Construction Law Update
Ontario Construction News staff writer
The provincial government is reviewing 86 suggested changes to the Ontario Construction Act to overcome gaps and glitches in the legislation which went into effect in 2019.
Glenn Ackerley, a partner with WeirFoulds LLP, says he has been tasked to outline issues in the law and suggest ways to overcome weaknesses to the statute “that is working in some areas but we need it to be working for everyone.”
One issue relates to the legislation’s restriction on adjudication to circumstances when projects are not completed. This is problematic in situations when, for example, the contractor is seeking to collect holdback payments, which generally only become due after the work is completed.
Since Ackerley submitted his report to the Attorney General, “I’ve had meetings with the senior policy people in the government, and they’re working on a process internally at this point how to figure out how to best tackle the problem of making these changes,” he told attendees of the Construction Law Update session at the Buildings Show.
“The hope this tie next year, this session net year, (we’ll) be able to report on changes that are being made to the Construction Act to actually fix some of these problems.”
Ackerley moderated the panel discussion on the show’s first day (Wednesday, Nov. 29), where panelists addressed dispute resolution options and challenging legal and regulatory issues relating to employment contracts, occupational health and safety, among other issues.
Norm Keith, partner, Employment and Labour law at KPMG Law LLP, said “the three things I see most of all right now, are grievances on unionized construction projects, where workers are caught or suspected of smoking cannabis or other drugs.
“There is virtually an epidemic, or least my unionized clients are seeing that, and we’re litigating that often.
“Secondly, at a non-union/worker level, we’re seeing more wrongful dismissal and competing employee claims because of the skilled (labour) shortage, not just at a trades level,” Keith said.
Non-competition clauses in employment agreements have been virtually banned, adding to the tensions as more senior employees (sometimes even Chief Executive Officers) move elsewhere for better rewards.
Occupational Health and Safety (OHSA) enforcement is also a significant challenge with increased penalties of up to $1.5 million for a corporation, per count. While the highest number of counts Keith said he has seen was 56, it is rare that an employer experiences only one count because almost always prosecutors can lay a “care of duty” count on top of the original charge.
Compounding the problem is that the Ministry of Labour has dozens of prosecutors – upwards of 40 – compared to much more modest numbers of prosecutors per-capita in other provinces.
“There is a study I’ve seen that is somewhat dated, but it indicates that Ontario per-capita based on incident or accident, prosecutes 2,000 times more frequently than any other jurisdiction.”
He said labour ministry prosecutors are “proud about the fact that there’s been a lot of accident and they prosecute so they can make more money.
“One might think if there is a commitment to improving safety on the jobs sites, they would like to see (the number of prosecutions) going down,” Keith said. “They would like to see less accidents, less injuries, less fatalities.” Instead, the fines and penalties have become a “revenue generating stream” for the government, he said.
Annik Forristal, partner, construction and infrastructure at McMillan LLP, discussed alternative contracting/project management models. She said owners’ have pushed risks and cost pressures so hard that “it’s not going to come as a surprise to anyone here that we are seeing a number of projects being cancelled or needing to be re-tendered because we’re seeing a lack of proponents responding.”
Bidders simply cannot or won’t take the risks in complying with unrealistic insurance or bonding requirements, or cover the risk of costs escalating outside their control.
To solve these challenges, “we are seeing moves towards more progressive or collaborative project delivery models,” she said. One is Progressive Design Build or Progressive P3.
The idea is to get more people engaged at the outset of the project’s design and development, to solve potential issues before they get out of hand, or to find creative answers to manage costs and implementation schedules.
Other structures include Cost Plus or Integrated Project Delivery (IPD), where – within guidelines – everyone involved in the project shares in the risks, and also the rewards for controlling costs and scheduling challenges.
Howard Krupat, partner at DLA Piper (Canada) LLP, discussed some of the challenges in using expert witnesses to win in court. One challenge is that the experts need to convince the court of their independence – if they are seen as being advocates for one side or another, their testimony will be invalidated.
Ted Dreyer, partner at Madorin, Snyder LLP and the Council of Ontario Construction Associations’ executive director, said that after a slow start, the adjudication process developed under the Ontario Construction Act is starting to gather momentum.
He said Ontario Dispute Adjudication for Construction Contracts (ODACC) reported 269 adjudications in the most recent fiscal year, compared to 69 in the year proceeding. The slow uptake in part related to the fact that the adjudication process under the Ontario Construction Act only applies to projects that commenced after the law was implemented in 2019.
Adjudication costs vary depending on amount disputed and how much each party wishes to spend on legal counsel. But the process is working as intended; it is quick, and while the adjudicator’s decision can be overturned through litigation after-the-fact, the contractor doesn’t need to wait to enforce measures to be paid.
Dreyer said ideally the parties in the dispute should agree on an adjudicator who understands their specialized environment; if not, ODACC will simply assign the next in line in its roster.
Finally, Anna Esposito, partner and mediator at Pallett Valo LLP, spoke in favour of mediation as an effective alternative to conventional litigation and other alternative dispute resolutions methods such as arbitration.
In a successful mediation, both parties reach an understanding of each others’ concerns and work towards a settlement. Sessions are confidential without prejudice. Even if mediation cannot completely solve the dispute it often helps in narrowing the areas of contention, reducing stress and costly litigation, she said.