



COURT OF APPEAL FOR ONTARIO

CITATION: Ross-Clair v. Canada (Attorney General), 2016 ONCA
    205

DATE: 20160314

DOCKET: C59741

Gillese, Epstein and Roberts JJ.A.

BETWEEN

Ross-Clair, a division of R.O.M. Contractors Inc.

Applicant (Respondent)

and

Attorney General of Canada

Respondent (Appellant)

Jacqueline Dais-Visca, for the
    appellant

Jeffrey A. Armel and Daniel T. Resnick, for the
    respondent

Heard: September 25, 2015

On appeal from the order of Justice Thomas R. Lederer of
    the Superior Court of Justice, dated November 13, 2014, with reasons reported
    at 2014 ONSC 6551.

Epstein J.A.:

OVERVIEW

[1]

This case involves the interpretation of a provision in a construction
    contract forming part of the process that allowed the contractor to advance a
    claim for compensation in excess of the contract price.

[2]

On July 24, 2007, the respondent, Ross-Clair, a division of R.O.M.
    Contractors Inc., entered into a contract (the Contract) with the appellant, Her
    Majesty the Queen, as represented by Public Works and Government Services
    Canada (PWC). Under the Contract, Ross-Clair agreed to build management
    offices at the Millhaven Institution (the Project). For ease of reference, I
    will refer to the two contracting parties as Ross-Clair and PWC. The
    agreed-upon Contract price was fixed at $7,923,800, excluding taxes. By its
    terms, the Contract required completion by January 24, 2009.

[3]

The Contract provided for a detailed procedure governing the
    circumstances under which Ross-Clair could claim additional compensation arising
    out of changes in soil conditions or PWCs neglect or delay. I will refer to these
    requests for additional compensation as claims for extras  the term normally
    used in the industry.

[4]

Central to this procedure was General Condition (GC) 35.4. This clause
    enabled Ross-Clair to submit a claim for extras to the Project Engineer.
[1]
The claim had to be in writing and was expressly required to be supported by information
    sufficient to allow the Engineer to determine whether it was justified. The Engineers
    written decision or direction in this respect was final and binding, subject
    only to the provisions of the dispute resolution conditions found in the
    Contract (the DRC). The DRC provided that, if Ross-Clair rejected the
    Engineers decision, it had 15 working days to provide the Engineer with
    written notice of its dispute. The delivery of this notice would then engage a
    process ultimately allowing the parties to proceed to binding arbitration.

[5]

In the course of working on the Project, Ross-Clair advanced a claim for
    extras in the amount of $2,204,676 (the Claim). PWC took the position that Ross-Clair
    did not provide a description of the facts and circumstances giving rise to the
    Claim sufficient to enable the Engineer to determine whether or not it was
    justified.

[6]

Since a decision by the Engineer was the only route to payment for
    extras, Ross-Clair brought an application under r. 14.05(3)(d) of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194, for an order compelling PWC to
    direct the Engineer to consider the Claim and issue a written decision as to whether
    Ross-Clair was entitled to additional payment. Once the Engineers decision was
    rendered, the parties could, if necessary, proceed to binding arbitration.

[7]

The application judge dealt with the amount of the Claim in two parts.
    He held that Ross-Clairs claim for $1,437,976 of the $2,204,676 requested (the
    $1,437,976 Claim) met the contractual requirements relevant to advancing a
    claim for extras and directed the Engineer to make a decision as to whether the
    $1,437,976 Claim was justified. With respect to the remaining $766,700 (the
    $766,700 Claim), the application judge held that the information Ross-Clair
    provided was not sufficient to enable the Engineer to determine whether it was justified.
    The application judge therefore dismissed the application with respect to the
    $766,700 Claim.

[8]

PWC appeals the application judges decision with respect to the $1,437,976
    Claim.

[9]

The interpretation of GC 35.4  specifically what constituted a written
    claim sufficient to enable the Engineer to determine whether a claim for extras
    was justified  is the focus of the dispute between the parties and of this
    appeal.

