b'LEGAL COLUMNwhich stated, The amount estimated$162,194.50. It was a costly endeavorarise which materially affect the cost to complete the job is an estimate only,to have the court determine contractualto complete construction, the parties and the job is subject to increasedterms which the parties had the chanceshould reach a clear agreement on how costs based on the circumstances onto determine for themselves. their contract is affected.the Premises and the nature of the job The estimate also provided thatThe lessons from All Out are important:Jeremy Burgess is an associate at Pushor the contract price would be a set pricedefining the contractual terms isMitchell LLP with experience in litigation plus costs, with the set contract ratealways preferred to litigation aimed atincluding a focus on construction related listed under the contract price headingclarifying those terms; estimates canissues. If you have any questions, being between $80,000-$100,000.cap claims for damages where paymentfeel free to contact Jeremy in a confidential The estimate was signed and the workterms are not agreed upon; the courtmanner toll free at 1-800-558-1155 or commenced, but no further contractwill likely impose a modest profit whenat burgess@pushormitchell.com.was executed. it determines the percentage for a cost- The foregoing is for informational purposes As work progressed, unforeseeableplus contract; and, if circumstancesonly and is not legal advice.issues arose which required additional work to address. A further estimate of approximately $162,500 for work to date and work was prepared by the contractor and, on completion, theFrom left to right, Mark Danielson, Alison Cathcart, Jeremy Burgess, Alf Kempf, Justin Daltoncontractors invoices totaled around $206,500. The clients refused to pay more than the $140,000 they paid to date based on the position that the original $80,000-$100,000 estimate capped the claimable compensation.The court held that signed was an estimate only. The parties created the expectation of a cost-plus contract but didnt enter one. As such, the terms of the cost-plus arrangement were not agreed to. With the parties failing to negotiate the compensation formula, the court turned to the doctrine of quantum meruit to decide what was owed. Quantum meruit is the notion that a party should receive fair compensation for work that is done in anticipation of compensation.As noted by the court in All In, quantum meruit is a flexible, contextualConstruction involves remedy that considers surrounding circumstances to determine what is faira high degree of risk.compensation. As is noted in decisions like in Golder Associates Ltd. v. Mill Creek Developments Ltd. et al., 2004 BCSC 665 (CanLII), an estimate canOurconstructionlawyershavetheknowledgeandindustry be a starting point for determining what might be a reasonable quantum meruitexperience to guide clients through all phases of the construction claim. Estimates are presumed to beproject and when needed will aggressively pursue matters in court meaningful and can cap claims whichto protect the rights of our clients.unreasonably exceed estimates.In All Out, the court assessed 7 per cent as a fair profit margin (within the3011665 Ellis Streettypical range for court-determinedKelowna, BCV1Y 2B3cost-plus percentages), made other250.762.2108adjustments for the circumstanceswww.pushormitchell.combefore it and assessed that the amount claimable by the contractor totaled SICA CONSTRUCTION REVIEWFall 202041'