Whissell Contracting Ltd v Calgary (City), 2017 ABQB 644

Court of Queen’s Bench of Alberta Citation: Whissell Contracting Ltd v Calgary (City), 2017 ABQB 644 Date: 20171025 Docket: 1301 02843 Registry: Calgary Whissell Contracting Ltd.

Plaintiff - and - The City of Calgary, SNC-Lavalin Constructors (Pacific) Inc., SNC-Lavalin Constructors (Western) Inc., Graham Infrastructure a JV, SNC-Lavalin Constructors (Western) Inc. and Graham Infrastructure a JV, carrying on business under the firm name and style of SNC-Lavalin Graham Joint Venture and otherwise known as SLG and the said SNC- Lavalin Graham Joint Venture and the said SLG Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D.

Macleod _______________________________________________________ [ 1 ] The Plaintiff, Whissell Contracting Ltd., applies for partial

summary judgment against the SNC-Lavalin Graham Joint Venture (SNC). The claim arises from the construction of the City of Calgary West light rail transit line and it is for monies allegedly owed by SNC to its subcontractor, Whissell, for unpaid labour, materials, services, tools and equipment for the ground work, clearing, removal and disposal of certain materials and installation of site work, including underground utilities, water, sanitary and storm sewer utilities, and auxiliary construction. [ 2 ] Rule 7.3 of the Alberta Rules of Court provides that a party may apply for

summary judgment if there is no defence to a claim or part of it. Whissell argues that this is the situation here and cites Hryniak v Mauldin , 2014 SCC 7 to the effect that

summary judgment rules must be interpreted broadly, favouring proportionality and affordable, timely and just adjudication of claims. It has been observed that

summary judgment ought not to be denied on the basis that evidence discloses a triable issue. The question should be whether there is any issue of merit that requires a trial or, conversely, whether the claim is so compelling and the likelihood it will succeed is so high that it should be determined summarily: Kidco Construction Ltd v Griffith , 2015 ABQB 814 at paras 14-15 .

[ 3 ] A great deal of time, both in the written arguments and the oral presentations, was spent on the quality of evidence necessary to result in a

summary determination. In my view, it is clear from the authorities that effective dispute resolution requires court processes to be more efficient and timely. Accordingly, parties are expected to respond to claims for

summary judgment in a more meaningful and effective way than simply arguing that

summary judgment should not be granted because a triable issue exists. Our Court of Appeal has said that the key is whether the circumstances require viva voce evidence to properly resolve the case: 776826 Alberta Ltd v Ostrowercha , 2015 ABCA 49 at para 11 .

Moreover, in arguing the issue of whether there needs to be a trial, both sides should put their best foot forward: Canada (Attorney General) v Lameman , 2008 SCC 14 ; see also Windsor v Canadian Pacific Railway Ltd. , 2014 ABCA 108 and CCS Corporation v Pembina Pipeline Corp , 2014 ABCA 390 . [ 4 ] I have been provided with lengthy affidavits, numerous documents, expert evidence and extensive written and oral argument in support of and against the motion.

The issue [ 5 ] In my view, the real issue is whether the contractual relationship between SNC and Whissell is sufficiently clear that I can conclude Whissell is entitled to the relief it seeks without a trial. Whissell’s position [ 6 ] Whissell bid the work on a unit rate basis whereby the parties agreed to measure work by convenient units of measure, such as metres of pipe. The subcontractors’ cost and margin are built into the unit rates. The price of such contracts is ultimately calculated based on the number of units actually completed.

Whissell alleges that soon after it began working in February 2010 it became evident that the scope of work and the site conditions differed greatly from those anticipated at the time of its bid and, accordingly, the original unit rates became inapplicable. [ 7 ] Whissell further submits SNC agreed that Whissell would reprice the work on a Force Account basis.

Force Accounts are an accepted construction practice whereby work is paid based on agreed hourly rates for the number of hours of labour performed, the number of hours of equipment used and the cost of materials. [ 8 ] Whissell notes that a SNC representative signed 2050 Force Account sheets confirming this agreement and, indeed, SNC paid Whissell over the course of the contract $24,349,364.06 (inclusive of GST), even though the initial subcontracted value was for less than $10 million dollars plus GST.

