Legal Blog:

Bogus Claims

By the title, you might think that we will be referring to claims that contractors make. Actually, we are discussing claims that an owner makes in order to justify non-payment to a contractor. A good example of this manner of defence, in which the defendant throws everything against the wall to see what may stick, is set out in Feltz Design Build Ltd. v. Larson, a 2021 decision of the Ontario Superior Court of Justice.

Contracts

The owner retained a construction manager to redevelop its premises. The reasons for decision referred to “a CCDC Construction Management Contract for Services and Construction.” Given some of the discussion in the reasons, we assume that this is a CCDC 5B. A CCDC 5B results in the owner paying the construction manager (i) for the subcontractors and specified general conditions at cost; and (ii) a fee, which can be a percentage of the cost or a fixed amount. The construction manager enters into all of the contracts with the subcontractors and pays them from the money that the owner is paying to the construction manager.

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