With large construction projects, delays in completion are almost inevitable. Often times, the delays to the project result from circumstances beyond a contractor’s control and can affect the contractor’s already tight profit margins.

As a result, contracts for large construction projects increasingly included terms that allow a contractor to make claims for additional costs incurred by delays in the project, provided that they meet certain requirements to inform the owner of their intention to claim the delay. The latest ruling by the Ontario Supreme Court in Elite Construction Inc. v. Canada[1](Elite) confirms that strict compliance with the provisions on contractual termination is a prerequisite for the assertion of damages due to delay.

In the Elite case, the court unceremoniously dismissed Elite’s late claim for damages because Elite had failed to report its claim within 10 days of the delay in accordance with the contract.[2] The court dismissed Elite’s allegations that its notices that changes in project scope would cause delays were notices of its intention to seek damages for those delays, and found that Elite’s notices did not indicate the intention To claim damages for delay.[3] The Court also dismissed Elite’s argument that the government’s delays were in breach of a treaty “time is of the essence” provision and that the government therefore waived its right to require strict notice of termination.[4] A delay itself does not mean a waiver of the obligation to notify in order to claim compensation for delay.

Accordingly, the Elite Decision confirms that a contractor should take all necessary steps to meet the stringent requirements of the contractual termination provisions in order to seek compensation for delays and should not assume that informal termination will be sufficient.