DIVISION 02: EXISTING CONDITIONS
Demolition / Deconstruction – BuildSmart (www.metrovancouver.org/about/publications/Publications/dlctoolkit08web1.pdf)

DIVISION 03: CONCRETE
Cement Association of Canada (www.cement.ca)
Canadian Precast Concrete Institute (www.cpci.ca)

DIVISION 04: MASONRY
Masonry Institute of BC (www.masonrybc.org)
Masonry Institute (American) (www.masonryinstitute.com)

DIVISION 05: METALS
Canadian Institute of Steel Construction (www.cisc-icca.ca)

DIVISION 06: WOOD, PLASTICS, & COMPOSITES
Architectural Woodwork Manufacturers Association of Canada (www.awmac.com)
Western Red Cedar Lumber Association (www.wrcla.org)

DIVISION 07: THERMAL & MOISTURE PROTECTION
Roofing Contractors Association of BC (www.rcabc.org)
BC Sheet Metal Workers Associations (www.smacna-bc.org)
EIFS Council of Canada (www.eifscouncil.org)
RCI Inc. (www.rciwesterncanada.org)
RCI Western Canada Chapter (www.rciwesterncanada.org)

DIVISION 08: OPENINGS (DOORS, WINDOWS)
Steel Door Institute (www.steeldoor.org)
Canadian Steel Door Manufacturers Assoc (www.csdma.org)
Door Hardware Institute (www.dhi.org)
Glazing Contractors Association of BC (www.gca-bc.org)

DIVISION 09: FINISHES
Association of Wall and Ceiling Contractors of BC (www.awccbc.org)
Gypsum Association (www.gypsum.org)
Master Painters Institute (www.paintinfo.com)
Carpet and Rug Institute (www.carpet-rug.org)
National Flooring Covering Association (www.nfcaonline.ca)
National Wood Flooring Association (www.nwfa.org)
Terrazzo, Tile and Marble Assoc. of Canada (www.ttmac.com)

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The Case for Old School Communication Tools Like Email in the Mobil & Social Era - Specifier: January 2015

By Dan Hodgins (www.danhodgins.com)

With everyone jumping on the social media bandwagon it’s easy to think you should do the same… just because everyone else is doing it.

However, I’m not convinced that this reasoning is sound, and that social media tools provide the right type of communication impact for every type of industry and organization… including yours.

Bear in mind that I’m speaking from personal experience as someone who has built up my own social media presence on a variety of platforms (including my blog, Twitter account, Facebook account, and LinkedIn account) and used the tools in practical ways to achieve my own communication goals.

To give you some additional context, I am currently responsible for operating two email distribution lists… one is a 2X monthly newsletter, and the other is an email-based course that automatically drips out a weekly educational email. These lists have 661 and 72 subscribers… and are growing in number each day, with unsubscribe rates under 1% per message.

For both lists, email open rates are currently ranging between 20 – 40%… well above the average open rate in our industry of 10 – 20%.

Let’s look at some data to gain some additional insight into people’s habits around the consumption of information.

Research studies show that email is used by most adult internet users.

92% of adult internet surfers use good old email, with 61% using it daily, and some multiple times per day. Pew survey, 2011

Email is probably the most cost-effective and efficient method for reaching people on all of the devices they use most often, at home, at work, and on the go, including smartphones, tablets, laptops and desktop computers.

No other method comes close to matching the reach and ubiquity of email in a seamless experience across all devices 24/7/365 – for alerts, notices, notifications and value-added communications.

If you don’t have a simple email communications plan in place including: stakeholders, their needs and how you can use email as a communication tool to achieve your goals, then you might want to look at beefing up your email program before investing resources into launching social media accounts that require ongoing effort and resources just to get off the ground, let alone grow. 

If people don’t want to hear from you and avoid your communications, then you've got a relevancy problem, not a problem related to any specific communication tool.

If no one opens and reads your emails, then why would they want to read 100 tweets from your organization that are 140 characters each?

Chances are there are plenty of opportunities to improve your email communications by changing your distribution lists, frequencies, topics and relevance/quality/length of your messages. It’s crucial to find out which topic(s) interest people the most, and at what frequency.

