Sector overview
Trends, developments and prospects
What is the general state of the construction sector in your jurisdiction, including current trends, notable recent transactions/developments and future prospects?
British Columbia The construction sector in British Columbia has been vibrant and close to fully employed for at least the past decade.
Two major hydro-electric projects – one in Campbell River on Vancouver Island and the other at Site C on the Peace River in Northern British Columbia – will employ significant human and material resources until 2025 and inject more than $14 billion into British Columbia’s economy. In addition, multiple hospital projects in Kamloops, Penticton, Kelowna and Vancouver have recently been completed, are nearing completion or are about to commence construction. The health sector has been busy over the past decade and continues to generate new projects in relation to both healthcare and research. This includes new research as well as patient facilities at the University of British Columbia in Vancouver.
Ontario Ontario's construction market is the largest and most diverse in Canada. Its largest projects are in the heavy and civil engineering construction sectors, including highways and transit, as well as utility systems and energy production. These projects have been fuelled by enormous investment by both the federal and provincial governments.
Ontario's provincial government is making the largest investment in transportation and related infrastructure in the history of the province. Metrolinx – a regional transportation agency and Crown agency of the province of Ontario – has been entrusted to lead the design and delivery of an integrated multimodal regional transportation system in the Greater Toronto and Hamilton Area, one of the largest expansions of transit in North America today. On 8 March 2018 Metrolinx adopted the 2041 Regional Transportation Plan, which will see more than $30 billion invested in rapid transit infrastructure over the next eight years.
Over the past decade, the residential construction sector in the Greater Toronto Area has seen unprecedented growth, particularly with respect to multi-unit residential buildings.
Commercial construction (primarily buildings such as hotels, shopping centres, warehouses and office buildings) has also seen significant growth in the past decade, and steady growth is expected to continue across the province.
Institutional construction, which includes the building of schools and hospitals, derives in large part from investment by the provincial and federal governments. Growth is also expected in this sector, as a result of the Ontario government's recent commitments to school repairs ($1.1 billion) and hospital infrastructure ($12 billion over 10 years).
Legal framework
Legislation
What primary and secondary legislation governs the construction sector in your jurisdiction?
In British Columbia, the Builders Lien Act provides security for the payment of contractors, subcontractors, workers and suppliers involved in construction projects. In Ontario, the Construction Act (formerly the Construction Lien Act) recently underwent sweeping amendments to modernise lien, holdback and trust rules and procedures, as well as to introduce surety bond provisions. Prompt payment and adjudication provisions will come into force in October 2019.
In both British Columbia and Ontario local governments determine the zoning applicable to each area of its jurisdiction and regulates what developments can take place in each of those areas. Once the zoning and development issues are resolved, local authorities exercise their jurisdiction to regulate building and occupancy permits.
However, local governments have no constitutional jurisdiction over the regulation of building on federal lands, but generally federal authorities abide by local building regulations in carrying out construction on federally owned lands.
Most of the lands in British Columbia are subject to aboriginal title. Where projects are to be undertaken on lands subject to aboriginal rights, the Supreme Court of Canada has clarified that, as part and parcel of the development process, those holding aboriginal title must be consulted before any development takes place.
Authorities
Which authorities regulate the construction sector and enforce construction law, and what is the extent of their powers?
In respect of security of payment legislation, such legislation is provincial legislation and is enforced through the court system. In respect of building codes, local government authorities are the “authority having jurisdiction” under the provincial building codes. Local governments are free to adopt a provincial code as they see fit. In many instances the codes are amended by local bylaw so that it reflects local conditions and needs. There is also a National Building Code of Canada.
Licensing
Project licensing
What licensing requirements and procedures apply to construction projects in your jurisdiction (eg, planning consents)?
Before any project can be undertaken in British Columbia, the project sponsors must obtain a development permit for construction of the particular project that they are seeking to develop in the local jurisdiction. Notice must be given to all stakeholders of the intent to develop the project, and the stakeholders are in turn given the ability to oppose or require amendments to the proposed development. Any decision at this initial stage is subject to appeal to a development appeal board.
