COVID-19: Force majeure and construction - a Quebec law perspective

On March 11, 2020, the World Health Organization declared the COVID-19 virus a worldwide pandemic. Governments in Canada and its provinces, and across the world are declaring states of emergency and implementing dramatic health and safety measures daily.

Gowling WLG's Infrastructure & Construction Sector Group is publishing a series of articles and hosting webinars to help the construction sector through these very trying times.

This Building Brief bulletin examines force majeure on construction projects under the Civil Code of Québec and Québec-based construction contracts. A concurrent Building Brief article examines force majeure under Canada's common laws.

What is force majeure?

The law in Québec specifically provides for the eventuality of a superior force, more commonly known as "force majeure", contrary to Common Law provinces. In fact, three sections in the Civil Code of Québec ("Civil Code") provide that a contracting party may exonerate itself from contractual liability when a situation of force majeure occurs:

"1470. A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it.

Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.

1693. Where an obligation can no longer be performed by the debtor, by reason of superior force and before he is in default, the debtor is released from the obligation; he is also released from it, even though he was in default, where the creditor could not, in any case, have benefited from the performance of the obligation by reason of that superior force, unless, in either case, the debtor has expressly assumed the risk of superior force.

The burden of proof of superior force is on the debtor.

1694. A debtor released by impossibility of performance may not exact performance of the correlative obligation of the creditor; if the performance has already been rendered, restitution is owed.

Where the debtor has performed part of his obligation, the creditor remains bound to perform his own obligation to the extent of his enrichment."^[1]

Section 2100 CCQ also applies precisely to the construction industry:

"2100. The contractor and the provider of services are bound to act in the best interests of their client, with prudence and diligence. Depending on the nature of the work to be carried out or the service to be supplied, they are also bound to act in accordance with usage and good practice and, where applicable, to ensure that the work carried out or service supplied is in conformity with the contract.

Where they are bound to an obligation of result, they may not be relieved from their liability except by proving superior force."^[2]

Force majeure is defined in the Civil Code as an event that is unforeseeable for a reasonably prudent and diligent person placed in the same circumstances as the contracting debtor at the time of the formation of the contract.

To meet the criterion of the unforeseeable event, the reasonable person could not have either objected to or resisted the event when it occurred, therefore making it absolutely impossible to fulfil the obligation[3].

Force majeure: does it have to be provided for in the contract?

The key principle to remember is that under Québec law, regardless of whether there is a clause to that effect in the contract or not, force majeure is implicitly included in agreements by means of the Civil Code.

As more fully explained throughout this article, the main differences between force majeure provided by the Civil Code and contractual force majeure are (i) the elements to be proven in order to be exempted from liability (ii) and the scope of situations constituting a force majeure.

Force majeure provided by the Civil Code

Force majeure provided for by the law is much more rigorous and difficult to establish than contractual force majeure. Several situations are identified in Québec case law as events of force majeure. Examples include animal behaviour, political crisis, accidents, wars, exceptional events in nature such as hurricanes, strikes, death, fires, disease and epidemics.

When such events, or any other events, are not specifically provided for by contract, the debtor invoking force majeure must demonstrate that an event meets the three following characteristics:

1. Unpredictability

First, to be qualified by the Courts as a force majeure, the event has to be unpredictable. The nature of unpredictability must be assessed at the time the obligation was contracted by the debtor, and not at the time the event occurred ^[4]. To do so, the Courts use the criterion of the reasonable person placed in exact same circumstances as the debtor.

A reasonable contracting party who could have anticipated the occurrence of the event cannot complain about it. He should have taken precautions to avoid it or simply refused to enter into the contract^[5].

2. Irresistible nature

In order to invoke force majeure, the event must also be irresistible. This means that a prudent and diligent person placed in a similar situation would not be able to resist it, such as a natural crisis or an emergency decision made by a government^[6].

However, it is important to mention at this point that an event that makes the performance of the obligation more onerous should not automatically be assimilated to the criterion of irresistibility that leads to a finding of force majeure. The authors are unanimous on this point: the irresistibility referred to here implies an absolute impossibility of being able to perform the obligation in question^[7].

3. Exteriority

Finally, the third characteristic of force majeure is exteriority. This implies that the event must be outside the area of activity for which the debtor is normally responsible. Where an event is not outside the debtor's control, even if it fulfils the characteristics of unpredictability and irresistibility, it will not be considered as force majeure.

Contractual force majeure

Force majeure may be provided for directly in contracts and this may allow the notion to be defined more broadly than the provisions of the Civil Code. This is often the case with epidemics, which will be added to the list of force majeure events in a specific clause.

In order for an event to be assimilated to a force majeure event in a contract clause, that clause must be negotiated between the parties, i.e. not unilaterally imposed, or must have been specifically brought to the attention of the contracting party^[8].

While drafting a force majeure clause, the following considerations should be taken into account:

• Knowledge of the force majeure clause by the contracting party is not presumed and must be proven when contested^[9];
• The debtor who wants to exonerate himself by alleging the force majeure clause must "conduct in good faith"^[10] and must not have committed an intentional fault which would be the cause of his impossibility to act;
• Exoneration clause for moral or bodily injury is null and void in Quebec, even in the event of a force majeure^[11]; and
• In order to exonerate oneself by alleging an event of force majeure, the party must show that a reasonable and prudent person in the same circumstances would not have been in a position to perform the obligation to which it was bound. It is not sufficient to show that the obligation could not have been performed on a personal and individual basis^[12].

Exceptions to force majeure

Notwithstanding the foregoing, the Civil Code provides for a few exceptions that prevent a debtor from invoking force majeure to discharge its obligations.