Perhaps making your email messages 75% shorter while increasing frequency would be a much better tactic than trying to build up social media accounts from scratch!

It’s hard work to focus on continual improvement in your existing communication tools based on practical feedback from stakeholders, but this might be the best approach for organizations who are short on resources and time.

Social media tools (Facebook, Twitter, LinkedIN) can be used for additional reach, but I tend to view them as the supporting cast to the main star – email.

A simple way to use social media to support your email communications would be to post your email message on your web site or blog as an article, and then send out a link to the URL via your social media channels. However, in this case, social media might be redundant, and unnecessary.

Still skeptical? Do you think that social media is truly mandatory for your organization just because everyone else is doing it? Perhaps a bit of comparison will help – read on.

If you don’t like email, then your only other options are to: knock on people’s doors (too time consuming), call people on the phone each time you want to communicate (too time consuming), or send communication pieces by postal mail (too time consuming and expensive). Or, you could try to drum up support for a daily or weekly fax message and see if people become fired up about that…

All 4 of the above solutions are extremely inefficient investments in terms of time and money. They are relics of previous eras where instant and free communication using email to reach people on smartphones, tablets, laptops and desktop computing was not yet possible.

What people want is asynchronous communications that they can read when they want (at home, at work, and on the go) using the device they want (smartphone, tablet, laptop, desktop) in their preferred message format (probably email or even SMS… as opposed to Twitter). People go to Facebook to deliberately AVOID work related communications, so don’t try to force your organization’s communication needs onto people’s personal channels.

Email is BY FAR the world’s biggest and most established social network (people can CC, BCC and forward messages to up to 500 people on Gmail), so my recommendation is to dust off your organization’s communication plan and look at opportunities for improving the quality/relevancy of your email communications.

There are currently 2 billion smartphones in the world, and email is available on most, if not all of them, so you can achieve a strong message/media match by focusing on one simple messaging technique – email for mobile.

This approach will help you reach people with the right messages, at the right times, on the right devices with the right types of media in order to maximize your overall communication impact.

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Mortgages and Dip Loans Trump Liens - Specifier: November 2014

By Bill Preston

Too often Designers/Contractors/Trades/Suppliers (I have witnessed delinquents among all of them!) invest services and materials into a project without first carefully investigating:

• Does the proposed project have good market prospects and is its financing a smart investment for your credit?
• Does the Owner/Developer have available some extra financial resources if a problem arises?

A recent BC Court of Appeal decision in Mission Creek v. New Recreations should be a gut wrenching lesson for everyone. In early 2007, New Recreations and its associated companies owned (and secured their investment by a mortgage on the title) prime Schuswap Lake waterfront property. They conceived a $19M West Beach Lands Development consisting of leased holiday sites and adjacent permanent storage facilities. For New Recreations’ business plan the appurtenant storage was critical to the success of the project. But, this portion of its scheme was attracting pushback from the municipal planners. Eventually, the municipality rejected the storage portion of West Beach Lands Development’s proposal and a Judge affirmed its decision in August 2010. But, by then New Recreation’s mortgage financing and the designers/builders had invested a whole bunch of credit in the development and eventually fought over who was going to spill the most financial blood.

Here is a chronology of what happened:

Oct/10
Liens for approximately $725,000 had been registered against the project.

Oct/10
But, Mission Creek Mortgage had before any liens were registered advanced $19M on its mortgages.

Oct/10
New Recreations was in default so Mission Creek gave bankruptcy notice.

Oct/10
New Recreations, hoping to complete its project and create better value for all of the creditors, obtained a Court order\staying all debt collection proceedings.

Oct/10
This Court also permitted the monitor (trustee) of New Recreations to borrow money (DIP financing) from Mission Creek Mortgage to leases-up the sites and sell the project.

Nov/10
So that New Recreation’s monitor could provide clear title to the lease sites, the Court vacated all of the liens upon the monitor borrowing and paying $725,000 into a lawyer’s trust account.