[10]

PWC
    submits that, on a proper interpretation of GC 35.4, the $1,437,976 Claim lacked
    information sufficient to enable the Engineer to determine whether it was
    justified. Ross-Clair contends that the application judges conclusion demonstrates
    neither an extricable error in law nor palpable and overriding error.

[11]

I
    would allow the appeal. For the reasons that follow, I have concluded that the
    application judge fell into error in interpreting GC 35.4. Specifically, he
    interpreted the provision in isolation without regard to related provisions in
    the Contract. In my view, when GC 35.4 is properly interpreted, the information
    Ross-Clair provided in support of the $1,437,976 Claim did not meet the provisions
    requirements as the information was not sufficient to enable the Engineer to
    determine whether or not the $1,437,976 Claim was justified.

BACKGROUND FACTS

The Relevant Contractual Provisions

[12]

The
    Contract contained interrelated provisions that established a procedure under
    which Ross-Clair could seek payment for extras relating to changes in soil
    conditions, or neglect or delay by PWC. As the application judge noted, these
    provisions may be considered to be a Code that governed the rights and
    obligations relating to a claim for extras.

[13]

GC
    35 formed the central part of this Code. For the purposes of my analysis, it is
    necessary to set out GC 35 in its entirety:

GC 35 (1994-01-10) Changes in Soil Conditions and
    Neglect or Delay by Her Majesty

35.1   Subject to GC 35.2
    no payment, other than a payment that is expressly stipulated in the contract,
    shall be made by Her Majesty to the contractor for any extra expense or any
    loss or damage incurred or sustained by the contractor.

35.2   If the contractor
    incurs or sustains any extra expense or any loss or damage that is directly
    attributable to

35.2.1 a substantial
    difference between the information relating to soil conditions at the work site
    that is contained in the Plans and Specifications or other documents supplied
    to the contractor for use in preparing the contractors tender or a reasonable
    assumption of fact based thereon made by the contractor, and the actual soil
    conditions encountered by the contractor at the work site during the
    performance of the contract, or

35.2.2 any neglect or
    delay that occurs after the date of the contract on the part of Her Majesty in
    providing any information or in doing any act that the contract either
    expressly requires Her Majesty to do or that would ordinarily be done by an
    owner in accordance with the usage of the trade,

the contractor shall,
    within ten (10) days of the date the actual soil conditions described in GC
    35.2.1 were encountered or the neglect or delay described in GC 35.2.2
    occurred, give the Engineer written notice of intention to claim for that extra
    expense or that loss or damage.

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.

35.5   If the Engineer
    determines that a claim referred to in GC 35.3 is justified, Her Majesty shall
    make an extra payment to the contractor in an amount that is calculated in
    accordance with GC 47 to GC 50.

35.6   If, in the opinion
    of the Engineer, an occurrence described in GC 35.2.1 results in a savings of expenditure
    by the contractor in performing the contract, the amount set out in the
    Articles of Agreement shall, subject to GC 35.7, be reduced by an amount that
    is equal to the saving.

35.7   The amount of the
    saving referred to in GC 35.6 shall be determined in accordance with GC 47 to
    GC 50.

35.8   If the contractor
    fails to give a notice referred to in GC 35.2 and a claim referred to in GC
    35.3 within the times stipulated, an extra payment shall not be made to the
    contractor in respect of the occurrence.

[14]

As
    can be seen, the provisions contain two main requirements  time and the
    provision of information in support of a claim for extras.

The Claim

[15]

The
    Claim emerged and was discussed in a series of letters between Ross-Clair and
    PWC, and Ross-Clair and the Engineer. As can be seen from the following
    summary, the nature of what was being discussed by the parties is at times
    unclear. Ross-Clair appears to have treated the correspondence as involving both
    a request for an extension of time and a claim for compensation for extras, whereas
    PWC often refers solely to the request for a non-compensable extension of time.

[16]

In
    a letter from Ross-Clair to the Engineer dated December 5, 2008,
[2]
Ross-Clair provided notice of the $1,437,976 Claim
[3]
:

Due to delays by the Institution in the start of construction
    for Building "E", we hereby request Project time extension as per our
    revised Schedule, dated December 1, 2008, which indicates completion date of
    September 14, [2]009. The Schedule is based on a tentative start date for
    Building "E" of December 15, 2008.

