42 LEXPERT MAGAZINE
|
APRIL 2016
faith toward each other. ere is an implied
duty not to lie or mislead.
"e ruling has caused ripples in many
areas of commerce, including in the in-
frastructure and construction space," says
Martin. "Oen when we have a dispute
in an infrastructure project, there's an al-
legation of a breach of this duty of implied
good faith."
Wilson, though, says the case is unlikely
to hurt infrastructure disproportionately.
"I think when you work with a lot of pub-
lic-sector entities, it is part of what they as-
sume must govern their dealings. We have
always carried a duty of good faith provi-
sion in infrastructure contracts, but [lately]
there has been some tweaking of the docu-
ments. Does the language you've used with
respect to the duty of good faith properly
bring in the duty as you've draed it?"
Another recent SCC decision focuses
narrowly on the construction sector. In
September 2015, in Stuart Olson Dominion
Construction Ltd. v. Structal Heavy Steel,
the high court held that a lien bond has no
effect on the existence and application of
trust remedies under provincial construc-
tion lien legislation. "e ruling will affect
private projects more than public ones as
the lien legislation across the country does
not apply to all public projects," says Jane
Sidnell, a partner at Rose LLP in Calgary.
When an owner or contractor has liened
on a construction project, the lien can
be discharged by posting either cash or a
bond. In the Stuart Olson case, a bond was
posted. e issue was whether the contrac-
tor who posted the bond still had a trust
obligation to the lien claimant. e SCC
said the obligation existed, separate and
apart from the lien bond.
A lien bond, the court ruled, does not
extinguish an owner or contractor's trust
obligations under the statutory trust and
does not amount to a "double payment."
"I think we all knew this, but this case
brought it into greater clarity," says Sidnell.
e case will likely affect how lien bonds
are used and trust monies are handled by
owners, contractors and sub-contractors
(and advice given by construction lawyers).
Recent British case law, meanwhile, has
boosted recognition in Canada that boil-
erplate exclusion clauses will not reduce
exposure for consequential (i.e., indirect)
damages in construction projects. "Do we
have any recent decisions [in Canada] that
are astounding? No," says Sidnell. "But is
this something on the verge of happening
in a very significant way? Absolutely."
Infrastructure lawyers have to be careful
to cover off the risks of consequential dam-
ages, she says, "because relying on those old
boilerplate clauses is not going to do the
trick." Parties oen cite a contract's blan-
ket exclusion of consequential damages,
not understanding that in fact that doesn't
exclude such eventualities as loss of profit,
delay damages, increased production costs,
overhead and the cost to remove defective
equipment from a site.
"You wouldn't want to enter into a con-
tract that could take down your company,"
Sidnell adds. "You may not want to do $50
worth of welding if you're going to be sued
for $500 million in the event you acciden-
tally blow up the plant."
In Québec, the Superior Court has up-
held the Québec Ministry of Transport's
policy of disqualifying firms that con-
tribute to the design or construction of
a project from bidding on the contract to
supervise the same project. In Roche ltée,
groupe-conseil c. Procureur Général du Qué-
bec, the court ruled that Roche Consulting
Group, having done the plans and designs
for a highway, was legitimately excluded
from bidding on the supervisory contract.
"Now, when a project comes out," says
Yvan Houle, a partner at the Montréal of-
fice of Borden Ladner Gervais LLP, "the
engineering firms have to decide what
they're interested in doing, knowing that
if they win the design phase, they won't be
eligible to do the supervision."
Up until 2011, the Ministry's tenders
for road works would include bids for both
design and supervision. "In hindsight, peo-
ple saw that as a conflict of interest," says
Houle. "e same engineering firm that
prepared the specifications could be super-
vising the work carrying them out. If there
were deficiencies in the specs, the engineers
would point the finger at the contractor,
saying it was an execution rather than a de-
sign problem."
In Ontario, the construction industry is
awaiting possible changes to the Construc-
tion Lien Act, which has been under review
by an expert panel for the past year. Its rec-
ommendations, which were to be present-
ed at the end of March, could well resonate
in other provinces, says Glenn Ackerley, a
partner at WeirFoulds LLP in Toronto.
He says the expert panel recognizes that
there's a strong desire from the trade con-
tractors for prompt payment legislation.
"But at the same time they're balancing
the interests of others in the industry with
that. e issue of timely payment will be
addressed in some form. Does that mean
statutory payment periods? Yes, perhaps,
but with exceptions for certain types of
projects. For example, statutory prescrip-
tion may not apply to home renovations."
Currently, the Construction Lien Act
requires a 10 per cent hold-back of pay-
ments all along the contracts chain. e
experts may urge that the release of hold-
backs become mandatory on the expiry of
| INFRASTRUCTURE |
TOBOR EMAKPOR
OSLER, HOSKIN
& HARCOURT LLP
"On an LRT project, you want
to bring in your rail specialists
and on a power procurement,
your power specialists. But the
basic contractual documentation
typically follows the P3 template.
Although the language may
be different, the general
principles are the same."
