On January 17, 2021, McCarthy Tétrault virtually hosted the 2021 Construction Law Round-Up, a panel discussion which featured Bryan G. West, Jocelyn Turnbull-Wallace, Jordan Bierkos, Andrew West, and Erinn Wilson. The discussion focused on various issues and trends in the Alberta construction industry from the year behind with a view to how that will impact the construction industry in the year ahead.
In case you missed it, you can still view the recording from the event below. This blog highlights the top ten takeaways from the panel, which were:
Course of the Project Considerations & Substantive Law Trends
- The duty of good faith and honest performance of contracts is the substantive law trend most likely to impact the interpretation of construction contracts and performance obligations under them.
- The Prompt Payment and Construction Lien Act (“PPCLA”) is the significantly overhauled version of the Builders Lien Act, which is anticipated to come into force in July of 2022. All organizations involved in the construction industry will need to be familiar with its provisions as they cannot be contracted out of. See our previous presentation on the PPCLA here, and blog posts about the bills passed to make it what it is today: Bill 37 and Bill 62.
- The Infrastructure Accountability Act, SA 2021, c. I-1.6 (the “IAA”) provides an evaluative framework for infrastructure projects being considered by the Alberta government. Proponents of projects seeking capital funding from Infrastructure Alberta must be able to demonstrate value under the framework set out in the IAA. See our previous blog post summarizing the IAA and its significance here.
Financing the Project
- The PPCLA has introduced statutory timelines for issuing (31 days), disputing (14 days), and paying (28 days) invoices for construction contracts.
- The PPCLA will continue to apply to improvements or lienable work only, which (subject to the yet unpublished regulations) does not cover things like maintenance: Young Energy Serve Inc. v. LR Processing Partnership.
- The effect of the PPCLA brings with it a number of detailed changes which will impact how companies track spending and issue and record ‘Proper Invoices’. It is important to review your internal processes, contracts, precedents, and appendices to ensure they are in accordance with the new legislation.
- Contract clauses that attempt to impose a penalty or additional cost on a contractor or subcontractor in the event of an insolvency are at risk of invalidity: Chandos Construction v. Deloitte Restructuring. See our previous blog post about this decision and its implications for insolvency clauses here.
Papering the Project
- Incorporating terms into a contract by reference to other documents can save time in drafting, but poses risks of uncertainty regarding whether the terms have been sufficiently incorporated. Special attention should be paid when referring to terms or content beyond the four corners of the contract, if this drafting technique is used be sure to 1) be specific about what terms are being incorporated; 2) ensuring there are no conflicts with the main contract; and 3) the incorporated terms have been acknowledged by all parties to the contract. See our blog post regarding Razar Contracting Services Ltd v. Evoqua Water, for a recent decision highlighting the risks of incorporating terms by reference.
Disputes in the Project
- Parties are strongly encouraged to incorporate dispute prevention and resolution clauses into their contracts, and to review existing clauses to ensure they continue to be efficient and effective in the post-pandemic environment of strained and overburdened courts. In this context, the value of arbitration is perhaps higher now than ever before, as are arbitration institutions who can administer an arbitration without having to resort to courts to appoint an arbitrator or tribunal.
- The PPCLA introduces a system of statutory adjudication. Parties will need to be prepared to take advantage of and respond to the tight timelines associated with such procedures.