Termination Without Fault For Budget Overruns While Work Is Underway: What Compensation Is The Contractor Entitled To?

On June 18, 2026, the Superior Court handed down a judgment in Norgéreq ltée c. Ville de Montréal concerning the redevelopment project for the Bain Saint‑Michel in Montreal.

The City of Montreal had awarded Norgéreq a fixed-price contract of more than $5 million for work to be carried out over a period of 365 days.

However, only a third of the work had been completed in that timeframe because serious, unexpected problems arose during the project, leading to several modifications in the work that had to be done. Given the increase in costs and the fact that the contingency budget had been spent, the City terminated Norgéreq’s contract before the work was finished.

After the contract was terminated, Norgéreq claimed over $1.5 million from the City. Norgéreq argued it was entitled to all administration fees and profits provided in the contract, even if much of the work was never performed. It also claimed daily expenses due to project delays, compensation for its subcontractors and