Contractor claims for owner interference

Regardless of its size or scope, two elements are essential to a contractor’s ability to successfully complete any construction project: access to the work site; and the freedom to carry out the work without interference. An owner’s attempt to constrain either of these elements can result in expensive delays and additional costs to the contractor; however, a legal remedy may be available.

Sufficient access to the work site

The owner of a construction project is under an obligation to provide contractors with sufficient access to the work site to perform the scope of work under the contract. The degree of access required, depends on the nature of the work being done.

For example, in W.A. Stephenson Construction (Western) Ltd. v. Metro Canada Ltd., [1987] B.C.J. No. 2075 (S.C.), the contractor was awarded a contract to build part of the Vancouver light rapid transit line for Expo ‘86. The contract included provisions relating to the control of road traffic in city streets, noting that the contractor should not assume that the area would be available at all times.

When the contractor attempted to perform its work in the city streets, as required by the contract, it ran into difficulties coordinating road closures with city officials. These difficulties required the contractor to modify its project design significantly, incurring considerable additional costs.

In W.A. Stephenson, the Court held that:

by allowing the city to dictate the contractor’s access to the work site, the owner had breached its obligation to give the contractor sufficient unobstructed access; and any obstruction of the contractor’s ability to access the site would have to be expressly provided for in the contract.

As a result, the contractor was awarded both the additional costs it incurred due to the obstructed access, as well as the costs arising from its loss of productivity and profit.

Right to carry out the work

The owner’s obligation to provide sufficient access to the work site is coupled with the contractor’s right to carry out the work without interference from the owner. If interference occurs and impacts the contractor’s method of carrying out the work, the owner will likely be liable for any additional costs incurred or profits lost by the contractor.

In Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460, the contractor agreed to construct a pit mine and other related structures. After the contract was executed and the contractor’s work plan developed, the owner of the project decided to take a hands-on, “construction management approach.” This approach involved the owner giving different and often contradictory directions to the contractor almost daily; including requiring it to: work on multiple areas of the site simultaneously; rearrange its construction priorities; carry out particular works in designated areas only; and mobilize all of its equipment on site at once.

The court held that the owner breached the contract by failing to allow the contractor to control the work. As the contractor was deprived of the ability to achieve its expected production rates, the owner was liable for the additional costs incurred by the contractor and the profit the contractor would have realized had it been allowed to carry out the work in the manner of its
own choosing.

The court in Golden Hill Ventures stated that interference on the part of anyone, acting either as an employee or agent of the owner, would constitute a breach of contract. Furthermore, the court limited the operation of contractual provisions expressly allowing the owner to direct the work of the contractor where they conflicted with the contractor’s contractual and common law rights to control the work.

Rights to access work site and to carry out work are fundamental

If an owner intends to limit a contractor’s ability to access the work site or carry out the work, the specific limitations should be expressly and incontrovertibly stated in the contract. Note that assigning or granting the power to interrupt the work of a contractor to a third party will not absolve the owner of liability to the contractor. The contractor’s rights to access the work site and to carry out the work in its own way are considered fundamental to construction contracts in British Columbia, and courts have indicated their willingness to provide a remedy for losses that flow from the infringement of these rights.

This article is for information purposes only and may not be relied on for legal advice. Lauren Kristjanson is a lawyer at the law firm of Borden Ladner Gervais LLP, practicing in the area of commercial litigation with an emphasis on contract and construction disputes. John Pratt is an articling student at Borden Lander Gervais LLP.