The original Schedule was based on the Tender/Contract
    documents, which did not tie-in, start of construction for Building
    "E" to completion of "E" Yards.

As a result of the delays and extension of the Schedule there
    will be additional cost incurred, which will be quantified and forwarded for
    your review in due course.

[17]

The
    Engineer responded to Ross-Clair in a letter dated December 16, 2008, stating
    that "there [was] insufficient evidence to suggest that all of [the] delay
    [was] the direct cause of the Institution". The Engineer therefore requested
    additional details to support the $1,437,976 Claim.

[18]

On
    December 22, 2008, a meeting of representatives of Ross-Clair, PWC and the
    Engineer was held to discuss, among other things, Ross-Clairs request for an
    extension of time to complete the Project, and associated costs. The report of
    the meeting discloses that the representative for PWC requested a detailed
    breakdown of the projected costs and the impact on the Project, in order to
    examine the $1,437,976 Claim. Ross-Clair agreed to respond to this request by
    January 10, 2009.

[19]

On
    February 27, 2009, PWC wrote to Ross-Clair expressing concern about the default
    in Ross-Clairs obligation to complete the Project by January 25, 2009 and
    reminding Ross-Clair of its promise to submit a request for an extension of
    time.

[20]

Ross-Clair
    replied to the February 27, 2009 letter on March 2, 2009. Referring to its letter
    of December 18, 2008 as a request for an extension of time to complete the
    Project, Ross-Clair then outlined the basis for that request. Ross-Clair also
    indicated that the March 2 letter was to respond to PWCs request for
    additional information in relation to the extension of time, and to provide PWC
    with additional cost information. The March 2 letter contained a description of
    circumstances that, according to Ross-Clair, caused delay in completing
    Buildings A, E and J. In particular, Ross-Clair cited delays due to site
    conditions, weather conditions, alterations to the [C]ontract and disruptions
    to the original sequence of construction as necessitating the December 18,
    2008 request for an extension of time. Attached to the letter was a document
    entitled Additional Costs Summary that listed various subcontractors and the
    costs attributed to their work. These costs totalled $1,437,976.

[21]

Other
    than the Additional Costs Summary, the letter of March 2 did not contain any
    other supporting documentation.

[22]

In
    letters dated April 7, 2009 and April 20, 2009, PWC wrote to Ross-Clair requesting
    further documentation in support of Ross-Clairs request for an extension of
    time to complete the Project. The April 7, 2009 letter noted that the extension
    would be treated as non-compensable until the supporting documentation
    necessary to validate the [$1,437,976 Claim was] received and the costs
    associated with [Ross-Clairs $1,437,976 Claim could] be fully explored. The
    Engineer also wrote to Ross-Clair on May 29, 2009, expressing its concerns as
    to the extension of time and requiring Ross-Clair to submit a detailed plan of
    action.

[23]

On
    October 6, 2009, PWC responded to Ross-Clairs request for an extension of time
    and compensation, as follows:

[PWCs] priority at present is to achieve completion as
    quickly as possible, and our preference would be to deal with your claim [(the
    $1,437,976 Claim)], once you have finalized it and provided supporting
    documentation, after completion is achieved.



It was not until March 2, 2009, that Ross[-]Clair set out its
    impact cost claim for $1.437 million, although no indication was provided as to
    what time period this cost claim related nor what assumptions were embedded in
    it.

Since December, 2008, all parties have been working towards the
    Target Date, but there has been no agreement reached with regards to the causes
    for the delays, and [PWC] has advised that it disputes Ross[-]Clair's
    entitlement to compensation during the delay period.



Lack of coordination, late start-up, poor scheduling, and
    inadequate resourcing by Ross[-]Clair are all factors which in our view have
    contributed to the delays experienced to date. As well, certain delay factors,
    such as weather, would not ordinarily be compensable in any event. A more in
    depth analysis of the delays on the Project will need to be completed in order
    for the parties to be in any position to allocate responsibility for the delay.

