By / par Andrew D. Delmonico and Ted Lewis
Costs of additional or unanticipated work, or “extras”, can be a source of dispute during a construction project – especially when there is no mechanism in place to define the rights of subcontractors, contractors, and owners with respect to these costs. Whether or not the work was in fact “extra”, or instead a part of the original scope, is also a frequent point of contention. The case of Diamond 11 Excavating and Demolition Ltd. v Dhunna, 2018 BCSC 2230, offers a cautionary tale of a subcontractor who was recently denied payment for significant amounts in alleged extra work.
The Facts
The Defendant property owner (the “Owner”) and general contractor (the “Contractor”) retained the plaintiff subcontractor (the “Subcontractor”) to perform demolition work and provide assorted excavation services (the “Work”) on two properties in West Vancouver. The Subcontractor quoted a price of $75,000 for the Work at each property. The subcontract entered into between the Contractor and the Subcontractor did not specifically provide for extras.
The Subcontractor took significantly longer in executing the Work than was typical, and also claimed numerous extras after it left the sites. For instance, at one of the properties, the Subcontractor invoiced extras for drywall dumping and associated fees, extra gravel and dirt hauling, extra digging and loading, machine time, and machine rentals and delivery, totalling over $91,000. For the other project, the Subcontractor invoiced for similar extras, as well as a specialist for the removal of drywall, totalling approximately $35,000.
The Contractor and the Owner disputed the full amount invoiced for the Subcontractor’s extras, saying either that the extras were included in the subcontract price or were not agreed to.
The Decision
The Court ultimately denied the Subcontractor’s claims for extras. In its decision, the Court reviewed the general test for determining liability for extra work as follows: (1) the work performed must in fact be extra, in the sense that it is not within the scope of the work originally contemplated by the contract; (2) if outside the scope, the owner must expressly or impliedly authorize the work; (3) the owner must be informed or necessarily aware that the extra work would increase the cost; and (4) the owner must waive relevant change provisions under the contract (if applicable). The Court also noted that, in determining compensation for extras, parties may (in the absence of a mechanism for determining the price) be presumed to have intended a reasonable price, which may be implied as a term of the contract.
Applying these factors, the Court was not persuaded the Subcontractor had properly charged for extras, determining for some claims that there was a lack of evidence to resolve whether the extras were owing, and in other cases finding that the amount invoiced as “extra” work was actually within the scope of the original subcontract price.
Lessons Learned
- A contractual mechanism dealing with changes to the scope of work is essential to a proper construction contract. It is prudent to ensure that your contract contains such a mechanism, and if so that you are actually following all contractual requirements in practice.
- Be careful in relying on claims for extras to make up for a job that is simply underbid. Work that falls within the scope of work will not be treated as an extra allowing you additional compensation. Only if the work is outside that scope can it really be considered an “extra” permitting an adjustment to the contract price.
- Clear communication on extra work is vital. Make sure that, if you anticipate extra work, you advise the owner of the anticipated change and cost increases as soon as possible (and in any event as required by the construction contract). ▪
This article was written by Andrew D.R. Delmonico, a lawyer, and Ted Lewis, an articled student, who practice in construction law with the law rm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. It is important to get legal advice for speci c situations. If you have any questions or comments about this case or other construction law matters, please contact us at 604-864- 8877 (Abbotsford) or 604-684-8668 (Vancouver).).
