A building owner issued hundreds of design changes and added over $2.7 million in extra work, refused to grant schedule extensions, then tried to claim liquidated damages against its contractor for the resulting delays. In CIMIC Morningstar Investments Ltd. v. Chandos Construction Ltd., 2026 BCCA 2, the BC Court of Appeal refused leave to appeal an arbitral award of nearly $6.5 million in favour of the contractor, and in doing so, reinforced four principles that owners, contractors, and construction professionals should keep front of mind when managing delay disputes.

Background: What went wrong on a $20M White Rock construction project?

The dispute involved the construction of a four-story, mixed-use building in White Rock, British Columbia. CIMIC Morningstar Investment Ltd. (“CIMIC“), the owner, engaged Chandos Construction Ltd. (“Chandos“) as the general contractor under a CCDC-2 fixed price contract. The contract was executed on October 23, 2020, with a fixed price of $20,245,000 plus taxes, with a substantial completion deadline of May 31, 2022.

The project experienced significant delays. CIMIC argued that Chandos failed in its planning, scheduling, and management of the work. Chandos attributed the delays to a deficient and ever-changing project design driven by CIMIC.

Arbitral award: How Chandos won $6.5 million in damages

Chandos was the successful party at arbitration. The arbitrator found that construction delays were caused by acts or omissions of CIMIC and its agents, including the issuance of hundreds of discrete design changes and over $2.7 million worth of extra work. In the final arbitral award, Chandos was granted damages of $6,470,275, plus costs and interest.

What did the owner argue on appeal — and why did every argument fail?

CIMIC sought leave to appeal the arbitral award under section 59 of British Columbia’s Arbitration Act, SBC 2020, c 2, which only permits appeals on questions of law. CIMIC advanced four grounds of appeal, each of which were rejected by the Honourable Justice Riley.

Ground #1: Interpretation of the contractual notice provision

First, CIMIC argued that the arbitrator erred in law by failing to require strict compliance with the contractual notice requirements as a condition precedent to Chandos’ delay claims. The contract required written notice of the cause of delay within ten working days of its commencement.

As is not uncommon with notice arguments, this was found to be unconvincing. The arbitrator had expressly considered the notice requirement and found, as a fact, that it had been satisfied by way of contemporaneous correspondence, formal delay notices, and in-person meetings between the parties. The arbitrator applied a purposive approach to notice compliance by assessing whether the owner had sufficient information to understand a delay claim was being made.[1] In effect, substance prevailed over form, and Justice Riley concluded that CIMIC’s real complaint was the arbitrator’s factual determination that notice was sufficient, which is a question of mixed fact and law, and not open to appeal.[2]

Ground #2: Application of the doctrine of promissory estoppel

Next, CIMIC argued that the arbitrator erred in her application of promissory estoppel by not properly applying all elements of the test – specifically, the requirements for a “clear and unequivocal” assurance and “detrimental reliance” from the test set out in Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47 (“Trial Lawyers”).

Chandos had indicated that zero additional days of delay would be incurred in 121 of 134 change orders executed during the project. However, based on contemporaneous records, the arbitrator found that CIMIC had assured Chandos that delay claims would be evaluated outside of the change order process, and that Chandos relied on this assurance when signing the change orders indicating no delay.

Justice Riley held that the arbitrator was not required to recite every legal phrase discussed in the Trial Lawyers test, and that her failure to use the words “clear and unequivocal” did not constitute an extricable error of law. CIMIC’s complaint in this regard was a challenge to how the arbitrator applied the estoppel test to the facts, rather than a challenge to the test that was applied.[3]

Ground #3: Application of the prevention principle

CIMIC’s third ground of appeal was that the arbitrator erred by applying the prevention principle to deny CIMIC’s right to claim liquidated damages. The prevention principle holds that “where a fixed completion date is lost due to owner interference, the owner cannot enforce liquidated damages for delay.”[4]

The arbitrator had found, as a fact, that CIMIC was the cause of delay that prevented Chandos from completing on time, by issuing hundreds of design changes while refusing to grant an extension. CIMIC claimed that the arbitrator erred in law by failing to consider the time extension provisions of the CCDC-2 contract, which required Chandos to claim extensions (including complying with contractual notice requirements) and therefore had the effect of ousting the prevention principle.

The Court rejected this argument. The mere inclusion of a time extension clause does not automatically bar the application of the prevention principle – in other words, merely including an extension clause does not allow the owner to claim liquidated damages for delay that it caused. The prevention principle may be displaced only where the extension clause is properly applied in its displacement.[5]

The Court further rejected this on the basis that it was a matter of contract interpretation, which is a question of mixed fact and law. Here, the arbitrator’s application of the prevention principle relied on four findings of fact:[6]  

(1) CIMIC was responsible for significant delay;

(2) Chandos fulfilled the notice requirements needed to engage the extension provisions;

(3) Chandos was entitled to a significant extension; and

(4) CIMIC unilaterally refused to grant it.

Given the general principle of deference to an arbitrator’s findings of fact, the Court could not find that the extension clause was properly applied, so could not find that the prevention principle should be displaced.

Ground #4: Misapprehension of evidence

CIMIC’s final ground of appeal alleged that the arbitrator misapprehended evidence regarding the mechanical and electrical rough-ins (“M&E Rough-Ins“). CIMIC claimed that the M&E Rough-Ins were not included in the baseline construction schedule, given the absence of a specifically named activity for this work, and as such, it was improper for the arbitrator to find otherwise in concluding that Chandos was entitled to an extension of time and reimbursement for reasonable delay costs.