Once a development permit is obtained, plans and specifications prepared in accordance with all applicable codes and standards, including local building bylaws, must be submitted to the planning department of the local authority for approval and issuance of a building permit. This process is backed up by a series of ‘letters of assurance’ which require project sponsors to assure the local authority that they have retained a qualified professional to design the project. This is followed by letters of assurance from the prime consultant, usually an architect, confirming that they have been retained as the coordinating registered professional on the project and providing the assurance that all plans and specifications for the project will be prepared in accordance with all applicable codes and standards. These letters of assurance are a prerequisite to the issuance of a building permit.
Once the project is completed, the project sponsors must obtain an occupancy permit. In order to do so, final letters of assurance must be obtained from all applicable consultants assuring the architect, in the case of subconsultants, that the various disciplines on the project (eg, structural, mechanical and electrical) have been completed in accordance with the plans submitted. An overall letter of assurance is then delivered to the local authority confirming that the building has been constructed in accordance with the plans submitted and therefore in accordance with all applicable codes and standards. Once this is done, an occupancy permit is issued.
In Ontario, the Planning Act (RSO, c P13) provides the statutory framework for the regulation of land use development and grants municipalities a broad scope of powers related to the approval of plans and drawings for development within site plan control areas.
The procedure in Ontario follows much the same path as that in British Columbia, with a few variations. The first step is to undergo a preliminary project review with the municipal authority, which is aimed at determining that the proposed project complies with the municipality's zoning bylaws. Next, a zoning certificate must be obtained. This process involves a more detailed review of a proposal intended for a future building permit application, to determine zoning compliance and confirm compliance with other applicable laws.
The next step is to obtain site plan approval from the municipal authority which has jurisdiction over the project site: many authorities do not accept a building permit application until the site plan approval process has been completed. This process can vary from jurisdiction to jurisdiction, but always considers the jurisdiction's official plan and zoning bylaws. Although there is no statutory requirement for public consultation in the site plan approval process, some municipalities have requirements in respect of public input and consultation.
Once site plan approval is completed, a building permit application must be submitted. At this stage of the process, technical issues related to the proposal are analysed. In addition to including all design plans and plot information, the application must include a form ensuring energy efficiency that is completed by the architect, mechanical designer and electrical designer. Over the course of construction, building inspectors review projects during key stages of construction to ensure that work complies with the Building Code and approved plans.
Once construction is completed, a fire inspection is required, subsequent to which a building inspector conducts a final inspection and issues an occupancy permit if all applicable requirements under the Building Code have been met.
Professional licensing and qualification
What licensing requirements and procedures apply to construction professionals, including any required qualifications?
The professions of architecture and engineering are regulated separately by each province and territory through regulatory bodies established by statute:
- in British Columbia – the Architectural Institute of British Columbia and the Engineers and Geoscientists of British Columbia; and
- in Ontario – the Ontario Association of Architects or Professional Engineers Ontario.
An architect or engineer cannot practise without a licence from the applicable provincial or territorial body. Penalties include fines, imprisonment, injunctions and prohibitions against collecting fees for unlicensed services.
The licensing of contractors is also regulated provincially. With some notable exceptions, most provinces do not generally require contractors to be licensed. Quebec has an elaborate scheme requiring all contractors to be licensed, while British Columbia requires that residential builders be licensed. In Ontario, residential builders must register with Tarion Warranty Company (the province's new home warranty provider).
Do any special rules and restrictions apply to foreign construction professionals?
Foreign construction professionals are not allowed to practise architecture or engineering in British Columbia or Ontario unless they are registered with the applicable professional body. In both provinces, a foreign engineer can apply for a temporary, provisional or limited licence. The renewal procedure and requirements for such licences vary from province to province. In British Columbia, for example, a foreign engineer must apply to renew a temporary licence before the end of each calendar year in order to continue practising engineering in that jurisdiction. Information on the licensing requirements for foreign architects and engineers is made available by the Canadian Architectural Certification Board and Engineers Canada.
Project structures and relationships
Project structures
What corporate/formal structures are available for construction projects in your jurisdiction? What are the advantages and disadvantages of each? Are any structures explicitly prohibited?
