The Court confirms the validity of the legal construction mortgage of the subcontractor since "the very terms of the notice advise the owner that the price may be increased by the costs of extras and changes".
The Civil Code of Quebec offers certain creditors "privileged" rights and conditions, and those involved in the construction of a building are a common example.
Thus, a subcontractor who has been granted any contract quickly notifies the owner of the building in order to secure their claim, as allowed by the Civil Code of Quebec. The notification then describes the nature and cost of the work performed, specifies that taxes (GST and QST) are additional, and states that everything is subject to additional costs related to extras and changes.
The work is progressing rapidly and the parties agree on a procedure to follow regarding work not included in the contract. Due to delivery delays, the unpaid subcontractor publishes a legal construction hypothec and turns to the Court* to validate their claim, which includes their contractual retention and an amount of "almost $800,000 for additional work and extras."
The owner disputes the validity of the subcontractor's hypothec, arguing that the overruns or extras should have been reported during the execution of the work. The Court confirms the validity of the subcontractor's legal construction hypothec since "the terms of the notification itself inform the owner that the price may be increased by the costs of extras and changes."
This decision should urge creditors and owners to exercise caution. Wouldn't it be appropriate for everyone to adapt and agree together to modify the content of the partial receipts of subcontractors who have notified their contract and to require them to include on the partial receipts, in addition to the contract amount, the known extras at the time of signing such receipts.
*C.A. 200-09-004488-034, 2005-04-25