Aug/12
At this point there was $22.1M dollars owing Mission Creek for both its mortgages and the DIP financing, as well as a further $725,000 was still owing to the lien claimants.

Aug/12
The West Beach Lands Development was sold for $17.9M, about $4.2M short.

The fight thus distilled down to the issue, who was entitled to the $725,000 in the lawyer’s trust account? It became a fight between Mission Creek seeking payment on its mortgages and DIP loans on one side, and the lien claimants on the other side. This dispute went all the way to the Court of Appeal, which decided that Mission Creek was entitled to the trust money while the lien claimants were left with an empty claim + legal costs!

The lien claimants had argued that the trust deposit was a set aside for the purpose of first paying their claims, while Mission Creek countered that the trust deposit merely stood in substitution for the land and its mortgages and DIP financing were superior claims, thus it was entitled to all the trust funds. The Court of Appeal agreed. It concluded that because all of the mortgage advances had been duly made before the liens were registered and the DIP financing gave Mission Creek statutory priority over the liens pursuant to the federal CCAA legislation, they trumped the liens. The Court rationalized that in October 2010 this project was in grave financial peril and all creditors, including Mission Creek and the lien claimants, hoped to revive the project or at least optimize their claims by using DIP financing to complete it. It didn't work out; and, it would create a mischief and uncertainty for future DIP financing Court orders if the financing could be trumped by late filed lien claimants.

Conclusion

Would it have been different if the liens had been filed sooner? Maybe. Earlier filed liens may have sooner prompted Mission Creek to freeze the mortgage financing and threaten bankruptcy proceedings. The better conclusion, in my opinion, is that had the lien claimants carefully investigated the financial prospects and strengths of the project before investing their credit in services and materials, they would have discovered that New Recreation’s business proposal was substantially predicated upon obtaining municipal approval for the storage sites; and further New Recreations has no rainy day resources, rather only debt financing.

Here in the end, New Recreation’s affiliated company also lost its investment in the land because earlier, to obtain Mission Creek’s mortgage financing, it had postponed its land mortgage to Mission Creek’s claim, and the sale price didn't realize enough to even completely pay off Mission Creek’s mortgages.

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CSC Vancouver Chapter Construction Fair - Specifier: October 2014

November 19, 2014 - 10:00 am to 4:00 pm
The Vancouver Convention Centre, 999 Canada Place,
Vancouver, BC

For your benefit, Construction Specifications Canada (CSC) Vancouver Chapter is bringing together – for one day only – over one hundred (100) local manufacturers, suppliers and distributors of construction products!

This Fair will provide easy, uncluttered access to each product and each sales representative will be available to take your questions. You will be able to see, touch and discuss the specifics of the latest, greatest, and most innovative construction products – all under one roof!

This “Simple but Revealing” approach towards gathering product and technical information for your next specification, architectural design or construction project is a streamlined version of the larger building exhibitions – but without all the associated fanfare and hype!

ATTENDANCE IS FREE AND ARCHITECTS AND DESIGN PROFESSIONALS WILL BE ENTERED INTO A DRAW FOR PRIZES INCLUDING AN IPAD AND CANUCKS TICKETS.

Speakers:

Shop Drawings - Review v. Approve
Mike Demers, LLB, Jenkins Marzban Logan LLP

Compliance with ASHRAE 90.1 and NECB: The building envelope prescriptive requirements
Catherine Lemieux, P.Eng., Building Envelope Specialist, Morrison Hershfield.

Connecting the Dots between Good Roof Design, Inspections and Guarantees
RCABC & Monty Klein of Wells Klein Consulting Group.

There are still a few exhibiting spots available, so if you are interested in exhibiting at this year’s show, please contact Todd Gerrard (toddg@enercorp.ca)

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Golf Tournament Results - Specifier: October 2014

50/50 Winner
Marcel Tack (Tec Agencies) $405

Most Honest Team Winners
James Kelly (Soprema), Scott Biggs (Convoy Supply), Eric Poxleitner (Keystone Architecture), Al Martin (Morrison Hershfield)

Mens KP - Peter Boscovic (Morrison Hershfield)
Womens KP - Kari Yuers (Kryton International)
Mens LD - Aaron MacLellan (Aqua-Coast Engineering)
Womens LD - Jayne Raeburn (Sika Sarnafil)

Top Team
Marcel Tack (Tec Agencies), Kevin Polk (Epro), Jarod Boddy (GC Supply), Aaron MacLellan (Aqua-Coast Engineering)

The following people were also noted for their long time standing as members of CSC as presented at the CSC Annual Conference in Kitchener, ON.