Construction projects involve multiple parties (ie, owners, designers, general contractors, subcontractors, labourers and suppliers) and can take on a variety of structures. The traditional and most common construction project delivery method is known as design-bid-build. This model involves several contracts. First, the owner enters into a contract with the designer. Once the design is complete, the owner enters into a separate construction contract with a general contractor. The general contractor then subcontracts pars of the overall scope of work to a number of subcontractors who can further subcontract aspects of their portion of the project to subcontractors and suppliers. The designer often remains involved at this stage of the project as the owner's agent-administrator and payment certifier. Many projects in both British Columbia and Ontario are built on a design-bid-build basis, whereby the project sponsor or owner retains a design consultant or consultants to design the project, the project is then sent to tender and the preferred bidder or general contractor enters into a separate contractual relationship with the project sponsor or owner. The general contractor then subcontracts parts of the overall scope of building work to a number of subcontractors who can further subcontract aspects of their portion of the project to subcontractors and suppliers. Under this structure, the design professionals usually remain involved with the project, supplying field services during the course of construction, often acting as the project sponsor's agent-administrator and payment certifier, ensuring that the work is proceeding in accordance with the contract documents. However, it is the general contractor and its various subtrades that remain responsible for the means, methods, techniques and sequences chosen to build the project and to assure that it is built in accordance with the contractual plans and specifications.
Other project structures are used for a different genre of projects. Design-build structures are commonly used in the industrial sector or on repetitive residential or commercial projects.
On larger public projects (eg, hospitals, tunnels, bridges and highways) the public-private partnership model is sometimes employed. This is known as the P3 model in British Columbia and the alternative financing and procurement model in Ontario. These projects are usually subject to overview by a provincial body (in British Columbia: Partnerships BC, and in Ontario: Infrastructure Ontario), which is an entity comprised of various skilled professionals familiar with project development, design and construction.
Relationship management
Are there any special considerations for managing relationships with:
(a) Joint venture partners (where applicable)?
On projects where a joint venture has assumed responsibility for a design, construction or the design and construction of a project, one of the joint venture partners is designated as the managing partner for the project. The arrangements made with the other joint venture partners are subject to a private contracting arrangement, which assigns both risks and rewards between the partners for the duration of the project.
(b) Contracting government entities in public-private partnerships (or other construction projects with a public element)?
Where government entities are involved as project sponsors or owners, the project is usually subject to a dense and comprehensive contractual arrangement between the public entity and the other project participants.
(c) Subcontractors?
Construction projects in British Columbia and Ontario sometimes involve a construction or project manager who is charged with management and coordination of all of the trades on the project.
There are no Canadian standard form subcontracts and these forms of contract vary widely.
(d) Architects, designers, engineers and any other related professionals?
Although some projects are organised so as to create a direct contractual relationship between the owner or project sponsor and all of the individual consultants on a project, many projects are structured around the concept of a prime consultant being fully responsible for the design and provision of field services, leaving it to that prime consultant to arrange the subconsultant arrangements as might be necessary, including structural, mechanical, electrical and other disciplines.
(e) Any other relevant parties typically involved in construction projects?
There are a number of specialist consultants who rarely fall under the prime consultant’s chain of command. This is because of the specialty of their practice or the high risk associated with those aspects of the project that these consultants are required to deal with. In this category are the geotechnical consultants, building envelope consultants and air quality consultants, among others. Each has a specialty and risk attached to it which requires considerable expertise outside the realm of expertise of the prime consultant. As a result, a direct contractual relationship is established between these consultants and the project sponsor or owner.
Other major players on construction projects in both British Columbia and Ontario are the inspecting arms of the local authority having jurisdiction or some provincial departments having authority over certain aspects of each project (eg, the electrical protection branch and the fire safety branch of the provincial government). These entities are sometimes given statutory protection from liability or responsibility for the areas that fall within their control, but there is a well-developed body of case law imposing responsibility for the actions of these specialist agencies that fall outside of the policy realm and into the operational realm of their functions.
Contracts and performance
Standard contract forms
What standard contract forms are used for construction projects in your jurisdiction? To what extent do parties deviate from these standard forms?