In terms of compensation issues, Ross[-]Clair has provided no
    indication of what assumptions are behind the $1.437 million claim for
    additional compensation. These assumptions, together with all relevant
    supporting documents, must be provided before we can assess this aspect of your
    claim. You will need to also provide information indicating your efforts and
    those of your subcontractors aimed at mitigating impact costs.

We would draw your attention to GC 51 of the Contract. In
    order for us to assess your impact cost claim we require that you produce all
    your cost estimates including your original tendering estimating sheets, and
    all records including general ledgers and books of account, and all other
    supporting documents relevant to your impact cost claim.

Once we have received additional
    information from you relating to the assumptions and factual background to your
    claim, we would suggest that we meet to discuss it, after which the Engineer
    will determine whether any portion of the claim is justified.
Once the
    Engineer makes that determination, Ross[-]Clair can consider the processes
    available under the [C]ontract for resolving disputes. [Emphasis added.]

[24]

In
    this letter, PWC extended the time to complete the Project to September 14,
    2009. This extension was granted without compensation and without prejudice to
    [PWCs] right to contest [Ross-Clairs] entitlement to any time extension or
    compensation from [PWC] related to such an extension.

The Correspondence Continues

[25]

On
    March 31, 2011, Ross-Clair wrote to PWC further to its Delay Claim of March 2,
    [2]009, submitting a claim for extras incurred as a result of delays in
    ongoing work in Building E as well as additional work carried out under change
    orders from September 14, 2009 to April 20, 2010. This correspondence contained
    no breakdown of the costs being claimed. It said only that [t]he additional
    cost incurred [was] in the amount of $766,700.00, for a Total Revised Claim of
    $2,204,676.00 and offered to provide additional information as required in
    support of its Claim. This additional amount formed the basis of the $766,700
    Claim.

[26]

PWC
    wrote to Ross-Clair on April 20, 2011 and advised:

Your letter dated April 2, 2011
[4]
requesting additional funds for the delay claim did not contain a sufficient
    level of detail. [PWC] has not received sufficient supporting documents or
    information that would allow it to determine if the [Claim] is justified, or if
    the compensation sought is fair and reasonable. Please provide documentation to
    substantiate each of your costs on the original [$1,437,976 Claim] and the
    additional [$766,700 Claim] that you have referenced in your letter of April 2,
    2011, with proof that the delays responsible for these additional costs were
    caused by [PWC]. Until this is received [PWC] will not be able to assess your entitlement
    to any additional compensation.

[27]

Ross-Clairs
    work on the Project was certified by the Engineer as complete on February 10,
    2012. Ross-Clair was not granted any further extension to the Contract.

[28]

The
    record contains only one further communication from Ross-Clair in support of
    the Claim. On May 28, 2013, Ross-Clair provided PWC with a report called
    Analysis of Delays and Additional Costs" (the "Knowles Report").

THE APPLICATION JUDGES REASONS

Ross-Clairs Compliance with its Notice
    Obligation under GC 35.2

[29]

The
    application judges analysis started with whether the December 5, 2008 letter
    from Ross-Clair to the Engineer constituted notice in accordance with GC 35.2.
[5]
The application judge noted that counsel for PWC acknowledged that Ross-Clair
    had complied with the notice requirement.
[6]

Ross-Clairs Compliance with its Obligations
    under GC 35.3 and GC 35.4

[30]

The
    application judge then turned to Ross-Clairs obligations under GC 35.3 and GC
    35.4, which, for convenience, I will reproduce again here
:

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.

[31]

The
    application judge expressed what he saw as the core of the dispute as follows:

The question to be posed is whether what is required is notice of
    the claim or proof of it? The answer lies somewhere between the two. There has
    to be more than notice but less than the proof an arbitrator would require.
    Notice, that is advice of an intention to make a claim, is provided through the
    provision of [GC] 35.2. This is the requirement for notice within 10 days of
    the actual soil conditions being encountered or the delay having occurred. This
    is the provision that [PWC] conceded has been complied with. On the other hand,
    there has to be enough information for the Engineer to be able to decide if the
    claim is justified. This need not be proof of the claim. The idea that proof is
    not necessary is demonstrated by the recognition that more information could be
    required and confirmed by the negotiations and mediation the process calls for
    before any disagreement goes to binding arbitration.