10 Years
Ms. Karen Fourchalk
Mr. Blair Bennett–CTR
Mr. Bob Matich–CTR
Mr. Tony Martinelli–CCCA
Mr. Roger Steers

15 Years
Mr. Mike Boldt

20 Years
Mr. Arthur Buse
Ms. Kimberly Tompkins–CTR
Mr. Edward Wetmore–RSW
Ms. Susan Morris –FCSC
Ms. Kari Yuers

25 Years
Mr. Robert Park–RSW
Mr. Ron Van Berkel–CTR

35 Years
Mr. Kenneth Halldorson–FCSC, RSW
Mr. Arthur Perjul

40 Years
Mr. David McGuigan FCSC

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Limitation of Liability Clauses; Ain't Judge Proof - Specifier: September 2014

By Bill Preston

Judges clearly require that if you want to be shielded by a Limitation Clause, you’d better be sure that the person/party claiming against you has knowingly signed on. A couple of Alberta cases bring these requirements home.

In the recent case of Swift v. Eleven Eleven Architecture, the Alberta Court of Appeal dealt with the issue of requiring a signature. The facts of the project were that the structural subconsultant had seriously and dangerously messed up and at trial sought to hide behind the following limitation of damages clause in the Architect/Client Agreement:

The Client agrees that any and all claims which the Client has or hereafter may have against the Designer which arise solely and directly out of the Designer’s duties and responsibilities in contract or in tort, shall be limited to $500,000.00


Mrs. Smith claimed $1.9M damages against the engineer and argued that she was not a “Client” bound by this clause. She had not signed the Agreement. Rather, she had only witnessed her husband’s signature; and, at trial testified that she neither had read it nor sought legal advice because the Agreement named only her husband as client. The trial judge didn’t buy her position and decided that her husband had signed both on his behalf as well hers as her agent. He rationalized:

• They were cohabiting and together intended the new project
• The project site was owned by both jointly
• The design services were for the benefit of her joint interest as well as her husband’s
• She was aware and on board with hiring the Architect
• She did have some input in the design requirements
• And, had she opposed the Agreement, it was “unlikely” her husband would have signed the Agreement

The Court of Appeal reversed the trial judgment. It reasoned:

• The judgment anachronistically ignores the separate legal identity of married &/or cohabiting persons
• So to, joint tenants have a separate interest

Courts should be cautious and must avoid the pitfalls of relying upon subjective assumptions about marital relationships

The structural engineer wasn’t shielded by the limitation of damages clause and was found liable to the wife for $1.9M, not just the $500K! And, the Supreme Court of Canada refused to change this decision.

The next requisite to depending upon these clauses is that, the person later claiming damages arising from a design/construction mess up must before signing and returning the Agreement, have been aware of the limitation term or had plenty of opportunity to discover that it was in the Agreement. In the Alberta Provincial Court decision of Simons v. Diagnostic Engineering the Simons had recently moved into their new home in Calgary when they detected a terrible smell coming from behind the closet in the play area next to their daughter’s bedroom. They contacted Diagnostic Engineering because of its reputation, to attend and advise whether they had a mold problem. An engineer attended for this purpose and just before beginning her inspection had Mrs. Simons sign a document. Then, two days later this engineer phoned to report that she had lab results that reported a serious mold problem in the Simons’ daughter’s bedroom and that it was not safe for children to remain in the house. As a consequence, the Simons immediately vacated their home and engaged a contractor to remediate the problem. It was not until the contractor had done substantial work that it began to question the engineer’s advice and a second mold air test proved that the engineer’s verbal report was wrong. The Simons sued for both their relocation costs and the needles remediation costs. In turn, Diagnostic sought to hide behind its Limitation of Damages Clause in the Document signed by Mrs. Simon as follows:

Limits of Liability – total liability in the aggregate, of DEI to the Client and for all shall not exceed the project costs, as is invoiced to the client by DEI.