Standard contract forms are widely used in British Columbia and Ontario on a variety of construction projects. The Canadian Construction Document Committee (CCDC) Contract Forms are widely used for the construction aspects of projects. The Fixed Price Contract (CCDC 2) is the most common standard form contract used for most projects in British Columbia and Ontario. CCDC also has a series of subcontract forms that are regularly employed. Alternatively, the Canadian Construction Association also offers a series of standard construction contract forms.
The most commonly used form for the retainer of a prime consultant is the Royal Architectural Institute Contract Form RAIC 6. Where an engineer is the prime consultant, the contracting forms of the Association of Consulting Engineers of Canada are adopted, most notably, form ACEC 2.
On most public/private partnership projects the provincial government has developed a very detailed standard format for public projects, particularly infrastructure projects. The form is amended in some significant ways from project to project to meet individual conditions and requirements.
Definition of ‘construction work’
How is ‘construction work’ legally defined?
‘Work’ under many construction contracts is defined as the entirety of the labour and materials required to construct the project in accordance with the applicable codes, standards, plans and specifications.
Governing law
Are there any rules or restrictions on the governing law of construction contracts?
Construction contracts in British Columbia and Ontario are subject to the Builders Lien Act in British Columbia, and the Construction Act in Ontario. Such contracts are interpreted in accordance with the common law of contract and negligence.
Formalities
Are construction contracts subject to any formal requirements?
There is no formal statutory requirement applicable to the form and substance of any contract.
Mandatory/prohibited provisions
Are there any mandatory or prohibited provisions in relation to construction contracts?
There are several prohibited provisions found in various statutes which could be applicable to construction projects. By way of example, the Builders Lien Act (British Columbia) and the Construction Act (Ontario) prohibit contracting out of lien holders’ rights under the act.
Implied terms
Can any terms be implied in construction contracts?
There are very few, if any, implied terms imported into contracts between owners and contractors or contractors and subtrades. However, there are several implied terms imported into a procurement period of construction contracts, an area of the law set afoot by the Supreme Court of Canada in R v Ron Engineering in 1985. In the procurement phase, there are long lists of implied terms applicable to both project sponsor/owners and bidders, as well as to consultants charged with responsibility for assessing bids.
Risk allocation
How are risks typically allocated between parties to construction contracts?
The practice in respect of risk allocation in both British Columbia and Ontario is generally described as a process which seeks to assign risk to that party or those parties best able to manage the risk or whose role and responsibilities on the project define the risk that they ought to assume.
Limitation of liability
How and to what extent can parties to construction projects contractually limit or exclude their liability?
Under the common law applicable in both British Columbia and Ontario, parties are free to limit their liability in any way they see fit. There is no statutory prohibition to defining the limit of liability in contract, even as far as removing any liability whatsoever or shortening or lengthening the time prescribed for claims under the applicable statute.
Liquidated damages
How are liquidated damages typically calculated and to which liabilities are they usually applied?
Liquidated damages are frequently found as part and parcel of major construction projects, particularly public projects. The liquidated damages are most commonly specified as a daily or weekly charge for failing to meet contract schedule or contract performance over a stipulated period.
Force majeure
How are force majeure clauses treated in your jurisdiction? Is there a legal definition of force majeure events?
Force majeure clauses are enforced by the courts in British Columbia and Ontario. The Supreme Court of Canada has described such clauses as follows:
an act of God or force majeure clause… generally operates to discharge a contracting party when a supervening, sometimes supernatural, event, beyond the control of either party, makes performance impossible. The common thread is that of the unexpected, something beyond reasonable human foresight and skill. (Atlantic Paper Stock Ltd v St Anne-Nackawic Pulp & Paper Co, [1976] 1 SCR 580, Paragraph 4).
General performance obligations
What are the general performance obligations of contractors and employers?
The general performance obligation of a contractor is to complete the project in accordance with the applicable plans and specification and within the project schedule and in doing so, to exercise reasonable care in carrying out the work. Employers, on the other hand, are usually limited to their payment obligations under the contract and to providing adequate and timely site access and information required by the contractors which is in the possession of the employer.
Project delays
How are project delays typically handled? Do any set rules, restrictions or procedures apply in this regard?
