By: Troy Baril and Taylor Moroz
The Saskatchewan Court of Appeal’s decision in Ace Burger Ltd. v G and I Construction Group Inc., 2025 SKCA 82, provides important guidance on how Canadian courts approach disputes arising from cost-plus construction contracts, particularly where no estimate or maximum price is requested or provided. For contractors and owners alike, the case clarifies what must be proven, what legal tests apply, and what does not apply in truly open-ended cost-plus arrangements.
Background of the Dispute
The parties entered into an oral cost-plus contract for restaurant renovations, with a 10% markup, but no estimate, quotation, or stipulated maximum price. After completion, the owner disputed the contractor’s invoices, citing escalating costs, inconsistent billing, and alleged unreasonableness. The contractor sued for the outstanding balance and succeeded on summary judgment. The owner appealed, arguing that the chambers judge failed to apply the law governing cost-plus contracts correctly.
The Court of Appeal dismissed the appeal in full.
The Governing Approach to Cost-Plus Contracts
The Court reaffirmed that disputes involving cost-plus contracts are fact-specific but distilled several governing principles that now provide clearer guidance, especially in the absence of an estimate.
No Estimate Means No “Bounds of Reasonableness” Analysis
A key clarification in Ace Burger is that the commonly cited “bounds of reasonableness” analysis does not apply where no estimate exists. Earlier cases, including Infinity Construction v Skyline Executive Acquisitions Inc., often assess whether the final cost falls within a reasonable range compared to an estimate. The Court held that this analytical framework presupposes the existence of a benchmark. Where no estimate was given, there is no comparator, and therefore no requirement for the contractor to prove that the final cost was reasonable in that sense.
Instead, the contractor’s obligation is narrower and more precise.
The Contractor’s Core Burden: Accuracy, Not Reasonableness
In a cost-plus contract without an estimate, the contractor must prove, on a balance of probabilities, that the costs claimed were incurred for the purpose of completing the contracted work and that the accounts are accurate and reliable. The Court expressly rejected the notion that contractors face a heightened or heavy burden of proof. Following F.H. v McDougall, there is only one civil standard: proof on a balance of probabilities.
If the contractor meets this burden, the onus shifts to the owner to produce evidence showing the accounts are incorrect, unreliable, wasteful, or uneconomical.
Implied Limits Still Exist: No Waste or Uneconomical Spending
Even in open-ended cost-plus contracts, courts will imply terms preventing recovery for wasteful or uneconomical use of labour and materials. However, in the absence of evidence suggesting such waste, courts will not speculate or impose hindsight-driven scrutiny. Dissatisfaction with the total price, without admissible evidence, is not enough to defeat a contractor’s claim.
Proper Accounts Do Not Require Perfection
The Court reaffirmed long-standing principles that contractors must keep proper accounts but not accounts maintained in any particular form or to an elevated accounting standard. Internal labour and cost records must be proven, while subcontractor and supplier invoices need not be independently audited, provided the contractor exercised reasonable diligence in retaining and reviewing them. Once sufficient documentation is produced, the burden shifts to the opposing party to show why the accounts should not be accepted. Confusion arising from multiple invoices, standing alone, will not defeat a claim if the court is ultimately satisfied that one version accurately reflects the costs incurred.
Opinion Evidence Requires Proper Qualification
The Court confirmed that owners cannot rely on their own views, experience, or unqualified third-party estimates to challenge a contractor’s costs. Assertions about what the work should have cost are opinion evidence, and if relied upon, must come from properly qualified experts. Absent expert evidence or concrete proof of inaccuracy, courts will not substitute subjective dissatisfaction for legal analysis.
Key Takeaways for Owners and Contractors
Cost-plus contracts without estimates shift the focus from reasonableness to accuracy and proof. Contractors are best served by maintaining clear, detailed records and exercising diligence with subcontractors and suppliers to support their claims. Owners who desire cost certainty should request estimates, budgets, or contractual caps to protect against unexpected outcomes.
Challenging a cost-plus invoice requires evidence rather than intuition or hindsight comparisons. Courts will enforce the terms of an open-ended agreement while preventing waste or uneconomical spending, but they will not retroactively impose price controls. Both parties benefit when expectations are clear from the outset and supported by proper documentation throughout the project.
Conclusion
Ace Burger v G and I Construction brings clarity to a frequently contested area of construction law. The decision confirms that courts will uphold open-ended cost-plus agreements as written, imposing implied limits against waste but refusing to retroactively control prices where none were agreed. For owners and contractors entering cost-plus arrangements, the case emphasizes the importance of upfront clarity, diligent record-keeping, and the need for concrete evidence in disputes.
How Procido LLP Can Help
At Procido LLP, our construction law team offers practical, strategic advice to help you navigate contract disputes and manage legal risks throughout your project. Whether drafting clear contracts or resolving disagreements, we work to protect your interests and keep your project moving forward. For consultations or fee estimates, please contact Troy Baril at troy.baril@procido.com or Taylor Moroz at taylor.moroz@procido.com. For general inquiries, call 1 (306) 664 1444.
Disclaimer
This article is provided for informational purposes only and should not be construed as legal advice. While efforts have been made to ensure accuracy, Procido LLP does not warrant or guarantee the completeness or applicability of the information. For legal advice tailored to your municipality’s specific circumstances, please contact Procido LLP directly at admin@procido.com.