2024 Spring Construction Law Forum

TED BETTS: OK. Thank you and welcome everybody to our Gowling WLG spring construction law forum. We started these construction law forums 10 and 1/2 years ago. Last fall we had our 10 year anniversary and made a big shindig of that. Some of you were there, so nice to see familiar faces, but we started these in Toronto 10 years ago to help the industry keep abreast of new events, new cases, new legislation, new issues that hit our industry, so that everybody is best performed and having successful projects.

We did it in Toronto only in person, and then our pandemic hit us, and we instead of shrinking, we expanded. We went across the country and went global on online. And since the pandemic, when we can return in person, we've decided to keep it online as well, so we have about 150 to 200 people online. Welcome, everybody online across the country, in all of the provinces. And it looks like 20 or 30 people here in the room, so thank you all for coming, especially through this heat.

We can't do anything about the heat except turn the air conditioning on and higher here. My name is Ted Betts. I'm the head of our infrastructure and construction group here at Gowling WLG. We are one of the country's largest and deepest construction law groups. There's about 77 lawyers across the country who practice primarily in the construction law space, and that's at the front end doing construction contract and structuring, all the way to problem solving in disputes, as well as everything in between.

One of the things that makes us unique is that we have deep expertise in all areas that relate to construction, including as will be the topic later today, health and safety. So our employment lawyers have specialization in the construction industry and work regularly on construction projects, and so we're very grateful to have them as part of our greater team.

We've developed a fairly standard format for these that we found very engaging for people to keep abreast of the changes that are happening in our industry. In a minute we're going to invite a couple of people up to talk to us about changes in legislative changes that are happening across the country that are of interest to people. Then we will have-- take a few minutes to talk about some interesting, recent case law, and then we will move to the heart of our program today, which is looking at the impact of the Supreme Court decision in Sudbury, and the new best practices in health and safety on construction projects.

So with that, I will pass it over, and we'll get a little bit of an update. I think Jordan is speaking online, is that right? No, who's doing legislative update? Oh, sorry Tom Brooks in Alberta. Tom, are you there?

TOM BROOKS: I am. Thank you very much, Ted. Just confirming everyone can hear me from all the way across the prairies and into Calgary.

AUDIENCE: We can hear you.

TOM BROOKS: Perfect, thank you so much. So I'll do a brief discussion just of some legislative updates. Specifically, I'll be looking at prompt payment. So just as a bit of a recap where we are in terms of prompt payment, Ontario, of course, has its prompt payment legislation as of October of 2019. Alberta also has prompt payment legislation as of August of 2022. Saskatchewan too join the ranks of prompt payers in March of 2022.

This leaves some of the provinces that have passed prompt payment legislation but have not yet enacted it. So this includes Manitoba, who gave royal assent to prompt payment legislation in May of 2023, but have not yet made it effective. New Brunswick, who gave royal assent on June 16, 2023, but again have not yet made it effective. And lastly, Nova Scotia, who received royal assent on November 9, 2022. Again, have not yet enacted that legislation.

Finally, we come to British Columbia, who as yet do not have any past prompt payment legislation. This leaves us with the federal government, and this is the most recent change. The federal prompt payment legislation came into effect as of December 9, 2023. This has a one year compliance period for existing contracts, meaning that really, in fact, it's going to come into force December 9 of 2024.

One of the important aspects of this legislation is its provincial designation. So what this means is that in areas or in provinces where they have similar prompt payment and adjudication regimes, and this, for example, includes Ontario, Saskatchewan, and Alberta, then they are designated under the act. What this means is that federal projects in these provinces will follow the provincial laws instead of the federal regime. So that's a quick update for you about the state of legislation across the country.

NICOLAS CAYOUETTE: OK, with that, hello, everyone. Nicolas Cayouette from the Montreal office. I'm here to provide you with a quick update on the Quebec, new legislation that has been tabled. As you may be aware, Quebec has tabled two new major laws, changing significantly the way contracts will be attributed in Quebec. Bill 60, actually project bill 61 and 62.

The first one, number 61, is with respect to the creation of a new public body called Mobilité Infra Québec, which will be responsible once the law is adopted for all major projects that the government will deem to give it with respect to infrastructure and major contracts. So basically major bridges, major rail projects, and all those types [INAUDIBLE] is going to be a distinct public body that will be responsible for this contract.

And it's still not exactly clear what its powers are going to be, but I think the intention behind this new organization will be to act more like a private company, like some entities in Quebec do, some major project like CDPQ Infra, so expect to see this bill probably be adopted sometime during the autumn. And the second bill, which is very significant, it's called Bill 62, and this is a major, major shift in the contractual landscape in Quebec.

As some of you may know, doing contracts with public bodies in Quebec is very rigid, very formal, very sometimes I would say difficult even. Now, this bill, the objective is to open up the contracting world in Quebec. And we've done by in the past some contracts like design build, design build finance, and those types of contracts, but it's been mostly on special authorization from the Treasury Board.

But now this Bill 62, will open up the doors and say that any public body, which is part of the government, will be allowed to do these types of contracts. Also, it opens the door to collaborative contracting, which in Quebec is very restricted right now. There's only two or three pilot projects that have been done, so you will see more and more of these projects occur once this bill has been adopted.

Now, it's progressing rapidly through the National Assembly of Quebec, and we expect it to be passed sometime before the summer time within the next few weeks, we think. And basically, once it's adopted, it will allow any public body, sorry, except I'm not talking here about municipal bodies yet. Those are going to come in the second phase, but all the public bodies.

Also, they will give a lot of new powers to some existing government bodies, such as the Societé Quebecoise des Immobilier, the SQI which is equivalent to Infrastructure Ontario, namely to expropriate in order to build projects. So if the SQI decides to build a certain project in a certain area, it will now have the power to expropriate in order to achieve that project, which is very new and a major change.

So we will, of course, keep you apprised of any development because this bill may change, and we have some documentation that is available. But if you have any question, please feel free to reach out to us, so thank you, everyone.

NATASHA CAREW: Good afternoon everybody. Thank you very much for joining us. For those of you who made the effort to come in person, I'm very impressed, so well done. My name is Natasha Carew, I'm a partner in the commercial Litigation Group here in Toronto. I specialize in construction infrastructure litigation. And this is my colleague, Jenny Zhou, and she is an associate in the litigation group, also practicing in the area of construction. So Jenny and I are going to give you an update on some recent cases in Ontario and Alberta. Jenny, will start and then I will finish off.

JENNY ZHOU: Good afternoon everyone. The first decision I will begin talking about is a 2024 Supreme Court of Canada decision of Earthco Soil Mixtures Incorporated and Pine Valley Enterprises Incorporated. This decision, by way of background, talks a little bit about implied conditions and exclusionary clauses. And so statutes can create implied conditions in contracts, and this means that the court will read conditions as if they existed in the contract, even if they are not written by the parties themselves.

An example of this is Ontario's Sale of Goods Act, where section 14 creates an implied condition that the items being sold will correspond with the description or sample of the goods provided. And this provision operates to protect the buyers to ensure that goods are actually as described by the seller. However, section 53 of that act also allows parties to remove the protections provided by that statute through express agreement, and that is through section 53 of the act. And when parties do that, and when they exclude the statute that is through something called an exclusionary clause or an exclusion clause.

In this case, the contractor, Pine Valley, wanted to buy a specific mix of topsoil from Earthco. And Pine Valley needed that soil for a flood remediation project, so it needed it to have specific characteristics to prevent flooding from happening again. Typically, Earthco had the practice of testing the soil and ensuring that it corresponded with the mix that it advertised.

However, in this case, Pine Valley was in a big hurry to finish the project on time, and didn't want to wait for the test results to come through. So instead they relied on test results that Earthco had from a previous batch of topsoil. And based on these results, Pine Valley decided to purchase, and the parties modified the contract by including two exclusion clauses.

The clauses themselves were that Pine Valley had the right to test and approve the soil before it was shipped from Earthco's premises. And secondly, if Pine Valley waived those rights and decided not to test, that Earthco would not be responsible for the quality of the material. This decision is really about the interaction between section 14 of the Sale of Goods Act and these clauses.