First, a party is not bound to complete its obligations in an event of force majeure unless it has undertaken to make reparation for it. For example, parties who provide in their contract that the debtor undertakes to offer reparation if he is unable to act due to a force majeure cannot afterwards invoke an event of force majeure to exonerate himself.

In addition, force majeure is not a ground to exonerate a debtor bound by an obligation of warranty^[13]. An obligation warranty is defined as an obligation for which the debtor has undertaken to perform despite the occurrence of force majeure^[14]. These obligations of warranty are often the result of specific clauses to this effect stating that the debtor is obliged to provide the creditor with a precise and determined result, even in the event of force majeure. The obligation of warranty must be expressly drafted since it cannot be presumed^[15].

Last but not least, force majeure will not set aside liability of a debtor if "the debtor has expressly assumed the risk of superior force" as provided by section 1693 CCQ.

What is the impact of force majeure on construction projects in Québec?

The issue of epidemics has rarely been addressed by the Québec courts and only the Small claims court has had to deal with such issue on two occasions. The two cases involved travel agencies being accused of having breached their obligations in international travel matters and in both instances, the Court recognized that the outbreak of an epidemic, such as H1N1, constitutes a force majeure that exonerates the debtor from its obligations^[16].

There is however no concrete construction case law that deals with epidemics as a force majeure.

We have therefore analyzed the situation according to construction case law that considers whether other events constitute force majeure and addresses the impacts this can have on both projects and liability.

First of all, it is well established that construction contracts generally entail an obligation of result. Thus, the client is entitled to expect that the work will be completed and that it will be executed within the agreed time limit^[17].

With that in mind, the debtors are allowed to rely on force majeure in order to exempt themselves from liability. However, the exemption applies to the delay in execution of the obligation. The debtors, either the entrepreneur and/or the contractor, will be entitled to additional time for performance because of the force majeure^[18]. Indeed, the debtors in the construction sector who are unable to fulfil their obligations because of the event of force majeure are not completely released from their obligations: they only benefit from a longer period to execute the construction without having to pay compensation to the client for the delay.

In other words, the debtors shall be released from their obligation to complete the work within the agreed time limit and shall therefore benefit from an extension of this timeframe for performance, without any possibility of claim by the client for the loss suffered.

This being said, it is important to note that the mere fact that the performance of an obligation is more difficult or more onerous, for example having to hire more employees or to order material from a different facility, does not constitute a case of force majeure. For this reason, the debtors will have to demonstrate an event of exceptional nature and intensity in order to be entitled to an extension of the time limits^[19]. Unless something else is provided for in the contract, the debtors must be in absolute impossibility to perform the obligation.

What constitutes a force majeure event justifying the delay of construction in Québec?

The following events have been identified as causes of force majeure in the field of construction:

• Strikes;^[20]
• Dangerous nature of the premises^[21];
• Soil defects^[22];
• Flooding of land or infiltration of water into the roof (as a result of heavy precipitation)^[23];
• Subsidence or collapse of the roof (due to exceptional snowfall in excess of established snowfall norms)^[24]; and
• Severe environmental situation out of the ordinary^[25]. On the other hand, a major snowstorm is not a cause of force majeure in Québec, since it is not unpredictable.

It is reasonable in the circumstances to question whether the COVID-19 outbreak will constitute a force majeure according to Québec law. The answer may vary depending on whether there is a clause to this effect in the contract or not.

We are of the view that the COVID-19 outbreak will most likely constitute a situation of force majeure if epidemics or quarantines are contractually provided as situations of force majeure.

If the contract contains a force majeure clause without specifying epidemics or quarantines, one will have to demonstrate that the COVID-19 outbreak prevented the performance of the obligations and that the clause was negotiated or brought to the attention of the co-contractors.

Where force majeure is not provided for in the contract, epidemics and quarantines will be considered events of force majeure if the debtor can prove these situations were unpredictable, irresistible and exterior to him while making absolute impossibility to act.

Who has to pay for the various fees related to the delay in construction?

The question then becomes, who is responsible for the foreseeable damages caused by delay in the construction project?

The Courts identify the following as foreseeable damages in the event of a delay in a construction project caused by an event of force majeure:

1. Wages of employees and their possible increase, as well as maintenance of machinery;
2. Winter protection, snow and/or ice removal, temporary heating and reduced labour efficiency;
3. Building site costs; and
4. Loss profits.^[26]

In order to identify the responsible party, the damages must be traced back to their source. From this point of view, the source of the obligation in construction projects being the service or enterprise contract, the foreseeable damage must be assumed by the debtor of such contract^[27].

Conclusion: what should I remember?

The key-points to bear in mind is that in Québec, even in the absence of specific clauses to that effect, debtors of obligations may invoke the protection of force majeure. Nonetheless, it is much easier to demonstrate the occurrence of force majeure when it is provided for in a contract.

As mentioned above, in the absence of such clause, the debtor must demonstrate the three characteristics of force majeure (i.e. exteriority, irresistibility and unpredictability) and must also prove that this event completely prevents him from performing his obligation.

Moreover, in the field of construction, force majeure may be invoked only in order to obtain an extension period without suffering direct consequences of the delay, unless the contract says otherwise. However, the debtor remains obliged to perform his obligations once the force majeure event has ended and may be held responsible for the additional costs associated with the delayed performance.

Considering that each situation remains fact specific, we invite you to contact a Gowling WLG professional for more information.

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These are very challenging times and even more so for construction projects. The health and safety of construction personnel is always paramount in construction, now more than ever.

Please check back to Gowling WLG's COVID-19 website hub as we update the sector on new developments, new announcements and best practices. Our Infrastructure & Construction Sector Group is publishing a series of articles and hosting webinars to help the construction sector through these very trying times.

The information provided in this article is solely informative and does not constitute a legal opinion.