Avoid Forfeiting Your Claim – Navigating Notice Provisions

The emerging consensus among courts in Ontario, and across Canada, is that compliance with contractual notice provisions is a mandatory prerequisite to a claim, even if the contract itself does not explicitly specify any consequences for non-compliance.[1]

Failure to comply with notice provisions in a construction contract can be fatal to an otherwise valid claim.

The Rationale Behind Notice: Promoting Fair Warning and Project Control

First, though, it must be established that notice provisions are not mere technicalities; rather, they serve several essential functions. They encourage clarity and transparency. Owners and general contractors, when provided with timely information, are able to manage risk effectively by taking immediate steps to mitigate the impact on the project’s budget and schedule. Owners are given the opportunity to decide whether they need to make arrangements to conclude another agreement with the contractor (or a replacement contractor) and/or to monitor the costs and progress of the work. When a contractor fails to provide notice, it strips the other party of its essential management rights on a project. This prejudice is the key reason courts enforce these clauses so rigidly.

Many standard-form contracts used in Ontario contain a two-step notice process that creates separate and distinct obligations. A contract may require you to provide (1) an initial notice of intent to claim when an event occurs that you believe will lead to extra costs or time. If your counterparty issues a formal decision rejecting the claim you have submitted, you may be contractually required to provide (2) a notice of dispute. Courts in Ontario have dismissed claims for a failure to provide either of the above notices, where such notice was required by the contract.

Give Notice Early and Often. The moment you identify an event (a delay, change in site conditions, design conflict, etc.), that you believe will lead to extra costs or time, provide formal written notice of your intent to claim. This initial notice is crucial. Equip project managers and site supervisors with the training and tools to identify potential issues immediately and to follow the notice procedure to the letter. The key takeaway: Don’t wait.

The Gateway to Your Claim: Notice as a Mandatory Prerequisite

Courts in Ontario continue to stress that compliance with notice provisions is a mandatory prerequisite to maintaining a claim, even if the clause doesn't explicitly state the consequences for failing to do so. While courts in the past may have adopted a more liberal interpretation of notice provisions – and permitted less-than-strict compliance with contractual notice – the trend in recent Ontario decisions appears to have moved decisively towards strict enforcement.

Think back to that real-world example. During excavation, your crew encounters groundwater levels far higher than the geotechnical report, provided to you by the owner, indicated. Controlling the water now requires a more extensive (and expensive) dewatering system and will delay the foundation pour. Your instinct is to solve the problem now and bill for it later. That could be a costly mistake.

Without providing a timely, formal written notice as required by your contract, the owner could reject the extra charges. More importantly, however, without providing the required contractual notice, you may not have a tenable claim before the court. To avoid this situation, the prudent course of action is to formally notify the owner of the unforeseen site conditions (and associated costs), preserving your right to be compensated for additional labour and materials required to complete the work.

While courts are increasingly enforcing notice provisions strictly, the rule is not absolute. There are limited circumstances where flexibility may be shown, but relying on them is risky. For example, a party can waive its right to receive notice, whether formally, informally, or through a course of conduct.[2] However, the court must be satisfied that there was a clear, unequivocal, and conscious intention to abandon that right. One of the most common and costly mistakes is assuming that an informal complaint qualifies as proper notice. To protect yourself, notice should be formal and unambiguous.

Never Assume Waiver. Proving that your counterparty intended to waive a strict notice requirement can be very difficult. Simply discussing the issue or cooperating does not equate to waiver. If your counterparty is prepared to waive its contractual right, insist on written confirmation.

In the past, courts have considered the conduct of the parties when deciding whether notice requirements were met.[3] However, these decisions were in the context of summary judgment motions. The crux of summary judgment motions is whether a responding party gives enough evidence that the matter warrants a trial. Apart from these decisions, however, the overwhelming trend in Ontario case law underscores the necessity of strict compliance. Relying on a potential exception is a high-risk strategy that rarely succeeds.

Informal Complaints Are Not Notice. Your daily reports, site meeting minutes, and other informal communications (texts, emails, etc.) may not be a valid substitute for formal notice. To ensure compliance, a notice should be a standalone document, which (1) cites the specific contract clause that you are providing notice under, (2) clearly states your intention to claim for additional time or costs, and (3) is delivered to the correct person via the method provided in the contract (e.g. to a specific email, registered mail, etc.).

The Bottom Line: Follow Your Contract!

Contractual notice provisions are not mere suggestions; they are, in many cases, a mandatory gateway to a valid claim. Ontario courts consistently affirm that failing to pass through that gate by providing proper notice, as required by your contract, may forfeit your right to payment for the issue in dispute. Don’t let a costly silence be the final word on your project. Ultimately, the difference between a paid claim and a complete write-off could come down to a single, timely notice.

Here's How We Can Help

At RAR Litigation Lawyers, our team of expert lawyers can review the notice provisions in your contracts and guide you in the background in properly navigating contractual notices. Even if you realize you have failed to give notice, we can advise on how you may still be able to have a viable claim.

Contact us to discuss how RAR Litigation can support you and your business.

[1] See Symtech Innovations Ltd. v. Siemens Canada Limited, 2023 ONSC 5795 (CanLII) and Arguson Projects Inc. v. GilSon Construction Limited, 2023 NSCA 72 (CanLII).

[2] See, for example, Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Limited, 2017 ONSC 5071 (CanLII) relying on Mar-King Construction Co. v. Peel (Regional Municipality), 2005 CanLII 37350 (ONSC).

[3] See Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736 (CanLII) and Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Limited, 2017 ONSC 5071 (CanLII).