In this particular instance, Pine Valley chose not to test, and the project flooded. Pine Valley discovered that the topsoil did not match the test results that Earthco had provided from a previous sample. So subsequently, Pine Valley decided to sue Earthco, seeking $350,000 in damages.

This case went first to trial, and then to appeal to the Ontario Court of Appeal, and finally to the Supreme Court of Canada. And at the Supreme Court of Canada, the majority of six judges decided with Earthco. They interpreted the contract itself to determine what exactly the parties intended to do when they first signed it. They determined that Pine Valley needed the soil fast, and they took the risk of not testing it. As a result, Earthco was not liable for damages.

The key takeaway from this decision is that although it would have been nice for the parties to explicitly refer to the Sale of Goods Act, or to specifically use the terminology that the statute used, that is not a prerequisite for the contract to oust the implied condition created by the statute. The courts will look at what the parties objectively intended to do when determining whether the exclusion clause operates, and in this case, the exclusion, the exclusion clause did operate to remove the statutory protections.

The next four decisions that we will be discussing today are about adjudications, and so the two decisions I will talk about today come from Ontario. This decision is a 2024 decision by the Ontario Court of Appeal, and it's called MGW-Homes Design Inc. and Pasqualino. This decision is mostly a procedural point that determines where the route of appeal applies. The underlying adjudication itself was about unpaid invoices.

These two parties decided to go to adjudication to determine whether unpaid invoices were ultimately owed, and the adjudicator sided with MGW, and found that Pasqualino was required to pay. In order to enforce on that adjudication decision, MGW obtained a writ of enforcement and then filed it with the court. However, MGW failed to provide notice to Pasqualino, and that notice could have been as simple as sending an email, basically letting them know that it had been filed with the court.

Because of this, Pasqualino actually tried to review the decision in two ways. First, counsel went the path of judicial review, and basically asked the court for leave to appeal to review the adjudicators decision, and divisional court did not grant leave. So that route of review was closed. And secondly, pasqualino also tried to essentially go to court and brought a motion to challenge the enforceability of that writ because they were not notified that it had been filed with the court.

And in that case, the court sided with Pasqualino, and told MGW that it could not further enforce the adjudicator's order. So, in effect, what happened was, although MGW has this adjudication determination, they couldn't really do anything to collect on it. And MGW ultimately tried to appeal that order, and this decision tells us that, that appeal properly goes to the Ontario Divisional Court.

Finally, the last decision I will talk about today is Ledore Investments and Dixin Construction. This is a 2024 Ontario Superior Court of Justice decision also on unpaid invoices. So in this case, these two parties went to an adjudication to determine whether these invoices should be paid. When they went to adjudication, they had the opportunity to provide written submissions, as well as oral submissions.

The written submissions they provided were about 10 to 15 pages long, and the parties made their best arguments on what they believed the invoices should turn on. Unfortunately, the adjudicator decided that none of those arguments were the most relevant, and determined the key point was whether the invoices constituted proper invoices under the Construction Act.

The parties appealed on that determination, and they ultimately went to the divisional court to get a review of that determination. The divisional court agreed that an appeal was appropriate because in this case, the adjudicator actually had not heard any submissions on the key point that the determination turned on, and so that created a procedural fairness consideration.

The key takeaway in this case is that, the parties to an adjudication have the right to be heard on the determinative issue. And if the adjudicator believes that, that issue hasn't been addressed by the parties, the adjudicator has the power to ask for additional submissions from the parties. Because that wasn't done in this case, the decision was reviewed and ultimately sent back. I will now turn things over to Natasha.

NATASHA CAREW: All right. So this is an Ontario Superior Court decision. In this case, the plaintiff had registered a lien on the defendant's property. The defendant's vacated the lien by posting security into court under section 44 of the act. Two adjudications were commenced, one by the plaintiff seeking money that they alleged to be owing by the defendants, and the other by one of the defendants seeking a repayment of money that they allegedly overpaid to the plaintiff.

The adjudicator found that the defendants did not owe anything to the plaintiffs, and the plaintiff did not owe anything to the defendant. And so the issue before the Ontario Superior Court was the interplay of the adjudication process in Ontario and the claim for lien process. And specifically whether the adjudicator's determination that no money was owing to the plaintiff was or means that the defendants would be entitled to go and get their security paid out of court.

So on a motion under the Construction Act to reduce or return security that was posted to vacate a lien, the defendant has to file evidence with the court showing that there no reasonable prospect of the lien claimant establishing their lien, or part of their lien if you're reducing the security. Under section 13 of the adjudication provisions of the Construction Act, the determination and reasons of an adjudicator are admissible as evidence in court.

And so in support of its motion in this case to return security from the court, the defendant solely relied on the determination of the adjudicator that no money was owed by the defendant to the lien claimant. Importantly, the adjudicators reasons noted that his decision was based solely on documentary evidence, oral submissions, and a site visit, so there was no cross examinations, no direct evidence presented by witnesses, so the typical evidentiary procedures in a civil action were not followed.

Justice Sutherland held that how that the determinations of an adjudicator alone are not enough to meet the evidentiary threshold required for the court to conclude that a lien claim does not attract the need for security. So he pointed out that adjudications are intended to provide rough justice, as we call it. They're supposed to be quick, efficient, they get the money flowing down the construction pyramid, and therefore not all the typical evidentiary rules will be adhered to.

And he cautioned that court should be wary of relying solely on determinations of an adjudicator in a motion to reduce or return security. So the key takeaways here are that adjudication determinations in Ontario are interim in nature, and that they can be used as evidence in a section 44 motion to reduce or return security, but they're not determinative of the issue. We'll provide you with these slides after the presentations today.

So this case is the first decision out of Alberta addressing the new adjudication process in Alberta's Prompt Payment and Construction Lien Act that came into force in August of 2022. This decision was released on May 24, which was also my birthday, so happy birthday to me. The court in this case provides guidance on the interaction between lien proceedings and adjudication in Alberta.

In this case, Atlas Granite had filed a $20,000 lien in respect of some unpaid invoices by Welcome Homes Construction Inc. Prior to commencing a court action, the parties agreed to follow the new adjudication process in Alberta. The adjudicator awarded Atlas about $13,000, and then after the adjudicator's order was released, Welcome Homes served a notice to prove lien pursuant to Section 52 of the Alberta Act. And given the new legislation and the novel situation, the parties brought this application to the court to seek advice and directions.

So at the outset of the decision, the court noted, but didn't find that Atlas' lien appeared to have been registered outside of the 60-day deadline in the act, so Atlas' lien seems to be out of time and invalid. So the court had to consider what was the impact of this potentially invalid lien on the adjudicator's decision, and what was the impact of Welcome Homes service of a notice of intention to prove lien.

Regarding issue one, Welcome Homes argued that the purpose of the adjudication amendments was to keep money flowing without prejudice and asserted that the adjudicator's order should be subject to proceedings on the validity of the lien, but the court held that the adjudicator's decision did not depend on the validity of the lien to be binding on Welcome Homes and Atlas Granite.

Essentially, the court said the adjudicators job is to determine the rights between contracting parties, so owner, contractor, contractor, subcontractor, subcontractor, subcontractor, and not lien right, so even where they overlap, the lien being invalid has no impact on the adjudicators decision. And regarding issue number two, the court held that service of the notice to prove lien did not override the adjudicator's decision.

And the court said that the adjudicator's decision under Alberta's Act is intended to be final and binding with respect to the parties in the dispute, except where the court makes an order or where an application for judicial review provides a different result. So the key takeaway in this case is that there is an important difference between Alberta and Ontario that's emerged in this decision.

The court distinguished the adjudication regime in Ontario with the regime in Alberta, and said that while the Ontario Act states that the adjudicator's decision is binding until, this is the key word, until a determination of the matter by a court, the Alberta legislation says the decision is binding except where it is displaced by a court order or a judicial review.

