Extras And Back Charges: Alberta Court Of Appeal Affirms Tests In Impact Painting Ltd v Man-Shield (Alta) Construction Inc.

In February 2018's edition of Breaking Ground, we reviewed the legal tests used to determine what will constitute a valid extra or back charge.1 These issues were discussed in some detail in the Alberta Court of Queen's Bench decision in Impact Painting Ltd. v Man-Shield (Alta) Construction Inc.2 A year after that article, the Alberta Court of Appeal has weighed in on the tests utilized by the trial judge in that case, dismissing the appeal.3

By way of summary, between 2011 and 2012, Man-Shield (Alta) Construction Inc. ("Man-Shield") and Impact Painting Ltd. ("Impact") had entered into the following contracts concerning the provision of painting and wallpaper services on a construction project known as the Laurel Retirement Community:

A subcontract for painting dated March 29, 2011, for $248,850; A subcontract for wallpaper installation dated June 23, 2011, for $98,700; and A subcontract for painting of the "DAL Wing" dated March 24, 2012, for $65,310. While the project was underway, a significant change was made after the owner obtained government approval and funding to have one of the floors of the building converted to a residence for dementia patients, being the DAL Wing. This change necessitated expansive renovations to that floor before the original scope of work was fully completed, and the evidence at trial indicated that it also created a great deal of strain for all parties involved in the project, including both Man-Shield and Impact.4

The trial judge's reasons exhaustively covered the available evidence, including Impact's contract proposal, the contracts and other project documentation, as well as the oral evidence called at trial. At the conclusion of the hearing, a net amount of $57,397.86, was found owing to Impact by Man-Shield. Man-Shield was also awarded judgment on its counterclaim in the amount of $14,903.60 for the additional premiums paid for the bond that stood in place of the builder's lien. This damage was found to have been caused by Impact because of the disparity between the amounts claimed by Impact and what was ultimately awarded at trial.

Legal Tests Applied at Trial

The trial judge considered the following factors in determining the validity of the claims for extras and back charges.

Extras

The work was outside the subcontractor's scope of originally contracted work; The subcontractor was either expressly or impliedly instructed by the general contractor to do the work; The general contractor was informed...