CCDC contracts over 20 working days of construction site closures
On March 23, 2020, the Premier of Quebec, François Legault, announced the complete shutdown of all non-essential businesses.1
This measure, which covered most construction sites, officially came into force on March 25, 2020.2
At the time of writing, the date for the resumption of construction activities remains uncertain, except for specific residential construction sites that meet the criteria set out in the Ministerial Order dated April 19, 2020.3
On Wednesday April 22, 2020, 20 working days4 have passed since the order to close most construction sites came into force.
Canadian Construction Documents Committee (CCDC) documents confer certain rights that are relevant to this situation.
The General Conditions of the CCDC 2 (Stipulated Price Contract), the contents of which are incorporated in such documents as the CCA 1 (Stipulated Price Subcontract)5, CCDC 3 (Cost Plus Contract)6, CCDC 5B (Construction Management Contract—for Services and Construction)7 and CCDC 14 (Design-Build Stipulated Price Contract)8, include the following:
7.2.2 If the Work is suspended or otherwise delayed for a period of 20 Working Days or more under an order of a court or other public authority and providing that such order was not issued as the result of an act or fault of the Contractor or of anyone directly or indirectly employed or engaged by the Contractor, the Contractor may, without prejudice to any other right or remedy the Contractor may have, terminate the Contract by giving the Owner Notice in Writing to that effect.
7.2.5 If the Contractor terminates the Contract under the conditions set out above, the Contractor shall be entitled to be paid for all work performed including reasonable profit, for loss sustained upon Products and Construction Equipment, and such other damages as the Contractor may have sustained as a result of the termination of the Contract.
The “other right or remedy” referred to in clause 7.2.2 could include, but are not limited to, the right to claim an extension of time and or a change in the contract price as provided by GC 6.5 – DELAYS and GC 10.2 – LAWS, NOTICES, PERMITS AND FEES.
Construction businesses that do not meet the criteria in the Ministerial Order of April 19, 2020 will need to assess their options.
The general contractor (or the manager for services and construction, or the design-builder, as the case may be) could also consider the following steps:
- (if opting to terminate the contract) give the owner a notice of termination and compensation, and thus unilaterally terminate any subcontracts; in this case, it should be noted that under CCA 19, subcontractors would be entitled to payment for all work performed, as well as a reasonable profit and compensation for any loss or other damage;
- (if opting to proceed with the contract) give the owner a notice of adjustment to the contract price or delay of execution, in addition to the notice ideally already given under GC 6.5 and 10.2, and including the delays and expenses that may accrue as a result of its subcontractors exercising their own right of termination and/or compensation.
However, when initiating the negotiation of adjustment rights, it is important to remember that the Civil Code of Quebec grants owners a unilateral termination right, which they may choose to exercise at any time upon payment of the expenses reasonably incurred by the contractor up to that point.
1 Essential services are listed on the government’s website at the following link: https://www.quebec.ca/en/health/health-issues/a-z/2019-coronavirus/essential-services-commercial-activities-covid19, and are the result of several decrees and orders issued in recent days;
2 See Order in Council 223-2020 dated March 24, 2020 concerning the ordering of measures to protect the health of the population during the COVID-19 pandemic: https://cdn-contenu.quebec.ca/cdn-contenu/adm/min/sante-services-sociaux/publications-adm/lois-reglements/Decret-223-2020-anglais.pdf?1585098577;
3 See Ministerial Order 2020-025 of the Minister of Health and Social Services dated April 19, 2020, concerning the ordering of measures to protect the health of the population during the COVID-19 pandemic: https://cdn-contenu.quebec.ca/cdn-contenu/adm/min/sante-services-sociaux/publications-adm/lois-reglements/AM_2020-025-anglais.pdf?1587337326;
4 Days other than Saturdays, Sundays and holidays, as usually defined in CCDC contracts;
5 We refer you to the same clauses as those in CCDC 2, i.e. clauses 7.2.2 and 7.2.5, which are identical in substance;
6 We refer you to the same clauses as those in CCDC 2, i.e. clauses 7.2.2 and 7.2.5, which set out similar rights, but with language adjusted to reflect the context of a cost-plus contract;
7 We refer you to the same clauses as those in CCDC 2, i.e. clauses 7.2.2 and 7.2.5, which are identical in substance;
8 In this contract, the relevant clauses are numbered 7.3.2 and 7.3.6. However, these are identical in substance to clauses 7.2.2 and 7.2.5, respectively, of CCDC 2;
9 See clause 7.2.6 of CCA 1.