And so the court said that based on the differing language in the statutes, the court or the construction adjudication in Ontario regime is an interim dispute, which is what we saw in the last decision as well. But in Alberta, the decision is intended to be final and binding with respect to the parties, except obviously where a court makes an order after an application for a judicial review. So we'll see how that emerges because this is the first case, but that is an important difference that's come out from Ontario and Alberta.

This last case is a Ontario Superior Court decision of Associate Justice Robinson. It covers a range of topics, but the one I'm going to focus on is the guidance he provided regarding proving the value of services and materials supplied under a cost plus or time and materials contract. So very briefly, the background to the dispute is that the sub subcontractor Sjostrom walked off the job, and then Kelson formed an oral agreement with Sjostrom to return to work.

Sjostrom later brought a legal claim against Kelson for unpaid invoices. Kelson disputed that any contract existed whatsoever with Sjostrom, but the court found that there was an enforceable oral agreement that similar to a cost-plus contract, and so he applied the law around cost-plus contracts.

In assessing the damages claim, Justice Robinson reviewed the principle from case law arising from disputes over cost-plus contracts, and he noted that where an estimate is given, the parties have to adhere basically and reasonably within that estimate, and the final price should fall somewhere near the estimate, and also that the contractor is obliged to promptly notify the owner if there are cost overruns to the budgeted amount.

The contractor bears a very high evidentiary burden to prove its costs in a cost-plus contract. It's not necessary that the accounts be kept in any particular manner, but they have to be sufficient to show the proof of the charges. And in particular, when you're dealing with labor, the time of workers has to be very strictly proven since it's difficult to verify after the fact, contrary to building materials which are a little bit easier.

He held that Sjostrom failed to prove its labor hours claimed were, in fact, spent. The evidence presented was essentially just time summary charts which identified laborers in the total number of hours spent per week. But they were unsigned and they didn't include any details about the work that was performed, and they weren't sent to Kelson each week, so the court noted that these time summaries alone have limited evidentiary value, and would require corroborating evidence like text messages, emails, notes, which apparently did exist in this case, but weren't presented as evidence. And as a result, the action of Sjostrom in this case was dismissed and its lien was discharged.

So the key takeaways are just that there's a very high evidentiary burden on a contractor to prove time and materials in a cost-plus, or sorry, to prove its the value of its services and the cost-plus or a time and materials contract. And I think that is it, so are you up next? All right. Thank you, everybody.

TED BETTS: We have this new stepladder thing so we don't have to jump up, so we're taking it to heart all this health and safety and mandated to use these as an employer, as a host. So thank you everybody for some of the updates on the strict, straightforward legislation and contract-- and case law that's going on. Obviously, that's just a tidbit, there's a lot of activity in the courts all the time, and we're on top of all of it, and we try to share some of the wealth of our knowledge.

We do if you're not already registered to get distribution of our bulletins, our sorry, our building brief, which is our newsletter on case new cases and new issues, please do subscribe to that to stay current on cases as they arise, as new legislation is passed to stay current instead of waiting around for the next construction law form.

We're going to move on now to the substance of our program, which is on health and safety, and the recent decision in the R v. Sudbury by the Supreme Court of Canada. In a few minutes, we will have a really excellent panel discussion on the impact of the decision, and what are those new best practices in construction, health, and safety.

Before we get there, we wanted to level set and give everyone the briefest of summaries of this precedent setting case that went all the way up to the Supreme Court. On October 12, 2023, the Supreme Court of Canada rendered its hotly anticipated decision in R v greater Sudbury on the sub-- on responsibilities of an owner as an employer under the Occupational Health and Safety Act of Ontario.

The decision has a significant impact on the roles and liabilities of owners on construction projects. As a result of the Supreme Court's decision, engaging a general contractor as a constructor or prime contractor, or principal contractor in other provinces on a construction project, and allowing the general contractor to assume full operational control over the project, no longer insulates an owner from liability under the act, if it ever in fact did.

Owners are now considered at greater risk for health and safety on their projects, and they need to carefully reconsider their contracts and their project management arrangements with contractors. It will be critical for owners to reassess their contracts and understand what are these new best practices as employers under the act.

It will be equally important for contractors to work closely with owners to ensure health and safe, healthy and safe construction projects. While this case is based on the Ontario Occupational Health and Safety Act, the language of the health and safety laws in other provinces is very similar across the country, and the decision has been rendered by the Supreme Court, and so has bearing on all provinces. In fact, already many cases across the country have already cited R v. Sudbury in defense or opposition to charges across the country.

Underlying this whole case, and what has caused many a sleepless night for many in the industry is that the contract structure that Sudbury entered into was entirely normal and ordinary. The city of greater Sudbury hired a general contractor for a road and water main repairs contract. The contractor agreed to act as constructor, that's the language we use in Ontario for the party in charge of health and safety on the site. Other provinces use prime contractor or principal contractor. It all ends up meaning the same thing.

As the constructor, the contractor had control over the day-to-day management of the project at the site, and had full responsibility for ensuring that it and its subcontractors and subtrades were in full compliance with the act for the entire project. The city's involvement was limited to monitoring the project by occasionally sending city employed quality control experts and inspectors to the job site to check for defects in workmanship.

These inspectors had limited authority. They couldn't direct any work or control any part of the work, or the performance, just detecting whether or not it was defective. No other city workers were present at the site, and yet the city was charged. They were charged because in September 2015, a pedestrian was tragically struck and killed by a road grading machine operated by an employee of the contractor.

The pedestrian was crossing the street at a traffic light that was adjacent to the project, while a road grading machine was reversing. The Ministry of Labor found that there were no barriers separating the construction site from the public, and that there was no signaler present checking behind the grader as it reversed. As a result, the ministry charged both the city and the contractor with numerous violations of the Occupational Health and Safety Act. This included charging the city for breaching its obligations as constructor, and also as employer under the act.

The contractor did not really contest its charges, and the constructor charges against the city were ultimately dismissed. The issue that went all the way to the Supreme Court was the role of an owner as employer and what responsibilities it has on its own construction projects, even when it has properly delegated and contracted the role of constructor to a third party.

In a few minutes, we'll hear from my partner, Jordan Epstein on the meaning of employer and constructor, how that's defined in the act. Very briefly and at a very high level, the act defines an employer as someone who employs workers to perform work or services, and defines a constructor as someone who employs workers to perform work or services on a construction project.

By definition in the act, the owner of the site is the constructor to begin with. However, the act does allow an owner of the project to delegate its constructor health and safety responsibilities to a contractor, which is what normally happens, and what Sudbury did, provided-- this is allowed provided, among other things, the contractor has sufficient skill and experience to play that role, and they have control of the site.

The Sudbury case examines what residual liability remains with the owner of a construction project as employer after it has appointed a constructor. So this started with a trial decision. The trial judge found in favor of the city, found that it was crystal clear that the contractor was the constructor, that the contractor had control of the site, and that they failed to fulfill its duties, and that the owner, the city, had properly delegated its duty by hiring a constructor.

It also found that as an employer, the city was an employer only of its own direct employees and the inspectors. It was not an employer simply because it had hired the constructor, the general contractor. The crown appealed to the Ontario Superior court of justice and lost. They appealed again to the Court of Appeal and they were partially successful.

Court of Appeal refused the claim that Sudbury was a constructor, which was one of the charges, but it did find that the city was an employer and had-- was an employer of by hiring the constructor, they were an employer of the constructors workers, and so they had separate obligations under the act. Then it goes to the Supreme Court. Normally, nine Supreme Court justices will render a decision on the cases before it. Unfortunately, in R v. Sudbury, only eight judges sat for the hearing, and made their decision and it was split 4 to 4.

In our court practices, a majority decision of the Supreme Court is required to overturn a lower court decision, and so as a result, the Court of Appeal decision stands, and Sudbury was found as an employer and charged. Because the Occupational Health and Safety Act imposes a standard of strict liability on an employer, the fact that the accident even occurred was enough and meant that the city had breached its duties under the act, and therefore committed an offense under the Occupational Health and Safety Act.