[32]

The
    application judge relied on this courts decision in
Technicore Underground Inc. v.
    Toronto (City)
,
2012
    ONCA 597, 354 D.L.R. (4th) 516,
for the
    proposition that providing notification of a claim for extras in accordance
    with the terms of the parties agreement is a condition precedent to the
    consideration of such a claim and ultimately access to the dispute resolution
    process. The application judge, referring to GC 35.8, observed that if he were
    to find that Ross-Clair had failed to give the Engineer a written claim, as
    stipulated by GC 35.4, within 30 days of the date when the Final Certificate of
    Completion was issued, Ross-Clair would not be entitled to any extra payment in
    respect of the Claim.


[33]

The application judge observed that GC 35.4 did not expressly demand a detailed
    claim, as had been the case in
Technicore.
Rather, GC 35.4 required
    only a written claim that contained a sufficient description of the facts and
    circumstances of the occurrence ... to enable the Engineer to determine whether
    or not the claim [was] justified.


[34]

Against
    this background, the application judge set out his conclusion in relation to
    the $1,437,976 Claim as follows:

To my mind, the notice provided by the letter of December 5,
    2008, in company with the letter of March 2, 2009 (particularly the Additional
    Cost Summary it enclosed), is enough to comply with this requirement. I say
    this understanding that the Engineer, receiving this notice, is not a stranger
    to the project but an active participant in reviewing its progress.

[35]

In relation to the $766,700 Claim, the application judge found that the letter
    of March 31, 2011 did nothing more than increase the amount of the [$1,437,976
    Claim] by $766,700. The letter contained no description of the facts or
    circumstances explaining the increase. There was nothing on which the Engineer
    could base a decision. According to
Technicore
,
the Knowles Report, which provided details of this additional amount claimed,
    could not be considered as, contrary to GC 35.3, it was delivered later than 30
    days after the issuance of the Final Certificate of Completion.

[36]

The
    application judge therefore held that the $1,437,976 Claim complied with GC 35.4
    but that the $766,700 Claim did not.

The Engineers Compliance with its Obligation to
    Render a Decision


[37]

The
    application judge went on to note that, under the Contract, the Engineer had to
    render a decision on a properly supported claim for extras.
He therefore considered whether
    such a decision had been made
in relation
    to the $1,437,976 Claim.

[38]

The
    application judge observed that, in its letter of October 6, 2009,
PWC provided Ross-Clair with a
    preliminary response to Ross-Clairs request for additional compensation and an
    extension of time
to complete the
    Project. In that letter, PWC denied responsibility for any delay and took the
    position that a more in-depth analysis of the delays in the Project would be
    needed in order to be in any position to allocate responsibility.

PWC
    expressed concern that Ross-Clair had provided no indication of the assumptions
    behind the $1,437,976 Claim and made it clear that such assumptions, together
    with all relevant supporting documents and information about efforts taken to
    mitigate impact costs, had to be provided so that the $1,437,976 Claim could be
    assessed.

[39]

The
    application judge concluded that the October 6, 2009 letter did not constitute
    a decision and that the Engineer was required to make one in relation to the $1,437,976
    Claim:

A decision should have been made. It may be that [PWC] blames
    Ross-Clair for not complying with its request for more information. Maybe
    Ross-Clair did not appreciate the impact of the terms of the [C]ontract and
    delayed doing what it was asked to do. Be that as it may, the requisite notice
    for the [$1,437,976 Claim] was made. A decision is required.

ANALYSIS

[40]

I
    would frame the issues raised on this appeal as follows:


(i)

What is the standard of review?


(ii)

Did the $1,437,976 Claim meet the requirements of GC 35.4?

Issue One: What is the Standard of Review?

[41]

The
    parties disagree on the applicable standard of review.

