This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The December 2002 decision of the British Columbia Supreme Court in Fournier Excavating v. Nanaimo-Ladysmith School District No. 68 dealt with an interpretive dispute over the wording of a contract for the construction of the Cedar Secondary School in Nanaimo, British Columbia. The parties disagreed over how much the contractor was entitled to bill for the excavation and removal of rock from the site. The Court highlighted the cause of the interpretive dispute as follows:
The interpretation of the contract between the parties arises because the contract uses three terms: “bedrock”, “trench rock” and “mass rock” and defines none of them. The contentious clauses of the contract read as follows:
Original Tender Document:
6. Unit Prices
6.1 Rock Blasting
The estimated volume of bedrock to be blasted or broken and excavated is approximately 400 cu.m. The actual quantity of bedrock that is blasted or broken with a rock breaker will be measured in the field. Overbreak beyond the trench section will not be measured. The unit price quoted will be used to deduct or add to the contract price if measured quantities of rock differ from the estimated quantity. Additions and deductions will be authorized by approved change order.
Addendum #3:
6. Unit Prices
6.1 Rock Excavation
The unit rates for this item will apply to trench rock only. Any mass rock excavation of the rock face above the drainage ditch from station 3+100 to station 3+220 shall be included in the tender price. No measurement or payment will be made for mass rock blasting or breaking. Contractors shall determine the volume of mass rock (if any) that will be required to install the foreemain [sic], and shall include this in the stipulated tender price [emphasis in original].
From these two clauses, it is unclear whether “bedrock” and “trench rock” are the same thing.
To help clarify the matter, the Nanaimo-Ladysmith School District No. 68, referred to as the School Board, attempted to introduce a diagram that illustrated its original intention regarding the “bedrock” and “trench rock” terms. However, the Court refused to accept this into evidence, since the diagram was not contained in the original tender call documents and was, in fact, created after the contract was formalized:
Mr. Sabo, an employee of the School Board, prepared a diagram meant to show that the two terms [“bedrock” and “trench rock”] are synonymous. However, the diagram is not admissible as an aide to interpretation of the contract since it was created after the work was completed and once litigation was commenced, and certainly did not form part of the original tender documents. As counsel for the defendant conceded, the intentions of the parties are not admissible for the purpose of construing the contract. It is therefore necessary to turn to the general principles of contract interpretation.
The Court then relied on the plain meaning of the disputed words to determine that the price adjustment would apply only to subsurface rock and not to the rock that was above the ground’s surface.
The contractor was therefore entitled to charge extra only for the rock that it removed from below the ground, not for the rock that it removed from above the ground. In coming to this conclusion, the Court relied on ordinary dictionary definitions:
Words of a contract are to be construed in their grammatical and ordinary sense, except to the extent that some modification is necessary in order to avoid absurdity, inconsistency or repugnance: Grey v. Pearson (1957), 6 J.L. Cas. 61 at 106. The Oxford Encyclopaedic English Dictionary defines “bedrock”, the term used in Article 6.1 of the original tender document, as: “solid rock underlying alluvial deposits…”. Applying this definition to Article 6.1 of the original tender documents, it seems that the 400 cubic metre estimate refers to rock beneath the surface, particularly when considered in conjunction with the phrase “overbreak beyond the trench section will not be measured”. On a plain reading of paragraph 6.1 of the original tender documents, it appears that rock above the surface will not be measured, nor will additions or deductions at the unit price apply to it. It is the rock beneath the surface that is to be measured and it is to that rock which additions or deductions based on the unit price will apply. The last sentence of the paragraph states that the unit price applies to additions or deductions to the contract price, if measured quantities of “rock” differ from the estimated quantity. While it is not clear from the words themselves whether “bedrock” and “rock” are synonymous, they clearly are when the paragraph is read as a whole. According to that paragraph, rock beneath the surface is to be measured and actual quantities excavated will be compared with the estimated excavated quantity, namely, 400 cubic metres. Any difference will be adjusted using the unit price. The terms used by the defendant are not consistent and could have been expressed more clearly; however, the meaning of Article 6.1 of the original tender document seems fairly clear.
While siding with the School Board’s interpretation, the Court noted that the School Board’s Addendum #3 (which was issued after the original tender call was released and formed part of the final contract) had added more confusion to the contract:
Whatever the defendant’s intentions, Addendum #3 actually muddied the waters of interpretation in respect of their original tender documents dated October 19, 1998. Article 6.1 of Addendum #3 makes no reference to “bedrock” (the term used in Article 6.1 of the original tender document) but, rather, uses the terms “trench rock” and “mass rock” which, like “bedrock” are not defined. Addendum #3 states that unit rates apply to “trench rock only” and that any “mass rock excavation of the rock face above the drainage ditch shall be included in the tender price”.
As this case study illustrates, when the meaning of a particular term is unclear, the courts may rely on the entire document rule to use other parts of the document to come up with an interpretation. This gives new meaning to the old expression “Anything you say can be used against you in a court of law.” Drafters should therefore strive for precision by using terms consistently and defining them accurately.