The plurality of the Supreme Court highlighted that there is an intentional legislative regime that imposes duplicative and overlapping responsibilities of health and safety between the employer and constructor, that's deliberate that the fact that there are similar responsibilities for both an employer and a constructor was found to be intentional.

However, the distinction is in the standard of care. A due diligence defense remains available for an employer charged under the act. In other words, the employer can defend themselves by proving that they had taken all reasonable precautions under the circumstances to protect the health and safety of workers. On the issue of the relevance of who controls the site and who controls the project, the plurality of the court held that the city's control over the project and the parties at the workplace was relevant, but to the due diligence defense that it would then be able to provide.

So the matter at Supreme Court was sent back down to trial to determine whether the outstanding issues of the case, including whether, in fact, the city had exercised appropriate due diligence or whether it had not, and so the substance of the case is still ongoing. I'd be remiss if I didn't highlight and mention that the several well-reasoned dissenting opinions of the other half of the Supreme Court.

Four of the justices recognized that the implications of the Court of Appeal decision would have far reaching consequences that would upset normal business practices on construction projects and risk management mechanisms that have been established for several decades. At several points, in fact, the Sudbury-- in the Sudbury decision, the other four describe the interpretation adopted by the ministry, the Court of Appeal, and their fellow Supreme Court justices as absurd.

So there's a real divide on this issue at the Supreme Court, but we are left with the Court of Appeal standing as the ruling Law of the land, at least as far as the language in the Ontario act, which, as I said, is similar across most of the provinces. The decisions leave open many questions about what are the best practices for health and safety on projects now? What is the role of the owner? What level and what kind of due diligence is going to be required? At what stage of the project should that due diligence start, and at what stage should the due diligence end? When are you off the hook? What activities should be undertaken by owners at the site? Equally important, what activities should not be taken at the site?

Near and dear to my heart as a contracts lawyer, what needs to be changed in our standard construction contracts to make sure everybody is on the same page and protected here. Finally, what is the contractor's role in light of all of this? Does anything change for contractors on the projects? How can they help? What are their opportunities going forward?

Since this Supreme Court decision in October of last year, many cases across the country have already made reference to different parts of the decision. As a divided decision, there is quite a bit of ambiguity that remains, and there have been some efforts already started to consider legislative changes. In the meantime, we're stuck with the Court of Appeal decision as left from a divided decision at the Supreme Court.

All of that means that there is an ongoing need to continue discussing the case and working toward an acceptable standard of best practices, which is what brings us here today for the next part of our program. We have a great panel discussion coming up, and I'm going to invite my associate, Tristan Neill, to join us at the podium, and the Jordan, who's going to join me on the podium for a panel discussion, and I believe we have Olga online as well now. Tristan, you're going to introduce the panelists. OK.

TRISTAN NEILL: And I think I might join you with [INAUDIBLE] more conversational. Thank you. So thank you everyone. I'm Tristan Neill, I am an Associate in Gowlings Waterloo Region Office, practicing in the area of construction disputes litigation, and I'm very happy to be here today to moderate this panel. Ted gave a great introduction, so no further introduction is required from me.

But I will just say that we have, in addition to Ted, two other panelists, Jordan Epstein, a lawyer in the employment group at Gowling WLG, and Olga Morozova, Counsel at Dragados, Canada, so thank you to our panelists for joining us. And we have a bit of an outline in terms of what we would like to discuss today. And the way I see it unfolding is that we really have three topics to cover.

We have the key concepts that were discussed in the Sudbury decision. We have the implications of the Sudbury decision. So what does it mean for our projects, for our owners, for our contractors? And then we have the questions about, well, what do we do with this, and how do we handle it? So why don't we start off with the first question, the more basic question about the key concepts.

And in my view, there are two really important concepts. There's the concept of the employer and the concept of the constructor. And as Ted mentioned, both of those are defined in the legislation. And so maybe Jordan, would you like to start off on this topic?

JORDAN EPSTEIN: [INAUDIBLE] specialize [INAUDIBLE] hirings and firings [INAUDIBLE] technical definitions [INAUDIBLE]. Ted said earlier, definition of employer is broadly [INAUDIBLE]. [INAUDIBLE] worker will suffice. [INAUDIBLE] workers, [INAUDIBLE].

Employers have a fundamental responsibility to act by [INAUDIBLE] project owner [INAUDIBLE].

OLGA S. MOROZOVA: Jordan, can I interrupt you for a sec? Your mic's not on. A couple of us online are having trouble hearing you.

TED BETTS: Just push it.

JORDAN EPSTEIN: Hi there. Much better, I think, at least for the people online. As I was saying a moment ago that only some of us here could hear is that there is considerable overlap in the responsibilities between employers and constructors in terms of responsibilities for health and safety under the act, and that's because health and safety of the workplace is a shared responsibility intentionally for everyone.

But the key distinction here between employers and constructors is that the constructor has overall responsibility for the safety of the entire project, whereas the employer has responsibility for the safety of their workers.

TRISTAN NEILL: And so, Ted, maybe from the contract drafting perspective, how does this distinction between the two different categories sort of fall into your practice and the drafting that you do?

TED BETTS: So the first important thing is to recognize that ultimately the Ministry of Labor wants to know that this is a safe project. And it wants to know that the person in charge has the ability to make sure that it's a safe project. And so our job in our contracts, and in the project structure and project management is to make sure that those lines and responsibilities are clear. Clearly defined roles and clearly assigned roles.

The first part of that is being clear about who is the constructor. So in our contracts and even without a contract, you want to make sure that the person in charge of health and safety is clearly assigned the role of constructor and that they've accepted that role. You want to make sure that they have the experience and the resources to manage that role.

And then also, and this is the important part in the contracts, especially on large complicated projects, that they have the tools, the owner gives the contractor, presumably it is the general contractor, but that they have the tools to enforce their obligations. Normally, that's in a simple project going to be very simple because you-- owner hires a contractor, contractor hires all of the subcontractors. They fall off a line. They start not complying with the health and safety management rules on the site. They get turfed.

But on larger projects, or phased projects, or more complicated projects, you might have multiple contractors on the site, and so it's important to contractually make sure that everybody is clear who is the constructor, that they have the authority to be the constructor and control the site. Failing of which, the Ministry of labor, if there's an accident, could come back and say, there isn't any one party who has control of the site, and therefore, the owner, even though you thought you delegated everything, you're the constructor and so you're on the hook for these charges.

TRISTAN NEILL: OK. Now, Ted, I think you mentioned assigning the role of the constructor. What about the role of the employer? Can you assign that role as well?

TED BETTS: Over the last couple of years, I've seen some people try to draft that, but I think one of the things it's always didn't feel right to me that you could assign that, or delegate that, contract that out. And I think that's one of the key takeaways messages from the Supreme Court decision and the Court of Appeal decision is there is a responsibility as employer that will always be there for the owner. They cannot delegate all of that role. They cannot delegate all of their responsibilities on a job site to a contractor, wipe their hands and walk away from the project.

JORDAN EPSTEIN: Just to echo, I think, that the decision and the Supreme Court is clear who is an employer. It's a matter of law. It cannot be assigned or transfer. With that being said, there perhaps could be some of the duties of an employer that could be delegated to a contractor, for instance. But that doesn't change the underlying responsibility that an employer could still be held for the safety obligations of the workplace.

TRISTAN NEILL: So Olga I'd like to bring you into this conversation now. What's your view? How does this distinction fit into your practice?

OLGA S. MOROZOVA: Thanks, guys, for having me coming to you live from Vancouver here. So for us, from a contractor's perspective, I mean, I kind of took some time, asked around the company what folks thought, and how that might impact what they do. And the feedback that I received, I think, my commercial manager put it the best is safety is a part of everything we do.

It's I don't want to go as far as to say it's in our blood, but certainly it's in our everyday practice. And so when we approach projects, I mean, we have a very well, robust, and previously executed health and safety plan. And so for us, really it's maybe it needs to be a bit of a mindset shift on the owner side to think like a contractor.