[42]

In
    oral argument, counsel for PWC submitted that the Contract was a standard form
    contract. Counsel acknowledged that the Contract was unlike a typical standard
    form contract, in that the process through which the parties agreed upon the
    terms of their bargain allowed for selection from among PWCs array of standard
    clauses. The individual clauses themselves, however, were in a standard form used
    in all such contracts with the federal government. The meaning of GC 35.4 had
    been raised in prior case law, and it can be assumed that its interpretation
    would have precedential value. These characteristics support a standard of
    review of correctness, in line with recent appellate decisions in
Vallieres
    v. Vozniak
, 2014 ABCA 290, 580 A.R. 326;
Precision Plating Ltd. v. Axa
    Pacific Insurance Company
, 2015 BCCA 277, 387 D.L.R. (4th) 281, leave to
    appeal refused 2016 CarswellBC 64 (S.C.C.);
Ledcor Construction Limited v.
    Northbridge Indemnity Insurance Co.
, 2015 ABCA 121, 386 D.L.R. (4th) 482,
    leave to appeal granted [2015] S.C.C.A. No. 188; and
MacDonald v. Chicago
    Title Insurance Co. of Canada
, 2015 ONCA 842, 127 O.R. (3d) 663.

[43]

PWC
    contends that a correctness standard is appropriate for another reason. PWC
    argues that the application judge committed an extricable error of law by
    interpreting GC 35.4 without regard to other relevant provisions in the
    Contract.

[44]

Ross-Clair
    argues that, given that the Contract allowed for some degree of negotiation,
    the deferential standard of review confirmed by the Supreme Court in
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633,
    applies.

[45]

In
    my view, the decision is reviewable on a standard of correctness.

[46]

I
    do not come to this conclusion based on a finding as to the nature of the
    Contract. Although it may be appropriate to regard the Contract as a standard
    form agreement, the interpretation of which is subject to review on a
    correctness standard, it is difficult to arrive at a definitive resolution of
    that question on this record. There is scant evidence of the circumstances
    surrounding the formation of the Contract, particularly any aspects that may
    have been negotiated. There is also scant evidence of the extent to which the
    terms in the Contract are used in other agreements with the Government of
    Canada. Moreover, the fact that in a previous decision, the court was required
    to interpret a very similar contractual provision does not provide a basis for
    a conclusion that the interpretive exercise in this case would have the
    potential precedential value that influenced the decisions in
Vallieres
,
Precision Plating
,
Ledcor
,

and
Chicago Title
.

[47]

My
    view rests on PWCs alternative argument. For reasons I will now explain, I
    agree that, in interpreting the Contract, the application judge erred by
    failing to construe the Contract as a whole. Accordingly, it falls to this
    court to properly interpret and apply GC 35.4.

The
    Application Judge Erred in Interpreting GC 35.4 in Isolation

[48]

One
    of the fundamental principles of contractual interpretation is that the
    contract must be construed as a whole:
Sattva,
at para. 64. In
Tercon
    Contractors Ltd. v. British Columbia (Transportation and Highways)
, 2010
    SCC 4, [2010] 1 S.C.R. 69, at para. 64, the Supreme Court expressed this
    contractual interpretation imperative as follows: the words of one provision
    must not be read in isolation but should be considered in harmony with the rest
    of the contract and in light of its purposes and commercial context. A proper
    interpretation of GC 35.4 had to involve a consideration of the other
    provisions in the Contract, specifically those comprising the Code.

[49]

As
    can be seen from the excerpt from the reasons set out above at para. 31, the
    application judge identified his interpretive task as having to determine
    whether GC 35.4 required notice of the claim or proof of it. He found the
    answer lay somewhere between the two. He observed that, unlike the agreement in
Technicore
, the Contract did not contain the phrase detailed claim
    or list specific requirements for the contents of a claim for extras. Based on
    these observations, the application judge concluded that more information than
    that contained in the letters of December 5, 2008 and March 2, 2009 was not
    required under GC 35.4.

[50]

It
    is clear that in coming to this conclusion, the application judge looked no
    further than the words in GC 35.4 itself. He did not take into account the
    relationship between that provision and the other related parts of the Code.

[51]

In
    order to understand the impact of related provisions in the Code on the interpretation
    of GC 35.4, it is helpful to summarize how, according to this Code, a claim for
    extras is intended to function.