This was found to be nothing more than a challenge to the arbitrator’s weighing of the evidence. The arbitrator preferred the testimony of Chandos’ senior project manager, who gave direct evidence that the M&E Rough-Ins were included in the baseline schedule within a classification of interior finishes, rather than as a standalone schedule activity. This was not considered a question of law.[7]

No basis for leave on any statutory ground

In obiter, the Court found that none of CIMIC’s grounds of appeal met the additional requirements for leave to appeal under section 59(4) of the Arbitration Act. In general, CIMIC’s arguments lacked merit in light of the arbitrator’s detailed factual findings, and the grounds were too case-specific to be of importance to a broader class of persons or to the public.

On the prevention principle ground of appeal, Justice Riley acknowledged that the construction industry could benefit from a ruling on how the principle should apply in the context of a contract that had notice provisions designed to oust it. However, he concluded that the permissive nature of the case law on this rule and the heavy reliance on the arbitrator’s factual findings in the context of this case made this ground unlikely to have broader applicability.[8]

What this decision means

This decision reinforces several important principles for parties engaged in construction projects:

Purposive approach to notice compliance

Courts and arbitrators continue to apply a purposive analysis to contractual notice provisions, asking whether the owner had sufficient information to understand that a delay claim was being made, rather than demanding rigid formal compliance with every procedural step set out in the contract.

Promissory estoppel as a shield for contractors

Where an owner assures a contractor that delay claims will be evaluated separately from the change order process, and the contractor relies on that assurance, the owner may be estopped from later relying on change orders showing zero days of delay.

The prevention principle survives extension-of-time clauses

The mere inclusion of a contractual extension-of-time mechanism does not automatically displace the prevention principle. If the owner causes delay and then refuses to grant a justified extension, the prevention principle may still bar the owner from claiming liquidated damages.

Narrow scope of appeal from arbitral awards

The decision confirms the high threshold for obtaining leave to appeal an arbitral award under section 59 of the British Columbia Arbitration Act, which strictly limits appeals to questions of law. Challenges that are, in substance, directed at the arbitrator’s factual findings or application of the law to the facts will not qualify as questions of law appropriate for appellate review. Section 44 of the Alberta Arbitration Act, RSA 2000, c A-43 is similarly restrictive, although it additionally permits appeals on questions of fact, or mixed law and fact, if expressly provided for in the arbitration agreement.

What should owners and contractors do now?

For owners

  • Do not rely on rigid notice technicalities to defeat delay claims. Courts and arbitrators assess whether you had sufficient information to understand a claim was being made, not whether every procedural box was checked.
  • If design changes are issued during construction, grant justified schedule extensions or risk the prevention principle barring your liquidated damages claim.
  • Ensure that change orders accurately reflect delay impacts. Assurances that delay claims will be handled separately may create estoppel risks if the contractor relies on them.

For contractors

  • Document every delay event in real time, such as by contemporaneous correspondence, formal notices, and meeting records. These all count toward satisfying notice requirements.
  • If the owner assures you that delay claims will be evaluated outside the change order process, confirm that assurance in writing and keep a record.
  • Do not assume signing a change order showing zero delay days forfeits your delay claim, but at the same time, do not rely on that assumption without documented evidence of the owner’s assurance otherwise.

For both parties

  • Treat contractual extension-of-time procedures as mandatory, not optional. The prevention principle may rescue a contractor who was denied a justified extension, but proactive compliance is the stronger position.
  • Before pursuing an appeal from an arbitral award, assess honestly whether your arguments challenge the law or merely the arbitrator’s factual findings. The threshold under certain provincial arbitration legislation can be narrow, as it is under the BC Arbitration Act, and the Court in this case found none of four grounds met it.

The bottom line

The owner in this case made a common but costly mistake: it was found to have caused the delays, refused to grant extensions, then tried to enforce liquidated damages and defeat the contractor’s claims on procedural technicalities. The Court and the arbitrator looked past the technicalities to the substance of the issues, and the result was a $6.5 million award against the owner.

How Miller Thomson can help

Miller Thomson’s Construction Litigation lawyers advise owners, contractors, subcontractors, and construction professionals on delay disputes, arbitration, contract drafting, and claims management. Whether you are facing a delay claim, preparing for arbitration, or looking to strengthen your contract language to avoid disputes like this one, our team can help.

[1] In doing so, the arbitrator relied on:  Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460 at paras. 742-744 and 750; W.A. Stevenson Construction (Western) Limited v. Metro Canada Limited (1987), 27 C.L.R. 113, B.C.J. No. 2075 (SC).

[2] CIMIC Morningstar Investments Ltd. v. Chandos Construction Ltd., 2026 BCCA 2 at paras. 26-27 [CIMIC].

[3] Ibid at para. 37.

[4] Perini Pacific Ltd. v. Greater Vancouver Sewerage and Drainage District (1966), 57 DLR (2d) 307, 1966 CanLII 457 (BCCA).

[5] CIMIC, supra note 2 at paras. 49, 50.

[6] CIMIC, supra note 2 at paras. 50, 52-53.

[7] CIMIC, supra note 2 at para. 59.

[8] CIMIC, supra note 2 at paras. 68-70.