And so when they start planning for a job is one of the first things they got to think about is how are we going to deliver this job safely? And it will take, I think, some reflection for the owner to think, OK, what resources do we have internally? What experience do we have with a project such as this one? And then the construction partner that we're bringing in, same thing. What is their experience, and what is their proposed execution plan?

And as we get into the actual execution of the project, I think somebody mentioned as well, how are we going to ensure that if any responsibilities have been delegated to the contractor, how are we going to ensure that they actually do this? So this is, again, the owner thinking what internal resources do we have? And if we don't have them or if they're not experienced in the type of project we are delivering, then we have to consider do we need to pull in external resources to help with quality, help with health and safety, and to make sure that the contractor that we've assigned these duties to is actually performing them.

So I think we, for owners, they got to think about the entire lifecycle of the project from planning to execution, and how are they going to now fulfill this role of an employer, which it seems like it's going to be a factually driven test to see are they an employer or are they not? And if they are, how are they going to carry out those duties under OSHA that are now assigned to them? And so there's got to be a lot of thought.

One thing, I think, what I would like to do is-- and we do this at the very beginning of every meeting that we have is we always start off with a safety moment. And this is kind of an example of why this is a part of our everyday practice. So if I were to start off at the beginning of this presentation, I mean, the first thing we'd be doing is saying, OK, time for a safety moment. Let's pick an issue and spend some time thinking about it so that we really kind of frame what is important, what are we really talking about here?

And so for this presentation, what I would like to offer up as a safety moment is the specific issue of navigating around construction sites. So some of our audience members here are lawyers for contractors or owners like myself, and sometimes you will attend a construction sites. You might not be just a passerby, you might actually be there. And so either if you're a passerby or you're attending, what are some of the things that you should be doing, and some of the things that you should be considering?

Well, first things first is to stay alert. If you know that you're going to be traveling by a construction site or going to a construction site, plan your route. If there's construction on the way to the site, you also have to navigate that. When you are at the site or near on the site, if there are any rules, or signs, or dedicated pathways, make sure you're following them because there might be machinery moving around, dangerous machinery, such as the one that we had in this case, that if proper procedures are not followed, may result in terrible accidents.

You also have to make sure to be visible. Of course, you have to have your proper PPE, but it doesn't just stop at putting on the necessary equipment. When you're walking around the site, you have to make sure that people actually see you, make eye contact with the operators of the machinery. And of course, if you see something going astray, you have to report those hazards either as a passerby or as a visitor.

And so this is just kind of certain examples of safety tips that we all have to be mindful of or as contractors are mindful of. And when we meet with our owners, they're very receptive to safety moments such as this, and they're often saying, can we have copies of this so that we can use them in our own meetings? So I think there is, I think, this maybe opens up a door for more collaboration or maybe even an opportunity for owners to learn from experienced contractors and employ that in their own practices. And I think maybe at this stage I'll pass it back to you Tristan.

TRISTAN NEILL: Yeah, so I'd like to build on that point that you just raised because I think you've given us a lot of information about how you go about dealing with health and safety, addressing health and safety, and then you started to talk about how this decision maybe opens doors to new approaches, new ways of doing things, new ways of looking at things, so how's your practice changed? How have you observed really the industry change since the decision in this case was rendered by the Supreme Court?

OLGA S. MOROZOVA: So for me, Tristan, my practice involves pretty much the entire country. So of course here in BC, you know, we've obviously heard of the Supreme Court's-- Supreme Court case. We've had discussions on it. But it's really in Ontario probably will have the greatest effect. And frankly, from my side, working for a contractor, we haven't really seen anything that we haven't seen before. So when we were pre-qualifying for a job, all the usual questions are being asked about the history, about any accidents.

At the RFP stage when we're putting together our proposal, we're putting forward our proposed health and safety plans. And so from our perspective, I mean, we still have the same duties. We are, of course, very-- and Dragados is very experienced in carrying out those duties. So for us it's more or less business as usual, and what we're looking to see is, how will our clients react? Are they going to ask for something more either at the pre-qualification stage or at the proposal stage? And how might things change when we're executing those projects?

Right now I frankly haven't really seen much in terms of difference in my practice. So for us, it's business as usual. Safety is a part of everything we do, and I think we're just waiting to see what is going to be the reaction from the owner's side.

TRISTAN NEILL: Yes, and I think that certainly makes sense because the decision does have more of an impact on the owners perhaps, than on the contractors. So, Ted, Jordan, let's talk a bit more now about the implications of the decision, and then perhaps we can start to move into how you have seen owners and other parties addressing the decision through your contract drafting and reviews of health and safety plans, and all of that. Good work.

TED BETTS: So I'll take a first crack at that. I mean, I think, from the decision itself they gave-- I think even the four that found in favor of the Court of Appeal recognized what a big change this was going to be. And so they did provide some helpful guidance, I think. They talk a lot about due diligence that an owner must and should conduct, even from the very earliest stages of the selection of the constructor.

So one of the things you want to build into your RFP process is a really robust review of not just the prior projects, and the good construction work, and the good management work of this contractor, but what is their health and safety record? Who is in charge of their health and safety? Who's on their team that has the experience that's similar to your type of project? What references have you checked on health and safety? What's their health and safety management plan like? Did you even ask for one?

These are the kind of due diligence questions that are going to be much more acutely looked at to verify whether you were-- whether or not, after there's an accident, the Ministry of Labor comes along and says, well, what due diligence did you even do in picking the constructor from the outset? That's at the very beginning. Once you get going on the project, your role isn't done. That's what's clear in the decision as well. What are you doing on the project? How involved are you?

It's pretty clear to me, at least, and Jordan can maybe verify, you're not the constructor as an employer. You're not expected to be on the site every day running this project. In fact, the more you are trying to run the project, the more likely the ministry is going to turn around and say, actually, you have taken over the role of constructor, or you've interfered with the contractor's ability to perform its role as constructor, and therefore, you've taken on those liabilities.

But that doesn't mean you can turn a blind eye. That doesn't mean you just walk away. I think, it depends on the type of project. It depends on the type of owner. An owner of a residential home who's having a renovation work is going to be under a different standard than a P3 project that's building a new hospital or a new highway, and so you have to continue your due diligence. You have to make sure that the contractor is doing their job.

When you see something, do you even have a mechanism for reporting it? That was one of the problems, I think, in the Sudbury case. They had inspectors going on site. Their job was not to report back on health and safety. They clearly saw that there was no barrier, no fence separating the project from the public, but they had no mechanism or reporting channels to go back and say, hey, we didn't see-- we were there to look at deficiencies, but we noticed this, that, and whatever.

So what's your system set up? How have you set up your reporting internally to track these issues? Because once you know about it, what are you doing about that? Usually, a standard part of any kind of monthly progress report is a health and safety report, incidents on the site. Well, hopefully you've got that, but if an incident has been reported, what are you doing about that? Next month are you following up, or is it just, OK, we had it in the list, we checked that box, and then we don't have to think about it? That, I say, would be a danger.

JORDAN EPSTEIN: Just to echo some of that, the impact of the decision certainly is that owners now have to be more hands on and involved in these projects than ever before. Gone are the days when an owner could hire a constructor to run the show, and not be concerned of their own safety obligations. The decision has said that's no longer the case at all. And Ted has shared some excellent ideas of how to take those proper steps of due diligence, certainly interview processes and reference checks for the appropriate individuals, but also a checks and balance system as the project is ongoing.

It's not good enough to just do your search and hire who you think is the right person at the time. You have to set up some measures during the project to ensure that the constructor, inspector are doing their job properly and maintaining a safe workplace, as Ted has explained. So it's an ongoing process. It's more work, certainly, it's more responsibility, of course, but in theory it's all in the name of maintaining a safe workplace, and keeping people safe, and keeping the project ongoing. So the intent of the decision and the act is altruistic and positive.

Sure, it causes more work and potentially exposes to greater liability, but it's for the greater good, or so half of the Supreme Court would say.

TRISTAN NEILL: So I think we've heard a lot of-- yes, a question. Was there a question?

AUDIENCE: My understanding of the case is-- now it's time to ask questions. [INAUDIBLE].