Whissell says that much of this money was paid to it on a Force Account basis and this is evidence that the agreement was to use these rates of payment rather than the method reflected in the subcontract. [ 9 ] Whissel claims that SNC continued to pay its invoices until it realized that the project was going to be over budget. Whissell argues that SNC did not perform the contract in good faith because: (

a) SNC personnel signed 2050 Force Account sheets on site; (

b) SNC paid Whissell over the course of the contract in excess of $24 million dollars (much of it on a Force Account basis) after a rigorous assessment of Whissell’s invoices; and, (

c) SNC issued subtrade orders, such as change order no. 58, which showed an increase in the value of Whissell’s subcontract up to the amount of $31,595,906.90. [ 10 ] Accordingly, Whissell claims partial

summary judgment for $7,246,542.84, the difference between the amount in (

c) above and the amount paid to date. Alternatively, it claims for judgment in the sum of $5,583,636.82, the total of all Force Accounts signed but unpaid. [ 11 ] The principal affidavit relied upon by Whissell is the affidavit of Mr. Jarrad Whissell, its president and general manager, who was cross-examined extensively, as was Mr. John Davies, an architect who signed an affidavit of “expert” evidence. SNC’s position [ 12 ] SNC fundamentally disagrees with Whissell’s position. It relies on the evidence of Mr.

Tom Cole, the Deputy Project Manager of the west LRT project, who was cross-examined extensively on his affidavit. SNC also relies upon the written contract, which was actively negotiated with legal assistance on both sides. This negotiation continued for five months after Whissell commenced work on the project in February 2010.

It was a unit price agreement and, accordingly, the amount to be paid was to be determined by the number of units completed. [ 13 ] The written contact had an “entire agreement” clause that superseded any prior agreement between the parties and SNC argues that any subsequent work and payment must be done in accordance with the written contract. Any amendment had to be formalized. SNC does not agree with Whissell that the latter encountered conditions that were so different as to entitle it to payment other than in accordance with the written contract.

It again emphasized that the final contract was not signed until Whissell had been working on the site for over five months. [ 14 ] SNC also disagrees that the written contract, which was executed during the summer of 2010, was amended as Whissell suggests. The west LRT project was a large scale and complex project that took almost three years to complete. Over eighty subcontractors were involved. This project undertaken by the SNC Corporations, and involving Whissell, was a “design- build” project

that involved designing as the project went along. It required a great deal of collaboration and flexibility. As a result, SNC argues the contractual documents were very important and were carefully negotiated. It was recognized that there would be times when the unit price basis would not apply, but SNC maintains that unit prices would apply generally. [ 15 ] From the outset of the project, Whissell presented field verification sheets for signature to SNC site personnel to confirm the labour, materials and equipment expected on site.

This was acceptable to SNC because, to substantiate a claim for extra payment, Whissell needed to establish that it actually completed the work claimed. [ 16 ] SNC submits that when the final contract was executed in late July 2010, it captured the parties’ entire agreement. SNC notes that: 1. The Design Build Contract and the Prime Contract were incorporated into the Whissell subcontract; 2. The final contract prices needed to be adjusted based on approved quantities and unit prices for all items; 3. The scope of work was finalized; 4.

The items not included in the unit prices were limited to a list of fifteen items 5. SNC had the right to audit; 6. The Whissell subcontract, together with the incorporated contracts, constitute the entire agreement; and, 7. Any amendment was to be in writing. [ 17 ] In the Fall of 2010, Whissell discontinued using the field verification sheets as described above and substituted “Force Account Summaries”. These Force Account Summaries contained the following printed notations. 1. This work is over and above the contract work and will be paid as force account in lieu of unit process; and, 2.

I hereby certify that the above labour/equipment hours have been expended, and the above materials have been incorporated into the work described. [ 18 ] While these notations were included in the documents frequently signed by SNC field staff, they were never agreed to in principle by the people who had negotiated the original subcontract, including Mr.

Cole or any of the management personnel whom SNC argues were authorized to amend the subcontract. [ 19 ] SNC argues that these notations were surreptitiously introduced by Whissell and were deliberately not reviewed with the SNC personnel authorized to make a contractual change. Mr. Whissell, during his cross-examination, agreed that the notations were drafted by Whissell’s lawyers and were not discussed with Mr. Cole or the project manager or indeed anyone at SNC. Furthermore, the wording was drafted prior to the subcontract being executed.

Whissell’s position is that SNC field personnel could sign it and approve it and Whissell’s position was that this was their responsibility. [ 20 ] SNC claims that its management became aware that Whissell had purported to make this unilateral change by replacing the Field Verification Sheets with the Force Account Summaries in the Fall of 2010. [ 21 ] SNC also claims that it immediately made clear to Whissell that it disagreed with this tactic.

