Can-Dive Services Ltd. v. Pacific Coast Energy Corp.

Can-Dive Services Ltd. v. Pacific Coast Energy Corp.

The Court of Appeal allowed the appellant's appeal: a rectification that would alter the parties' written bargain to give the subcontractor more than the contractor could recover from the owner could not be ordered in the absence of pleaded and proved fraud or unconscientious conduct sufficient to vitiate the subcontract's protecting/flow‑through clauses; the trial judge in effect rectified the bargain rather than the instrument and erred by permitting parol/negotiation evidence to vary express subcontract provisions that incorporated the head contract and limited recovery to amounts actually payable to the contractor by the owner

Citation
2000 BCCA 105
Parties
Plaintiff/respondent/cross‑appellant: Can‑Dive Services Ltd.; Plaintiff/respondent/cross‑appellant: Laurentian Pacific Insurance Corporation (now Boreal P & C Insurance Company); Defendant/appellant: Morrison‑Knudsen Company Inc.; Defendant/respondent: Pacific Coast Energy Corporation; Defendant/respondent: Westcoast Energy Inc.; Defendant/respondent: Intec Engineering Inc.; Defendant/third‑party: Northern Construction Company Ltd.
Court
British Columbia Court of Appeal
Jurisdiction
Canada
Judgment Date
9 February 2000
Procedural Posture
Civil Appeal (contract and Tort Issues) / Court of Appeal Judgment on Appeal and Cross‑appeal From Trial Judgment (rectification Claimed)
Outcome
Appeal allowed; trial judge's rectification order set aside and substituted orders entered consistent with appellant's proposed relief (rectification dismissed; recovery limited so subcontractor cannot obtain more than contractor can recover from owner; set‑off provided)
Legal Topics
Rectification, Mistake (mutual and Unilateral), Protecting/entire Agreement Clauses, Contract Interpretation, Extra Work Claims, Subcontract Flow‑through/indemnity, Negligent Misrepresentation
Source Language
English
Contract Law Equity Construction Law Tort Law Insurance/bonds Rectification Mistake (mutual and Unilateral) Protecting/entire Agreement Clauses +4 more

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Parties

Can‑Dive Services Ltd.

Plaintiff/respondent/cross‑appellant

Laurentian Pacific Insurance Corporation (now Boreal P & C Insurance Company)

Plaintiff/respondent/cross‑appellant

Morrison‑Knudsen Company Inc.

Defendant/appellant

Pacific Coast Energy Corporation

Defendant/respondent

Westcoast Energy Inc.

Defendant/respondent

Intec Engineering Inc.

Defendant/respondent

Northern Construction Company Ltd.

Defendant/third‑party

Procedural Posture

Civil Appeal (contract and Tort Issues) / Court of Appeal Judgment on Appeal and Cross‑appeal From Trial Judgment (rectification Claimed)

Legal Issues

  1. 1 Whether the subcontract should be rectified to record a common intention that slope/soft‑soil stabilization was extra work
  2. 2 Whether protecting clauses/entire agreement and flow‑through provisions in the subcontract preclude rectification or recovery absent fraud
  3. 3 Whether the trial judge rectified the underlying bargain rather than the written instrument and whether that was permissible

Ratio Decidendi

The Court of Appeal allowed the appellant's appeal: a rectification that would alter the parties' written bargain to give the subcontractor more than the contractor could recover from the owner could not be ordered in the absence of pleaded and proved fraud or unconscientious conduct sufficient to vitiate the subcontract's protecting/flow‑through clauses; the trial judge in effect rectified the bargain rather than the instrument and erred by permitting parol/negotiation evidence to vary express subcontract provisions that incorporated the head contract and limited recovery to amounts actually payable to the contractor by the owner

Court Disposition

Appeal allowed; trial judge's rectification order set aside and substituted orders entered consistent with appellant's proposed relief (rectification dismissed; recovery limited so subcontractor cannot obtain more than contractor can recover from owner; set‑off provided)

Orders

  • Claim for rectification of the Subcontract dismissed
  • Plaintiffs' claims described as 'subcontract balance', 'installed grout bags' and 'inspection' allowed against Morrison‑Knudsen only to the extent not based on rectification of the Subcontract