Delay claims are frequently raised on construction projects in British Columbia and Ontario. There are no set rules, restrictions or procedures applicable to these claims. They are frequently complex, factually driven and expensive to process.
Contract variations
To what extent can the parties make variations to the contract? Do any set rules, restrictions or procedures apply in this regard?
Parties to contracts in British Columbia and Ontario are free to enter into any form of contract that they wish, as long as it is not for an illegal purpose.
Termination
What are acceptable grounds for the termination of a contract?
Provided that the terms and conditions of the contract pertaining to termination are strictly complied with, contracts can be terminated. Missing a step in the required termination sequence can be fatal to any attempt to avoid the obligations under a contract.
Remedies for breach
What remedies are available for the breach of construction contracts?
The standard remedy for breach of contract is recovery of the foreseeable losses as a result of the breach, sometimes softened by the contributory wrongdoing on the part of the claimant.
Financing
Types of financing
What types of financing are used for construction projects in your jurisdiction? Which are the most common? Are there any restrictions on available financing methods?
A variety of financing structures are used on projects in British Columbia and Ontario. Simple bank financing – whether bridge financing or project financing – is the most common method. Occasionally, a mix of equity and financing is chosen to underwrite projects, usually in the corporate sector on P3 and alternative financing and procurement arrangements.
There are no restrictions to the form of substance of financing which might be used on any particular project in British Columbia or Ontario.
Security
What forms of security are used in construction project financing?
Construction loans are often secured through a variety of methods. Collateral for the loan can take the form of a collateral mortgage registered against the property (provided it is owned by the developer). Additionally, a security interest in the personal property of the borrower or developer may be required. In some cases, lenders can also require security interest or assignment of planning approvals, licences, permits or other third-party agreements. In addition to the forms of collateral described above, lenders will also regularly require that they have an interest as an additional insured or loss payee in any liability or property insurance policies.
Further, lenders will often look to be included in any performance or labour and material payment bonds provided by the contractor. Security for project sponsors and owners is available through the provision of bonding, whether bid bonds, performance bonds or labour and material payment bonds. Recent changes to the Construction Act (Ontario) have made the provision of surety bonds a mandatory requirement in relation to public contracts (where the owner is the Crown, a municipality or other public sector entity) where the contract in question exceeds a specified amount. In such a case, a contractor must provide both a labour and material payment bond and a performance bond with coverage equal to at least half of the contract price.
Payment
Methods and timing
What are the typical methods and timing of payment for construction work? Are there any restrictions on ‘pay when paid’ and ‘pay if paid’ provisions? Do any other rules, restrictions or procedures apply?
The typical method and timing of payment for construction work is by way of submission of regular progress claims during the course of the project, which are contractually due and owing 30 to 45 days after submission. The payment mechanism is usually triggered by certification by the registered professional having jurisdiction over the project.
‘Pay when paid’ clauses, that stipulate that a subcontractor is entitled to be paid only when and to the extent that the primary contractor has been paid by the owner, are generally enforceable in British Columbia and Ontario if properly drafted.
Non-payment
How can the contractor secure itself against non-payment by the employer? Under what circumstances can the contractor suspend work for non-payment?
A contractor or subtrade can secure payment in several ways. The most efficient way to do this is to ensure that all contracts include the requisite terms and conditions to force payment in a timely manner. The provision of a labour and material payment bond can present a very secure remedy to non-payment for subtrades. The ultimate safety net is found under the Builders Lien Act (British Columbia) and the Construction Act (Ontario), which permit project participants to file liens against the property on which the construction project is located, and to require security to be posted or payment to be made before the charge against the property is removed.
How can subcontractors secure themselves against non-payment by the contractor? Under what circumstances can subcontractors suspend work for non-payment?
The primary protection for subcontractors is found in the applicable lien legislation. A contractor or subcontractor can suspend work for non-payment, certainly if the terms and conditions of the contract allow for this and those terms and conditions are strictly complied with, and in more extreme cases in accordance with the common law applicable to breach of the fundamental obligation under a contract to make payment when and as required by the contract.
On what grounds can payments be withheld?