TED BETTS: Make sure it's on.

AUDIENCE: There we go. So from my understanding of the case, there were hired police at this intersection. Do we know who hired them? Was it the contractor or was it the city? And the second question, more importantly, is do you see wholesale changes on these hiring practices of policemen? I mean, to me, in my mind, they had an obligation not only for the vehicle traffic, but for the pedestrian traffic. Thoughts?

JORDAN EPSTEIN: It's not enough, right? Obviously, in this case, there was a fatal accident, so the hiring of the police was certainly a good step, but the barricade wasn't there. So that's it's not enough in the name of safety.

TED BETTS: Yeah. And I'd have to look at the actual role of police officers hired from my understanding is they're hired for traffic control, and they are not experts in the health and safety rules and regulations. And what's supposed to be on site in terms of the barrier, the need for a signaler when you're reversing a machinery, that's not-- I wouldn't think that's their role. I don't think in the end, I mean, there may be more education that's needed on police officers in that role or anybody on the site.

At the end of the day, I don't think the rule and the obligation of the owner changes. They may want to make sure that it's clear what the police officer's role is, and if they see things, to report it up to appropriate channels or to report to the site foreman to make sure that the site is safe.

But in terms of the owner's obligation, that's maybe going to-- if they didn't have a police officer, it's going to make it worse. That's going to be part of their due diligence, defense, if there's ever an accident to say, hey, we hired the police officers to make sure of this. We hired a constructor to make sure the site was safe. We did an occasional inspection with, with our own consultants to make sure that the site was safe. What did you do as an owner is the bottom line question. And you want to be able to say, here's all the things we did, here's all the things we kept doing during the course of the project.

AUDIENCE: Yeah, I would have thought from that perspective that they would have all public safety responsibility, including pedestrian traffic. And I fail to see how he couldn't have observed this could be a situation where someone could get-- a pedestrian could get injured by a greater backing up at a construction site.

TED BETTS: I don't think-- I'm not aware of-- so the Ministry of Labor is the one that enforces the act, and they brought charges, a lot of charges against the contractor. From what I understand, there wasn't much time before. It didn't take the contractor much time to decide they weren't going to win this one, and they just conceded. They brought charges against the city, both as employer and constructor. Ultimately, they lost on the constructor, trying to claim that the owner was the constructor. I'm not aware of any charges against any of the police officers or whether they even did an investigation. I don't know, so on that.

TRISTAN NEILL: OK. So I think we've heard a number of suggestions from Ted and Jordan about the kinds of things that owners should be thinking about. But I'm interested to hear from Olga, given your perspective, I think your key message from what you said earlier is that the contractors have really been living and breathing these health and safety issues for a very long time because they've always been contracted down to the contractor. So what lessons do you think owners can learn from the contractors experience to assist with this new-- perhaps this new way of assigning responsibility?

OLGA S. MOROZOVA: It's a great question, Tristan. And when I think about, I mean, who this will really impact, I think probably I'm not seeing it in my space as much because typically our owners are public clients, Sophisticated clients. The provinces, rarely so municipalities, and typically these more sophisticated owners, they'll have their own internal counsel. They're likely used to doing projects of this type.

It's where the smaller players come in that, I think, I get very concerned, and I think this is where you guys are going to get very busy. Say an individual homeowner who has never done a construction project and they're hiring a contractor. A municipality that might be doing a certain type of construction project for the very first time. Maybe they're used to doing road work, but maybe, I don't know, say they're building a small bridge for the first time.

And when it comes to doing that, you really have to, like I mentioned earlier, have a hard look in the mirror and say, am I set up to do this? Am I able to take this job on? Because here's the thing. Here at Dragados, we look at various projects that we might bid on, but if, say, we have absolutely no experience building the type of project, we also have to have a hard look in the mirror and say, are we going to be well positioned to do this if we have absolutely no experience doing it? If we're used to building tunnels, are we now going to go and build, say, a bridge?

OK, maybe we're very experienced in large construction projects, but maybe not of that type. So I think the owners have to really kind of step back and say, what am I experienced enough to do? And if I don't have that experience, how am I going to get that experience? So hiring a contractor is one thing, but this case kind of turn that on its head and say, well, no, you still have these other responsibilities that you got to fulfill, and you can't just pass them on to your contractor. And so how is the owner going to do this?

So when they start planning the project, do they have the appropriate staff? If they have the appropriate staff, does staff have the appropriate experience? So they're going to stay on for this project or they're going to move on to something else? If the internal staff is not robust enough, who do you need to supplement this with? Then you start getting into the procurement process, where you start looking at your contractors. And I think you need to do that exact same exercise.

I mean, a contractor, of course, will put forward their pitch and say, of course, we can take this on, but I think an owner also has to take a look at this. An individual owner that's hiring somebody to do a deck, but the contract that they're hiring only ever does driveways. Well, that might be an issue if they have no clue how to navigate a different type of site than they're used to.

Say if there's going to be some interface with another constructor, this, we used see this more on the larger scale jobs, but does the contractor have experience interfacing with that other type of work and still able to maintain the site safely? Then we get into execution phase. The owners got to think about, OK, how do we ensure a contractor complies with their requirements? But also since we're now the employer, and if something happens, what can we do such that if we have to make out a due diligence defense, we can make it out.

So is it enough to just send quality inspectors to have a look? Everything is OK, no deficiencies, everything's fine, or is that not enough? Do you have to send your guys to have a look and not only look at construction deficiencies, but also how is the site being run? And then is there going to be another mechanism for them to come back, report it up the chain such that things get addressed?

And so I think your guys are going to get quite busy with phone calls from your perhaps individual owner clients, perhaps developers that are smaller scale or perhaps smaller contractors. I think that somebody mentioned-- I can't remember who's Christopher Jordan in terms of choosing your contractor. I think one of the main things that, unfortunately, went astray in this R v. Sudbury case, I have some familiarity with the areas. I don't think there is a whole large group of contractors that are unable to undertake this work in Northern Ontario.

So when owners are now looking at the parties that are coming to bid on their work, they might be in a spot where they don't actually have anyone that's qualified, and so what do they do? I guess they'll have to go outside of their regular market and perhaps pay more. And I've read it a couple of places that the insurance companies are going to get busier because owners are going to be looking to increase their insurance limits to protect themselves if something happens.

So I think it's-- yes.

TED BETTS: Olga.

OLGA S. MOROZOVA: Yes.

TED BETTS: [INAUDIBLE] all the contractors get hired out as health and safety consultants for all these municipalities in Northern regions.

TRISTAN NEILL: So Olga raised the concept of the due diligence defense, and I think that came up in Ted's introduction and explanation of the case, but I'm wondering if Jordan can tell us a bit more about what that means, and how it fits into the overall strategy of handling health and safety issues.

JORDAN EPSTEIN: So we've established that employers have these responsibilities under the Occupational Health and Safety Act to ensure safe workplace and how owners effectively have the responsibilities of employers as well. It's not assignable. It's not transferable, not even by a contract, but what you can do is proper due diligence to defend your position in the event of a potential incident on the workplace.

And what due diligence means is taking the necessary steps and the appropriate precautions to ensure a safe workplace. Hiring the correct individuals and doing your reference checks for those individuals. Ensuring the checks and balances are in place on the worksite throughout the project, checking in and being involved in the safety diligence throughout the process. And that's the defense of an employer and an owner in the event of these issues is, we've done-- we did our steps and here's the proof, and therefore, it shouldn't be us who is legally responsible for any damages because of these precautions that we took.

And I think it's important here to note that it's not enough, in many cases, to just do the due diligence. And from an evidentiary perspective, you got to be able to prove that you did it. You need the documentary support. You really have to set out the paperwork, and the email chain, and the correspondence, and make it obvious.

So just and record it well and keep your files organized. Because when there is an incident, it's a lot harder to prove that you did something to prevent the incidents if you don't have any documentary records to show what you did.

TRISTAN NEILL: And Olga, do you have any more thoughts on what needs to be done to make out a strong due diligence defense primarily from the perspective of what do you need to be doing every single day on the project to make sure that you're prepared when an incident occurs?

