The practice of Construction Law is generally understood to comprise the provision of advice and representation, whether by way of negotiation, judicial proceedings, alternative dispute resolution, mediation, or arbitration, in all matters relating to the construction process including preparation of contract documentation and related agreements, contract negotiations, claims for extras/credits, claims arising from alleged design changes, claims under bid bonds, performance bonds, labor and material payment bonds, lien bonds and judgment bonds, claims arising from delay, claims for consequential damages, claims in relation to environmentally hazardous materials and for unanticipated subsurface soil conditions encountered during construction, claims for negligence against consulting engineers and architects, and claims for breach of statutory trust.
Construction and COVID-19
While the construction sector has thus far escaped the sustained work-from-home regimens and sector-wide shutdowns other parts of the economy have seen during the COVID-19 pandemic, there have been other significant effects on construction projects and construction law.
In Ontario, many projects were shut down on March 17, 2020 when the province enacted a declaration of emergency to help prevent the spread of COVID-19. Construction projects deemed non-essential were shut down, and those projects that remained open—such as for hospital construction and linear transit—were subject to exacting health and safety requirements. This included complying with public health guidelines that mandated pre-screening of laborers for COVID-19 when they arrive to work, cleaning and disinfecting worksites more than usual, and handwashing stations installed around the site so laborers could wash their hands regularly. Laborers were also required to keep a two-meter distance from each other.
As reported in Canadian Lawyer, the value of the loss of productivity arising out of those measures, plus the supply chain disruption, has been estimated by one source at 10 to 12 per cent, and is roughly equal to the profit and administrative overhead that would be bid as a healthy margin for performing the work.1
A hang-up faced by many construction clients has been uncertainty around lien time periods, after an emergency regulation suspended limitation periods and procedural deadlines—making it hard to know when to release holdbacks, said both Andrea Lee, partner at Glaholt Bowles LLP, and Andrew Jeanrie, partner at Bennett Jones LLP, in interviews with Canadian Lawyer.
“When it comes to timelines governed by contracts, most standard contracts in the construction space already employed force majeure clauses, says Jeanrie. Now, he says, clients are trying to navigate how to address the new challenges posed by contractual obligations. For example, he says, if a series of pandemic-related events raises the price of steel, how does the language in a fixed price contract deal with that? What turns ‘on’ and ‘off’ the force majeure clause in a situation of prolonged emergencies?”2
Ontario’s Construction Lien Amendment Legislation
According to the Ontario Ministry of the Attorney General, as of December 5, 2017: “Ontario passed legislation to improve the efficiency and competitiveness of the construction sector. The Construction Lien Amendment Act, 2017 includes new prompt payment rules to ensure Ontario construction businesses and workers get paid on time for the work they do. The changes will also modernize the lien and holdback process, help protect creditors, and set out a new adjudication process to resolve payment disputes faster.
“Key changes include:
- Providing more time for contractors and subcontractors to resolve their disputes outside of court by extending timelines to file liens and start court actions from 90 days to 150 days
- Ensuring contractors and subcontractors know when to expect full payment by requiring holdback funds to be paid as soon as the deadline to file a lien passes
- Protecting subcontractors and workers if the general contractor files for bankruptcy by requiring surety bonding on public sector projects above a certain amount
- Allowing condominium unit owners to remove liens from their unit in relation to common elements (corridors, lobbies, etc.)
- Referring construction lien claims under C$25,000 to small claims court.”
Bruce Reynolds and Sharon Vogel, now of Singleton Urquhart Reynolds Vogel LLP, worked extensively with government and industry groups on the Report that led to Bill 142. “In particular Bill 142 reflects the three key objectives identified in the Report: 1) modernization of the construction lien, holdback and trust rules; 2) introduction of a prompt payment regime; and 3) introduction of an adjudication regime for the expedient resolution of construction disputes.”3
- Raymer, Elizabeth. “COVID-19 expected to have significant impact on construction industry.” Canadian Lawyer. June 22, 2020. https://www.canadianlawyermag.com/practice-areas/corporate-commercial/covid-19-expected-to-have-significant-impact-on-construction-industry/330729.
- Balakrishnan, Anita. “Construction lawyers see COVID changing delay and force majeure clauses.” Canadian Lawyer. May 21, 2020. https://www.canadianlawyermag.com/practice-areas/real-estate/construction-lawyers-see-covid-changing-delay-and-force-majeure-clauses/329822.
- Vogel, Sharon. “Ontario’s Construction Lien Act: Second Special Client Update.” Borden Ladner Gervais LLP (BLG). June 9, 2017. https://www.mondaq.com/canada/construction-planning/603224/ontario39s-construction-lien-act-second-special-client-update.