Legal Blog

Unbelievable

There are times when one reads a case and one’s jaw drops open in amazement. The case of Ring Contracting Ltd. v. PCL Constructors Canada Inc., a decision of the British Columbia Supreme Court, is one of those.

Settlement

Soil conditions were different on the project than those anticipated. Consequently, the excavating sub made a claim for its resulting extra costs along with other smaller claims for extras. In all, it sought approximately $400,000.

On February 11, 1999, the sub, the general, the owner, and the engineer attended a meeting to discuss the sub’s claims. The parties reached a settlement and the owner paid, through the general, approximately $320,000 to the sub.

On February 15, 1999, the general forwarded to the sub a subcontract revision that stated that the contract was increased by the settlement amount “for all work associated with the changed soil conditions claim and all outstanding contemplated change orders.”

On May 12, 1999, the sub sent a statement to the general that reflected the amounts agreed upon in the settlement meeting and the amount set out in the subcontract revision.

On September 2, 1999, the sub wrote to the general notifying it that although it had accepted 80% of its claim from the owner in the February settlement meeting, it wanted an additional 10% of its claim from the general. This is probably when the jaw of the general also dropped.

Fabrication 

The sub alleged that it had written a letter to the general on March 8, 1999 that set out its remaining claim of an additional 10% and a subsequent internal memo that set out its claim and referred to the March 8, 1999 letter. The general denied receiving the March letter

The judge did not accept the sub’s allegation. The March letter was inconsistent with all other correspondence, inconsistent with the purpose of the February settlement meeting, inconsistent with the evidence of the general and the owners, and, we might add, inconsistent with common sense.

The judge went so far as to conclude that the sub had fabricated the March letter and the memo.

The judge held that the February settlement was an all-inclusive settlement affecting all parties and, accordingly, dismissed the sub’s claim against the general.

Costs

The judge was so outraged that the sub commenced the action in the first place and fabricated the documents that the sub was ordered to pay the general all of its legal fees and disbursements in defending the action.