OLGA S. MOROZOVA: That's going to be, I think, a question that your clients are going to be asking you quite a bit. And I think this is exactly where a good construction lawyer comes in. And if I had to guess the kind of advice that you might give to your clients is, yes, absolutely when you're getting the contractor, do your due diligence on them, and of course, have a record of that. It's one thing to say, oh, yeah, I went online, and I googled, and I saw that everything was fine. Well, that's great. What did you actually look at? Did you look at safety records or did you just look at Google?

And then when-- and during the execution stage, same idea. If you're sending out guys, probably you're going to have to pay for that, and have copies of various records that they might be producing. So I think it's a matter of good planning, good due diligence, and then also having a record of all of that, so that if something does happen, then you have your kind of due diligence evidence ready at the go, and of course, a paper record is always helpful.

TED BETTS: Olga, I wonder-- I'm curious about your experience with owners on training because I think one of the things I have not seen, and I'm wondering if you have, is a lot of uptick on new training. And I would have thought employers would turn to their hired constructor to say, what do I need to know? You're the expert, you tell me so I can learn because I think being proactive is one of the best defenses you have, and one of the best due diligence that you could possibly assert.

OLGA S. MOROZOVA: Yeah. That's a great question, Ted. I mean, we'll see what happens on new jobs, on existing jobs. I mean, we provide the training, and our programs are very robust. I mean, I can tell you, even as a lawyer working at Dragados, I've had a pretty robust health and safety training. Of course, I have my first aid certification and whatnot, so right now, I think, it's generally in the contractor's purview to provide that training. And what I can imagine is that probably owners will start asking us for maybe copies of our training materials, or to have-- to participate in our training programs to see what we're doing, and then to implement that on their end.

TED BETTS: Another cottage industry for the consultants like HK and others here maybe that.

TRISTAN NEILL: Yes. So we're coming to the few final minutes of the panel, and so now, I think, I'd just like to hear if there's any final thoughts from our panelists. Ted, I know we started off talking about contract drafting. We've had a lot of discussion now about what comes after that phase, but maybe to bring it back to you. Final thoughts from the contract drafting perspective.

TED BETTS: Yeah, thank you, Tristan. I started off talking about how the contract that Sudbury had was just as ordinary, and plain vanilla, and normal as you could possibly imagine. They did everything they were expected and thought they had to, which was delegate their role and responsibility to a contractor to take care of health and safety on their projects. They failed to do that and somebody unfortunately lost their life as a result.

So what's the contract? I mean, ultimately, people have to do the health and safety work on the ground. What the contract can do is make sure you give the contractor the tools to do that, that the owner is getting the information that it needs, and that it is clearly defining the roles, and clearly assigning the roles to the right parties.

So in a typical contract, and these are different for every size of project, obviously. So the first and foremost, make sure you have a contract. There's a lot of projects that just go ahead that don't have contracts. And I don't mean that facetiously because the Occupational Health and Safety Act defines a project very broadly. It's a very low bar, very low threshold for something that constitutes a construction project. So if you're installing major pieces of equipment, that's a construction project. What's the health and safety? There are all those rules are triggered.

So first of all, understand how the act works, make sure you have a contract, you've assigned the role of constructor if it's appropriate. One of the things I see in big projects, especially owners holding on too much control inappropriately.

So they don't want to give up control if-- or they want to be able to take back control in certain particular circumstances, deficiencies. They want to-- if the contractor isn't doing the work to fix the deficiency, they want to be-- they want to retain the right to jump in and fix it themselves. In an emergency, they want the right to come on site and do all the work that's necessary without even consulting the contractor.

We see this even-- especially on residential, I find, or multifaceted projects where some part of the project might be completed and the owner naturally wants to get in and start using that project, that part of the building early before the whole project is done. All of these are danger zones. Not saying that they're not appropriate, but they need to be really carefully thought of, first of all, in the drafting, and more importantly, if you're actually going to use those terms to take control because once you take control of any part of the project, you're now the constructor, and you're running the risk of taking on more responsibility and liability than you expected.

We see a lot of complicated projects where you have multiple parties, multiple contractors on the site. This is allowed. I mean, the Ministry of Labor will respect that as long as there's still the delegated authority and control over the whole site to one contractor. But it's more complicated, so make sure you're drafting it properly and you're giving the tools to the contractor to run the project safely and control the site. So there's a lot of things in the contract that we can add and make sure are there or not there so that we make sure we have a successful and healthy and safe project.

TRISTAN NEILL: OK, Jordan, any final thoughts?

JORDAN EPSTEIN: Well, this panel discussion is not intended to be an infomercial, but if you ever needed a reminder, the wake of the Supreme Court decision is a fantastic time to speak to a lawyer, contract lawyer, construction lawyer, employment lawyer to know your rights, know your obligations, to update your contracts because it's not possible to eliminate risk altogether, but with some proper, proactive understanding and minor legal work, you can certainly limit the impact of risk and the level of exposure.

OLGA S. MOROZOVA: Tristan, definitely echo that because, I mean, the flip side is either you spend a little bit of money and resources up front, hire perhaps an external consultant like I recommended somebody in the chat, a good construction lawyer to put together the correct contract. Because on the flip side, if something happens, then you're going and hiring a criminal lawyer, and that's not a good day for anybody. So spend the right resources at the beginning, and have the contractors mindset of safety is first and safety is part of everything we do because really, that's really the biggest issue here, that we do not want accidents like the one happening in R v. Sudbury ever again.

TRISTAN NEILL: OK. Well, with that closing remark, are there any questions from the audience?

AUDIENCE: Thank you. Hi. Specifically for Ted because you brought this up from the contract drafting perspective. As far as the allocation of risk goes then between owners and contractors, at least in the procurement stage, do you anticipate there being any additional requirements, whether by way of indemnification or owners requiring additional insurance policies or something like that, by way of deflecting that liability back onto the contractor? Especially if the practice before this decision was, we're the owner, we don't want to deal with this new contractor. You run with this. How can owners-- or A, have seen, and B, what more can owners do to deflect that liability?

TED BETTS: So back when I was a young pup starting to draft these and working in the construction sector, and we're going to avoid saying how many decades ago that was, the practice was definitely for owners to say, hey, this is my project. I'm hiring you to take care of problems and I want you to take care of all of the problems. You're on the hook for every problem that is going to come up on the project.

I think over the last few decades, we've seen a real shift, especially on larger projects to more sophisticated and appropriate response. And you see this in the contracts to say, there are parties who have expertise and they're the ones who should take care of that risk, and there are parties who can control risks better, and that's the party that should control the risk.

Most of the time that is still going to be your contractor, and so the contracts aren't going to change that much in terms of roles, and responsibility, and liabilities. But you still see it where the owner is trying to avoid even the responsibilities and risks that it is really in the position to control the best and therefore should hold on to and the contract or is in the position to take out the right kind of insurance to cover it. So when it comes down to this issue, like I said in my opening remarks, I still see some contracts where an owner is trying to delegate not just the role of constructor, but all of its roles and responsibilities as employer.

I've seen that over the last year. I don't think I'm going to ever see that again given this decision, so that's hopefully been cleared up. You can't do that, and it's not good for the project either. Is there additional insurance? I think the health and safety has always been an issue, and so there's good insurance that covers this. And I think you certainly want to make sure you talk to your brokers to make sure you have the right kind of employer insurance in place. Much of it is already covered by workers' compensation regime, which is outside of insurance altogether anyways.

Certainly, one of the due diligence things you're always going to want to do on any project anyways is make sure your contractors are all WSIB certified, and they have the right kind of credentials for workers' compensation, whatever the regime is and whatever the province, and making sure you've done your due diligence on your contractor.

Another part of it is-- and this is an interesting little anecdote, kind of related is, and Olga mentioned one circumstance, make sure if you're doing a-- I think it was if you're doing a driveway, make sure you've got the right kind of contractor doing that and not somebody else in charge of health and safety, and had that very issue on a project. We had two phases to the project. One was a base building contractor who had to build the shell of the building, and then we had another contractor coming in to build all of interior equipment and machinery, which was itself a $40 million project.