Moreover, SNC personnel continued to believe they were signing the sheets or summaries for the purpose of verifying what was actually done on site. [ 22 ] There is evidence of genuine confusion in the SNC ranks as to why Whissell was not billing as per the contract. At one point an email dated November 24, 2011, refers to Whissell as “sneaky bastards”. [ 23 ] On December 1, 2011, SNC provided notice to Whissell that it had detected considerable discrepancies between the amounts that had been invoiced and partly paid to date and amounts payable under the subcontract.

SNC indicated that Whissell’s contract billings would be audited. At this point, Mr. Whissell responded as follows by letter dated December 5, 2011: We have received your letter from December 1, 2011. You are correct that the amounts billed by Whissell and paid by [SLG] do not always reflect the unit prices under the original contract. The contractual unit prices have been amended in accordance to the agreement of [SLG] and Whissell. You have in excess of 3200 force accounts duly signed by your authorized personnel, confirming the amendment of the original unit prices [ 24 ] Mr.

Cole responded on December 14, 2011, that the field staff had only verified the actual time spent doing the work and the equipment used on site and that Whissell’s billings would be reviewed. Since that time the parties have continued to take these respective positions. [ 25 ] SNC acknowledges that certain work was performed in addition to the unit prices and is the subject matter of a legitimate claim.

But in the main, the work was to be charged based on the unit price subcontract. [ 26 ] As for the change orders issued by SNC, it argues this was an internal computerized tracking system upon which Whissell cannot rely to change the terms of the subcontract. SNC argues that its staff observed that most of Whissell’s billings were being claimed on a Force Account basis and, to make payment, SNC was required to reconcile Whissell’s billing with the wording of the subcontract and the estimated number of units actually completed.

As a result, when payments were made the estimated amount of the contract changed but it was never intended by SNC that it could be relied upon as an amendment of Whissell’s contract. [ 27 ] It is true that Whissell was often pressing for payment and frequently SNC obliged. Whereas Whissell argues SNC was thus

responding to an amended billing structure for Whissell, SNC maintains that Whissell’s failure to bill according to unit prices made for a lot of extra work for SNC and cannot be used as evidence of acquiescence to a different billing structure. SNC says, in effect, that they made interim payments to the extent they could satisfy themselves that work had been done. Any such payments did not represent a contract amendment. Can

summary judgment issue on the record as it stands? [ 28 ] In my view, the record is insufficient for the Court to determine the contractual basis on which Whissell is entitled to payment from SNC. [ 29 ] There is a written subcontract which sets out the basis of payment as unit prices. There is an “entire agreement” clause. Furthermore, given the scope and complexity of this project it is understandable that the parties would want the terms of the agreement to be in writing and readily ascertainable.

SNC has raised evidence that, if accepted, would defeat Whissell’s claim that SNC agreed that unit prices no longer applied. [ 30 ] Whissell relies upon the Force Account sheets as an effective amendment to the subcontract. But there is a problem with that argument based on the record as it stands. The wording of the Force Account sheets was never the subject of discussions with SNC and, in particular, with anyone who was a party to negotiating the original subcontract. Can they be effective under the circumstances?

SNC takes the position that there could be no reasonable expectation on the part of Whissell that the field personnel employed on behalf of SNC had authority to bind SNC to a contractual amendment because they were not given apparent or ostensible authority to do so. The evidence contains a number of assertions on the part of SNC to Whissell that the claim process ought to be based upon the unit price contract.

There is an issue, in my view, as to whether or not Whissell had any reasonable expectation that the notations attached to the Force Account sheets would operate under these circumstances to amend the written contract. [ 31 ] Similarly, internal documents issued by SNC which purported to track the progress of the Whissell subcontract cannot, without more, operate to effectively amend the written subcontract. [ 32 ] In result, the application for

summary judgment is dismissed. Heard on the 12 to 13 th day of January, 2017. Dated at Calgary, Alberta this 24th day of October, 2017. A.D. Macleod J.C.Q.B.A. Appearances: W. Donald Goodfellow, Q.C. Thomas Brookes, Esq for the Plaintiffs Jeffrey Vallis, Q.C. Peter Banks, Esq for SNC- Lavalin Graham and Joint Venture Lise Olsen for The City of Calgary