Payment can be withheld where there are deficiencies in the work underpinning a progress claim or when the work of the claimant has caused other damage which entitles the affected parties to set off that damage against any amounts which would otherwise be due and owing.
Insolvency
Contractor insolvency
What recourse is available to employers in the event of the contractor’s insolvency?
The best available protection to owners faced with an insolvent contractor is the performance bond or security required to be delivered by the contractor at the outset of a project.
Insurance
Coverage
What mandatory insurance coverage applies to parties involved in construction projects? Is any additional coverage recommended?
Insurance is the often a key source of any recovery that is going to be made for negligence on a construction project. Thus, those who are well advised will have an informed and reasonable insurance programme placed on the project, including professional liability insurance for the consultants, general liability insurance for the builders and trades, and course of construction insurance for any physical damage to property during construction.
It is important on each particular project to obtain the advice of a skilled insurance broker as to the nature and extent of the insurance coverage necessary for each project.
Tax issues
Liability
What tax liabilities arise in relation to construction projects?
Every construction project in British Columbia and Ontario is subject in one form or another to both provincial sales tax and federal tax. This is a complex area which requires the advice of a tax consultant to assure that tax liabilities are properly discharged on a timely basis both to provincial and federal authorities.
Incentives
Are there any tax incentive schemes to promote construction and development in certain areas?
Although few and far between, tax incentives are sometimes made available by provincial authorities to encourage investment by foreign entities into British Columbia’s and Ontario's construction and infrastructure industries.
Environmental issues
Environmental protection
What environmental protection legislation and regulations apply to construction projects in your jurisdiction?
Both provincial and federal legislation impacts on environmental issues facing projects in British Columbia and Ontario. For example, in British Columbia the Air, Water and Land Act provides regulations for contaminants which may already exist or may be generated during construction, making parties retroactively and strictly liable for any environmental damage. Federally, contamination of waterways or fisheries is protected by various statutes.
Authorisation/certification
What environmental authorisations and certifications are required for construction projects and how are they obtained?
There are both federal and provincial requirements for certificates of approval to proceed with a project where the project presents a threat to waterways or fisheries, in the case of federal legislation or where the lands in question are historically contaminated. In this latter regard, provincial legislation requires certificates of authorisation for projects to proceed on lands historically contaminated.
‘Green’ regulations and incentives
Are there any regulations or incentive schemes in place to promote the construction of energy-efficient and low-carbon buildings?
There are incentives available for parties who achieve silver, gold or platinum Leadership in Energy and Environmental Design standards.
Employment issues
Employment and labour law
What employment and labour legislation applies to construction projects in your jurisdiction? What rights and protections are provided to construction workers?
In both British Columbia and Ontario, there are several statutes and codes that apply to the employment of construction workers. These include the Employment Standards Acts and regulations, human rights codes and labour relations codes. These laws provide a wide range of rights and protections for construction workers, including regulations with regard to working conditions and remuneration, protection against discrimination and contract bargaining rights. Federal employees are generally not covered by these provincial laws, but corresponding federal statutes provide similar protections. Legislation protecting the health and safety of employees also applies to construction workers.
Occupational health and safety
What occupational health and safety regulations apply to construction projects?
The Workers Compensation Act and the Occupational Health and Safety Regulations in British Columbia, as well as the Occupational Health and Safety Act in Ontario delineate the rights and duties of workers, supervisors and employers in maintaining a safe and healthy work environment. These laws give employees the right to know about hazards in the workplace and obtain proper training. They also provide the possibility for compensation for employees injured on the job.
Employment contracts
What types of employment contract are typically used for constructions work? Are there any mandatory or prohibited provisions in relation to employment contracts?
All contracts are governed by the British Columbia Employment Standards Act which includes, at minimum, provisions for overtime and holiday pay and termination notice. These statutory provisions will be incorporated by reference, if not expressly included, in an employment contract.
The most important provisions include the termination and notice or pay in lieu of notice, hours of work and overtime which can be subject to averaging agreements. Drug testing cannot be a mandatory term unless the employee is in a safety sensitive position. The contract must include who is responsible for workers’ compensation coverage, especially if the employee is a contractor, and must also specify what trade certification may be required. Construction sites are often unionised and it is advisable to consider any collective agreements in effect that employees could be bound by.
