Quebec appeal court upholds $15.7-million award against Énergir over extra construction costs

The Quebec Court of Appeal has upheld a $15.7-million construction award against Énergir, finding that the utility breached its duty of good faith by leading its contractor to believe a claim for extra costs would be considered after the work was finished, then relying on the contractor's failure to follow the contractual claims procedure.

In Énergir c. PG4 Construction Corp., 2026 QCCA 1242, available through SOQUIJ, the court dismissed Énergir's appeal with costs on September 22, 2026. The ruling leaves intact the Superior Court's order to pay PG4 Construction Corp. $15,670,101, plus taxes, legal interest, the additional indemnity and trial costs, including expert fees of $658,407.15.

A pipeline project meets unexpected ground conditions

The dispute arose from the installation of 52.5 kilometres of underground natural-gas lines in the Thetford Mines region. The parties signed their contract in May 2018, with completion scheduled for November. During the first week after work began in June, PG4 reported unstable soil and unexpected rock that it said could not reasonably have been anticipated from the tender documents.

The contract required written approval for extra work and advance written agreement on its price and terms through a change notice. PG4 did not follow that procedure. It nevertheless accelerated construction and finished in December 2018. Énergir accepted that the work was properly performed and raised no objection to completion one month later than originally scheduled.

After Énergir rejected PG4's further claim following completion, the contractor began proceedings in September 2019. The Superior Court heard an 18-day trial before finding that the unexpected conditions and Énergir's conduct justified nearly all of the damages ultimately sought.

The undertaking to consider the claim mattered

On appeal, Énergir argued that it had consistently disputed responsibility, rejected compensation demands and reminded PG4 to submit contractual change notices. It maintained that the trial judge had overlooked those communications when finding that it created false expectations.

The appeal court found that the judge had considered those facts. What also mattered was Énergir's repeated willingness to continue discussions about compensation despite knowing the contractual procedure had not been followed. At the same time, it pressed PG4 to finish the project and expressly requested acceleration, as its own risk register demonstrated.

The court distinguished an undertaking to examine a claim from a promise to pay it. The contractual fault was Énergir's failure to honour the former. It had never told PG4 that failure to obtain the required change notices would mean every request for payment for the extra work would be rejected.

That finding also disposed of two arguments attacking the trial judge's use of the civil-law doctrine of fin de non-recevoir to bar Énergir's defence. The appeal court said the doctrine was a second, non-essential basis for the trial result. It therefore did not need to decide whether the judge had improperly raised it without the parties' submissions or whether it applied in the circumstances.

Evidence supported the damages assessment

Énergir also challenged findings about rock along the route. The court upheld the distinction between the distance where rock was physically present and the longer distance over which crews had to work using rock-excavation methods. Evidence explained why crews would continue with that equipment for about 50 metres after the rock ended before switching methods.

The court found no reversible error in the $7,709,906 productivity-loss assessment. The trial judge had accepted an expert comparison of productivity during disrupted and undisturbed periods, supported by employee testimony about how unexpected soil and rock conditions disrupted the sequence of work across the project.

Although Énergir pointed to other possible causes of lost productivity, the trial judge had found on the evidence that the unexpected conditions invoked by PG4 caused the claimed loss. The appeal court held that Énergir had not shown the clear and outcome-changing error required to overturn that finding.

The court also upheld using the hourly rates actually incurred rather than the lower rates estimated in PG4's bid to assess additional direct and indirect costs. Énergir no longer disputed the additional hours worked. Given the significant gap between quantities estimated at tender and quantities actually used on site, the trial judge's assessment was supported by the evidence and the principle of full compensation.