The Change Order - The Most Common Cause of Disputes
Evan Stregger, PQS, C.Arb.
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The most common contract used in the industry, CCDC2 1994, defines a Change Order as a written amendment to the Contract prepared by the Consultant and signed by the Owner and the Contractor stating their agreement upon a change in the Work; the method of adjustment or the amount of the adjustment in the Contract price, if any, and the extent of the adjustment in the contract time. General Condition 6.1.2 reads "The Contractor shall not perform a change in the work without a Change Order." In a perfect world under perfect conditions a change order should address all changes to the work before the work is done. However, construction is by it's very nature no a perfect science. With pressures of schedule and other demands proceeding with changes to the work without a Change Order is not usual. In the majority this does not pose a problem. Nontheless, there are exceptions and these exceptions usually lead to a dispute between the Owner and Contractor. Some of these disputes are resolved with the assistance of the Consultant, but others are left to be resolved through arbitration or litigation.

Knowing how a Court may analyze the alleged Changes to the work is important and for this I refer to a test used by Justice Egbert of the Supreme Court of Alberta in Chittick V. Taylor which sets out rules for determining what are extras within the meaning of a building contract.

Justice Egbert set out the following rules:

Rule 1: An item specifically provided for in the contract is not an "extra."

Rule 2: When the plaintiff supplied material of a better quality than the minimum quality necessary for the fulfilment of the contract, without any instructions, express or implied, from the defendant to do so, he is not entitled to charge the extra cost as an "extra."

Rule 3: When the plaintiff did work or supplied materials not called by the contract (plans of specifications) without instructions, express or implied, from the defendant, or the consent of the defendant, he is not entitled to charge this additional work or materials as an "extra."

Rule 4: When the plaintiff did work or supplied material not called for by the contract on the instructions, express ro implied of the defendant, he is entitled to charge for the additional work or materials as an "extra."

What amounted to instructions from the defendant is dependent on the circumstances relating to each item. If the defendant, without giving definate instructions, knew the plaintiff was doing extra work or supplying extra materials and stood by and approved of what was being done, and encouraged the plaintiff to do it, that, in my opinion amounts to an implied instruction to the plaintiff and the defendant is liable.

The first three rules placed the onus on the Contractor and relive the Owner of liability, but Rule 4 corrects this by introducing the idea of "implied instructions."

Justice Downs of the Supreme Court of British Columbia more recently applied these same rules in her decision in Alex Gair & Sons Ltd. v. Lepiriski. The lawsuit centered on the issue of changes and extras. Justice Downs applied these rules to the scores of items in dispute. The value of these disputed items ranged from less then $100 to many thousands of dollars. In doing so the court relied upon the quantities and measurements supplied by a Quantity Surveyor.

Owners and Contractors may benefit by applying the above rules to the claims prior to beginning an action either in arbitration or in court. At a minimumm, application of these rules to the claimed changes could lead to elimination, either through through abandoment or agreement, of atleast some alleged claims, or resolution of the entire dispute.

Evan Stregger, PQS, C. Arb practices exclusively in dispute resolution and as an expert witness and in British Columbia and Ontario. The above information and opinion is provided for information only and does not replace the need for qualified legal advice.

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