[52]

I
    start with GC 35.4 and then turn to how it fits into the Code.

[53]

It
    is important to bear in mind that a claim contemplated by GC 35.3 and GC 35.4
    has several components. First, there is a form requirement  it must be in
    writing. Second, there is a sufficiency requirement  it must contain a
    sufficient description of the facts and circumstances to enable the Engineer to
    make a decision as to whether the claim is justified. Finally, there is a time
    requirement  the claim must be given to the Engineer within 30 days of the
    date that a Final Certificate of Completion is issued.

[54]

I
    now turn to certain aspects of the process by which a contractor seeks payment
    for extras. The contractor must give written notice under GC 35.2. This notice
    must be followed by a written claim under GC 35.3 and GC 35.4. However, while
    the contractor must give notice within ten days of the occurrence giving rise
    to the claim for extras, the contractor has time to submit the actual claim. In
    fact, GC 35.4 itself provides an opportunity for the Engineer to request
    further information in support of the Claim and the contractor to respond to
    any such request. As previously noted, GC 35.4 expressly allows this process to
    continue beyond the date when the work is certified as being complete.

[55]

If
    the Engineer determines the claim is justified, GC 35.5 mandates that PWC
    shall make an extra payment to the contractor in an amount calculated in
    accordance with GC 47 to GC 50.

[56]

The
    nature of the information required by GC 49 to 50 provides additional context
    for the interpretation of GC 35.4. GC 49 deals with how costs are determined,
    prior to undertaking work. GC 49.2 provides that, in order to facilitate
    approval of a change, the contractor must submit a cost breakdown identifying, at
    a minimum, the costs of labour, plant, and material; each subcontract amount; and
    the amount of the percentage mark-up. GC 50 contemplates the submission of
    equally, if not more, detailed information in circumstances where it was not
    possible to predetermine the price of a change.

[57]

In
    summary, the Code contemplates a process for dealing with a contractors claim
    for extras in which the Engineer has control sufficient that it can fulfill its
    obligation to determine whether a claim is justified. The Engineer receives the
    claim. The Engineer decides whether the information provided within the
    prescribed time frame is sufficient to determine if the claim is justified. If
    so, the Engineer decides the amount, if any, to be paid to the contractor 
    again, subject to arbitration. The Engineer fulfills this important role in the
    context of a Code that, in my view, depends on a highly specific informational
    component.

[58]

It
    is apparent that the application judge, in interpreting the information
    required by GC 35.4, did not take into account the context of the rest of the Contract,
    particularly that provided by the Code. Rather, his approach to the
    interpretive exercise was as Doherty J.A. described in
Glimmer Resources
    Inc. v. Exall Resources Ltd.
(1999), 119 O.A.C. 78 (C.A.), at para. 17  he
    gave meaning to the word claim by looking at it under an interpretative
    microscope in isolation. This constitutes an extricable error of law.

Issue Two: Did the $1,437,976 Claim meet the requirements of
    GC 35.4?

[59]

For
    the reasons that follow, I conclude that the application judges determination that
    the $1,437,976 Claim met the requirements of GC 35.4 cannot stand. It follows
    that his direction that the Engineer make a decision in respect of the
    $1,437,976, Claim similarly cannot stand.

GC 35.4 Requires More than
    what was Contained in the Letters

[60]

As
    stated in
Sattva
, at para. 57, the interpretation of a written
    contractual provision is grounded in the text and read in light of the entire
    contract. This court can look to the surrounding circumstances in interpreting
    the contract, but they must never be allowed to overwhelm the words of the
    agreement:
Sattva
, at para. 57.

[61]

The
    language used in GC 35.4, interpreted in the context of the rest of the Code,
    leads me to conclude that even though the word detailed is not included in GC
    35.4, the requirement that a contractor submit a claim in writing sufficient to
    enable the Engineer to determine whether the claim is justified cannot be
    interpreted in a manner other than that it must be supported by detailed
    information. Without detailed information, it is difficult to see how the
    Engineer would be able to make a decision as to the validity of a claim. In my
    view, such a decision requires proof that the claim is justified.