Foreign workers
What rules, restrictions and considerations apply to the hiring of foreign workers?
In order to hire a foreign worker, there must be a demonstratable need in the labour market that cannot be fulfilled by domestic workers (eg, that the foreign worker possesses unique skill or knowledge). Employers of some types of temporary worker need to obtain a labour market impact assessment (LMIA) before the worker applies for a work permit. An LMIA is an Employment and Social Development Canada document that gives the employer permission to hire a temporary worker.
Employers can access express entry pool candidates, these are skilled workers or tradespersons who apply through the Federal Skilled Worker Programme or the Federal Skilled Trades Programme. Express entry is a system used to manage applications.
Applicable legislation includes the Immigration and Refugee Protection Act and accompanying regulations and ministerial instructions.
Anti-corruption rules
Applicable rules
What regulations and procedures are in place to combat corruption, bribery, fraud, collusion and other dishonest practices in the construction sector in your jurisdiction?
Anti-corruption legislation in Canada exists to address both domestic and international bribery and corruption in the engineering and construction industry relating to procurement, misappropriation, fraud, asset misappropriation and bribery of domestic and foreign officials.
The federal Competition Act makes it an offence to participate in arrangements such as bid rigging, bid rotation, cover bidding and market division in procurement of government construction contracts.
The federal Corruption of Foreign Public Officials Act makes it an offence, punishable by fines and imprisonment, to bribe foreign officials to induce them to influence a foreign state action in awarding construction and engineering contracts. The Criminal Code creates offences punishable on indictment for bribing, or attempting to bribe, government officials in connection with procurement of construction contracts.
The Federal Integrity Regime Programme backstops anti-corruption measures through a system of excluding from eligibility for award of government contracts a person or entity convicted under federal anti-corruption legislation. At provincial level, in Quebec the Integrity in Public Contracts Act requires prospective contractors to obtain a ‘seal of integrity’ designation as a condition of eligibility for obtaining provincial construction contracts.
Although not strictly speaking a component of the Canadian anti-corruption regime, civil and common law liability for fraud, breach of fiduciary duties, asset misappropriation in relation to procuring, and participation in domestic construction and engineering contracts, also serve to enhance the integrity of the industry.
Best practices
What best practices are advised to ensure compliance with the relevant anti-corruption rules?
In a Canadian engineering and construction sector increasingly operating in the competitive global market, best practices include the establishing of robust anti-corruption policies, practices and procedures as a feature of sound corporate risk management.
Dispute resolution
Courts
What courts are empowered to hear construction disputes in your jurisdiction? Are there any specialist construction courts?
There are no specialist courts in British Columbia to hear construction disputes, though in Ontario there are some construction lien masters (though currently only in Toronto). If they go to court, most construction disputes are resolved in the British Columbia Supreme Court or the Ontario Superior Court, with an appeal to the respective courts of appeal. Some cases find their way up to the Supreme Court of Canada on points of national importance.
Common disputes
What issues are commonly the subject of construction disputes?
Some of the more common construction disputes are those relating to fairness of the procurement process, delay claims and deficiencies in workmanship or materials.
Statute of limitations
What is the statute of limitations for filing construction-related claims?
The limitations statutes in British Columbia and Ontario provide for a two-year period from the date of discovery of a cause of action, with an ultimate limitation period of 15 years from the date of the wrongful act in question.
Mediation
Is pre-litigation mediation required or advised for construction disputes?
Mediation has been widely used for resolution of disputes in the construction industry since the early 1990s. It has been highly successful and continues to have broad application today. Mediation is often mandated in complex construction cases.
Arbitration
How often is arbitration used to resolve construction disputes? What arbitration forms and institutions are typically used?
Arbitration is frequently used to resolve construction disputes in both British Columbia and Ontario. The courts tend not to be equipped or have the desire to hear complex commercial disputes in the construction and infrastructure industries, so mediation and arbitration have largely occupied this field.
Law stated date
Correct as of
Please state the date of which the law stated here is accurate.
1 July 2018.
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