Again, the trial judge didn’t buy it. The Court reasoned:

• Neither the engineering firm nor the engineer told Mrs. Simons that the document contained a limitation of damages clause
• Nor, was this a type of situation where Mrs. Simons ought to have reasonably expected the document would contain a limitation of damages clause
• So, this clause was not a part of the Contract and Diagnostic could not hide behind it

In contrast, where the signature is from a person who ought reasonably to have expected the probability of a limitation clause, such a clause can be a good defence. In the recent Ontario case of Gedco Excavating v. Aqua-Tech Dewatering, the City of Kitchener had contracted Gedco to replace underground piping at a location with a high underground water table. Being aware of the City’s award to Gedco, Aqua-Tech sought the dewatering work and provided a written proposal to Gedco which contained this exclusion clause:

“shall have no liability or responsibility for any loss or damage, resulting from the performance of the Work called for herein”

“Gedco hereby agrees to defend such a claim for damage resulting from the performance of the work.”

Gedco’s project manager signed and returned Aqua-Tech’s proposal. Then, two weeks later this project manager signed and sent to Aqua-Tech a PO with conditions which purported to negative this exclusion clause. Aqua-Tech, wisely, did not sign and return the PO; rather, it just went to work. And, while performing the work, one of Aqua-Tech’s employees accidently drilled through an adjacent sanitary sewer main which was not discovered until 10 days later. After Aqua-Tech refused to repair the main and remediate the harm caused to neighbouring residences, Gedco repaired and had its liability insurer recompense the neighbours. But Gedco didn’t sue. Rather, as you might have anticipated, it simply held back Aqua-Tech’s final payment of $135,372.00. Thus, Aqua-Tech sued.

Eventually, the trial judge after some legal procedural difficulties determined:

• Aqua-Tech’s signed & delivered proposal containing the exclusion clause was the contract between the parties because Gedco’s subsequent PO was never signed by both parties
• The exclusion clause was clear and not complicated
• The exclusion clause was consistent with normal industry practice that the general contractor was responsible to locate adjacent underground lines
• While, the documents were silent on the sanitary main’s locates and the physical markers on the surface were made by Gedco’s crew

Thus, given Gedco’s Project Manager signed and delivered Aqua-Tech’s written proposal and was a person who ought to have known the normal practice, Gedco’s claim failed, while Aqua-Tech

realized its entire final payment claim.

Post Script

In the Swift v. Eleven Eleven Architecture case, the Court of Appeal also had a couple of comments about the clarity of the words used in the limitation of damages clause which, again, read:

The Client agrees that any and all claims which the Client has or hereafter may have against the Designer which arise solely and directly out of the Designer’s duties and responsibilities in contract or in tort, shall be limited to $500,000.00

1. If each of Mr. and Mrs. Swift had been found limited by this clause the wording leaves doubt on whether each would be entitled to $500K, $1M jointly; it commented that the word “aggregate” might need to be inserted before the $500K to limit the Swifts’ total to $500K ;
2. And, the Court also judged that the words “Designers duties and responsibilities” used in this limitation of damages clause do not include verbal reports made by the Designer, thus neither is Mr. Swift’s limited to $500K!

To give you a bit of a context for the 2nd clarity quibble by the Court, the mess-up by the structural engineer involved his report that his design is compliant with the seismic loading requirements of Part 4 of the Building Code for Vancouver Island. In fact, this wasn’t the case; and, most important for the Court of Appeal, was that this default raised the gravity of the “fault” by the engineer to “real and substantial danger to the project’s occupants” and persuaded the Court to conclude that the engineer’s verbal report did not fall with the words “Designer’s duties and responsibilities.” This part of the case left me with a suspicion that limitation of damages clauses will never be clear enough to shield against “real and substantial danger claims! Structural and geotechnical engineers, buy more insurance.

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