[62]

It
    follows that in order to allow the Engineer to determine the validity of the
    $1,437,976 Claim, more was required than the contents of the December 5, 2008
    and March 2, 2009 letters. I say this even taking into consideration the
    application judges implicit finding that the Engineer was intimately familiar
    with the Project.

[63]

The
    two letters provided little if any support for the $1,437,976 Claim. Among
    other things, the letters failed to include information relating to the nature
    and extent of PWCs responsibility for the delay, to address whether
    compensation had already been paid on account of the extra expense or to
    explain whether the extra expense contained in the $1,437,976 Claim fell within
    the classes of expenses compensable under GC 35.5 and GC 49 or GC 50, and, if
    so, in what amount.

[64]

Moreover,
    the two letters were inconsistent and therefore confusing in terms of the
    location where the extra work was said to be required. The letter of December
    5, 2008 referred to delays by the Institution in the start of construction for
    Building E in completion of E yards. The letter of March 2, 2009 mentioned
    Building J and revisions to concrete foundations due to soil conditions and
    consequent additional time required to complete related masonry work. The March
    letter went on to speak to Building A as having been impacted by revisions to
    concrete foundations. Finally, in the March 2, 2009 letter, Ross-Clair returned
    to Building E and the start of construction having been tied into the completion
    of E Yards. The Additional Costs Summary included with this letter provided skeletal
    information listing the amounts attributed to various sub-contractors but no
    breakdown identifying, for example, the costs of labour, plant, and material or
    the amount of the percentage mark-up.

[65]

That
    the Engineer and PWC repeatedly asked Ross-Clair to provide more information to
    enable a determination to be made as to whether either part of the Claim was
    justified further solidifies my conclusion that the $1,437,976 Claim did not
    meet the requirements of GC 35.4. There is nothing in the record that suggests that
    Ross-Clair provided any information in response to these requests prior to the
    delivery of the Knowles Report. The Knowles Report was delivered on May 28,
    2013, over one year and three months after the Final Certificate of Completion
    was issued. By then, it was too late.

[66]

In
    conclusion, the information contained in the letters was lacking in
    specificity, confusing in terms of identifying the parts of the Project
    affected by the delay and accompanied by virtually no information in support of
    the extra work done and the costs associated with any such work. In my view, therefore,
    the application judge erred in ordering the Engineer to render a decision in
    relation to the $1,437,976 Claim.

[67]

For
    completeness, I add that I see no evidence that supports Ross-Clairs submission
    that either PWC or the Engineer acted in bad faith in the course of their
    requests for further information.

DISPOSITION

[68]

Accordingly,
    for the foregoing reasons, I would allow the appeal and set aside the order of
    the application judge. I would dismiss the application and declare that
    Ross-Clairs claim for extra payment is barred by operation of the Contract. I
    would award PWC its costs of the appeal in the agreed-upon amount of $15,000,
    inclusive of disbursements and applicable taxes.

Released: March 14, 2016 (EEG)

Gloria
    Epstein J.A.

I
    agree E.E. Gillese J.A.

I
    agree L.B. Roberts J.A.





[1]
As noted by the application judge, initially, there was confusion as to who
    should be taken to be the Engineer (PWC or NORR Limited). For the purposes of
    the decision below, counsel for PWC accepted that the Engineer was NORR
    Limited.



[2]

As a result of the confusion as to who was the Engineer, Ross-Clair sent
    another letter, identical in substance to the letter of December 5, 2008, to
    PWC on December 18, 2008.



[3]
While this letter notified Ross-Clair of the existence of the claim, no
    information was provided as to quantum. Ross-Clair did not inform PWC of the
    amount, $1,437,976, until a letter dated March 2, 2009.



[4]
As noted by the application judge, there is no letter dated April 2, 2011 in
    the record.



[5]
At times, the application judge confuses the terms notice under GC 35.2 and
    claim under GC 35.3 and 35.4.



[6]
Counsel for the appellant initially challenged this concession on appeal, but
    ultimately resiled from that position and accepted the concession.


