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2016
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LEXPERT 25
ment/contract negotiation phase and the actual
construction phase." Aer the contracts are nego-
tiated and signed, the project team's makeup oen
changes. A new team may become responsible for
building the project.
"What I've seen in the last five to seven years is
that the construction team puts the contract in the
drawer – typically without reading it – and pro-
ceeds to build the project based on their own ex-
perience and what they think is best," says Martin.
e owners may feel they are paying for some-
thing they're not getting because the construction
team has gone and done their own thing. "Yet
they're reluctant to bring lawyers into the picture,"
says Martin, "because historically you only have
lawyers involved when you have litigation."
More sophisticated clients try to avoid this
disconnect by making sure there is a transfer of
knowledge from the contract negotiating team to
the construction team. en that team can man-
age the construction as it sees best, but in keeping
with what was contractually agreed.
In most construction contracts, when contract-
ors have a claim for a delay or a cost overrun they
must give timely notice, e.g., within seven days of
first experiencing the delay. Oen, however, con-
tractors fail to give that notice because they're too
focused on trying to solve the problem. ey may
only belatedly ask the owner for an extension of
time and additional payments.
Litigation frequently arises over whether a con-
tractor's delay claims should be denied because they
failed to give timely notice. If, say, the contractor
was delayed because the owner's consultant was
taking too long to answer the contractor's ques-
tions, the owner could have pressed the consultant
for a more timely response. Failing to inform the
owner until the end of the construction leaves it
too late for the owner to resolve the problem.
In addition to cost overruns, delays are a huge
pitfall for potential litigation. ere has been in-
creased public pressure in recent years for infra-
structure projects to be completed on time. Also,
the funding given to municipalities by provincial
or federal governments for infrastructure typically
has an end date by which it must be spent.
is means that infrastructure contracts oen
carry a liquidated damages clause — the contract-
or is required to pay the project consortium's lend-
er X dollars per day for every day the project is late.
e contractor will then try to pass the penalty on
to the sub-contractor or designer whom they con-
sider responsible for causing the delay. "Two weeks
late in the context of a P3 could have hundreds of
thousands of dollars of consequences," says Glenn
Ackerley, a partner at WeirFoulds LLP in Toronto.
Unexpected soil conditions are another major
issue that can arise. Unless the ground is fully
excavated before the construction phase begins,
Madras, Mark L. Gowling WLG
(416) 862-4296 mark.madras@gowlingwlg.com
Mr. Madras specializes in the practice of environmental law, including
environmental issues in project approvals, regulatory compliance,
commercial transactions and dispute resolution.
MacWilliam, Alexander G. Dentons Canada LLP
(403) 268-7090 alex.macwilliam@dentons.com
Mr. MacWilliam advises Canadian and international clients on all legal issues
relating to the environment. These include regulatory approvals, compliance,
contaminated land, climate change, transportation of dangerous goods,
dealing with regulatory agencies, responses to government policies and
the development of internal environmental practices and systems.
MacDonald, Ross A. Stikeman Elliott LLP
(604) 631-1367 rmacdonald@stikeman.com
Mr. MacDonald's diverse real estate and commercial practice emphasizes
acquisitions, leasing, financing and all aspects of major multi-use real estate
development projects. His practice also includes working on real estate-
based infrastructure projects, such as the Vancouver/Richmond/YVR Canada
Line rapid transit project.
Macaulay, David J. Bennett Jones LLP
(403) 298-3479 macaulayd@bennettjones.com
Mr. Macaulay represents domestic and international developers of
commercial energy projects, with an emphasis on structuring power, pipeline,
oil and gas, storage and other infrastructure projects.
Lyons, Catherine A. Goodmans LLP
(416) 597-4183 clyons@goodmans.ca
Ms. Lyons counsels private and public-sector clients in planning and
environmental law and social licence. Her brownfield and greenfield
redevelopment experience includes cost-sharing agreements, infrastructure
financing and environmental approvals.
Lutz, J. Steven Bennett Jones LLP
(416) 777-5732 lutzs@bennettjones.com
Mr. Lutz specializes in project, asset-based, cross-border, equipment and
syndicated financings. His clients include Canadian and international banks,
project developers, private equity and borrowers.
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