Well, there were delays on the project, and so the base building contractor wasn't quite done yet. And so they still had some roofing work to finish off and some landscaping work, but we went ahead anyways and we were going to have the contractor, the second contractor, act as constructor for the whole project because they were now really the ones in charge of most of the work on the site. And we had the good foresight to talk to a health and safety consultant, who then brought the Ministry of Labor in and said, let's talk about this, let's divide it by time and space and all that good kind of stuff.

And the Ministry of Labor actually said, you can't do that. Your second contractor has never done a roof, doesn't do roof work, and that's what's left, so they are not allowed to be the constructor. They denied them the notice of project on that as constructor for until we had a proper time and space plan in place. So it is really-- and fortunately they did because if you-- in today's world with R v. Sudbury, if they had not done that, if the project had simply gone forward with the second contractor in charge of health and safety for the whole site, and an accident had occurred on the roof, well, the owner would have been liable for that without question now in today's world.

And so it was fortunate that we had that foresight to get a health and safety consultant on, and unravel that, but it is important to zero in on that. And that was in the contract, that came out in dealing with it in the contract.

AUDIENCE: I've got some questions from online. So the question is, is there a way for the owner to assign financial liability for its own employer liability onto the general contractor? Or in other words, the owner's responsible at law, but in the end, the bill is footed by the general contractor.

TED BETTS: It's kind of a public law question on employment. Do you want to handle that or do you want me to?

JORDAN EPSTEIN: The answer is no. Legally speaking, the employer cannot assign or transfer their obligations as an employer, and it goes to them the obligations in the same, so it's a nice thought and perhaps a creative angle that someone might try to raise in a contract, although perhaps not enforceable if you do. So it's difficult to absolve liability under the act. There's no sidestepping responsibility here, and if that's what the contract says, there will be steps taken to ensure that that's not what actually applies.

TED BETTS: Because remember, these are provincial offenses. And if there's been a charge against the owner as employer, there would have been a charge against the contractor, presumably as constructor if there's been an accident. And so at the end of the day, there's a fine, and that fine is assessed by the Ministry of Labor, and it's a clear amount. And so you wouldn't-- I wouldn't think you, you would ever be able to pass over a direct offense fine charge like that to your contractor.

Now, if there's other damage that suffered, physical damage, and they had a responsibility, and let's say there was a collapse of a roof because they didn't put up the right kind of safety bracing, that's pure damages, I would think, in that case. And if they didn't-- the contractor didn't do their job in keeping a safe site, those kind of charges would be I don't think you need much in a contract to be able to say that's the contractor's liability.

AUDIENCE: On a document retention note, what would you consider to be best practice for the length of time a contractor should keep non-financial records such as drawings, daily hazard assessments, et cetera?

JORDAN EPSTEIN: Well, there's a statute of limitation period in Ontario establishes that the lawsuits for damages cannot be brought beyond two years from the date that the claim ought to have been discovered. So because of that, I would suggest at the very least, two years from the date of the completion of the project, but that's probably not enough. I would extend that further. Best practices, perhaps even four years because a claim could be discovered after the project is completed.

OLGA S. MOROZOVA: I would add to that Jordan, typically a contract would actually provide for document retention timelines, and if it doesn't, I would say, I don't know. We're discussing earlier probably like ultimate limitation period is probably when you want to keep these things for. But otherwise, if you have a question, I think, the Gowlings team is well positioned to answer.

TED BETTS: Yeah, I think I see on big projects a requirement to keep it usually about six years or so.

OLGA S. MOROZOVA: Six, we've seen as high as 10.

TED BETTS: Yeah, six years. And 10 is our ultimate limitation period, at least, in Ontario, but I think normal practice is at least six or seven years.

AUDIENCE: And does this mean the end of the lowest bidder system?

TED BETTS: Do you want to handle that one first, Olga?

OLGA S. MOROZOVA: I would say, I don't think so. I don't know if we're even right now, even in the lower bidder system. Frankly, I mean, the contracting authorities have a lot of powers as set out in the procurement documents to pick not who just has the lowest price. There's many other considerations that go into a bit. I mean, a financial aspect of a bid might be one thing, but if it's a design build, you're going to have a technical submission as well, and so if that's found non-compliant, then it doesn't really matter regarding the price.

So I'd say, I don't know if we're even there right now, but certainly as a result of this case, I think owners can't just be cavalier and say, oh, he has the lowest price, no experience, but it's OK, I'm going to give him the job anyways. That would be my thoughts.

TED BETTS: It's been an erosion, generally speaking, of the lowest price wins. I think we're seeing more kind of different contract models, progressive design build, collaborative models where the qualifications very, very robust qualification stages first before shortlisting to then look at price. So I think all of that is there already, and I think this might move that along.

What I think I've already seen is some-- in the criteria, in the qualification criteria, adding some scoring specifically for health and safety, either health and safety experience, health and safety team members, or health and safety management plan, and seeing that as an actual scorecard in the evaluation of the quality of the bidders.

AUDIENCE: I was just going to say, Ted, you could just do a cash allowance for the safety part of it, and then the rest of it would be competitive bid. Maybe even the owner can take some control with getting a consultant on board that everybody has to use for safety or something like that. Just thinking of that.

AUDIENCE: So question going back to the fines, is this going to open up the opportunity for the Ministry of Labor to leverage and lay more fines against employers, and pull more money in?

JORDAN EPSTEIN: Potentially, for sure. And I guess, I don't think the intent of the fines is simply to make money from the Ministry of Labor. I think it's to deter bad actors and reinforce their proper behavior. But for sure, this creates--

AUDIENCE: And not to belittle the intent, the fines are significant right now. Maybe you could just let us know what they are. Do you have a perspective.

JORDAN EPSTEIN: The fines have increased even recently. I don't have it on top of my head what the increase is.

TED BETTS: In my sense, and you tell me, Jordan. But my sense is there has been a more active engagement in pursuits in actually enforcing it. I see a lot more reported cases where-- and the fact that in this-- in the circumstance at the time in 2015, it was quite standard, as we've said, to have a project structured like this. And the Ministry of Labor was keen enough on this to lose a trial and appeal, lose at the Superior Court and appeal, lose at the partially at the Court of Appeal and an appeal to the Supreme Court. So the Ministry of labor, at least in Ontario, is looking at aggressively protecting workers on job sites. That is the message I'm picking up out of that.

JORDAN EPSTEIN: I think that's right. And anecdotally, I've heard stories of spot audits and threats of increased audits by inspectors of the Ministry of Labor, and whether or not those threats are legitimate or not, at least, it reinforces the intent here, and the trend line, which is enforcement of these safety standards.

TED BETTS: And on that note, actually, don't forget, as well as owners or contractors, make sure you close out all the permits. I mean, if you're not getting your permits closed, it may be a health and safety reason. I know I was on a project where they didn't have enough fire extinguishers, fire sprinklers, sorry. And the inspector had done a count, and for various reasons, the configuration of the building, they kind of not done the proper job. And it was going to be a major, major cost, and so they kind of thought they'd finished the project without.

Now, if anything ever happened, and they didn't have the right number of sprinklers, and they closed and occupied the building without the fire permits closed, you know there's a massive liability and risk there, and so don't forget to close out your permits as well.

TRISTAN NEILL: OK. Are there any other questions in the room? Not seeing anyone. I'll say thank you very much to our three panelists for that great discussion. I think the key takeaway is that there is a lot of work to be done based on this very important decision, so thank you for offering your perspectives today.

TED BETTS: Thank you. And I'd like to thank--

OLGA S. MOROZOVA: That's guys for having me.

TED BETTS: --Olga from Vancouver, and thank you to Margaret and the others, our technology team, and all the organizers who put this together. Thank you all for joining us for the presentation. Thank you online for clicking on and joining us. We are now going to go next door, and hopefully, everybody in the room can join us for some drinks, and we can chat more about R v. Sudbury if you want to, or we can talk about the weather and the winning-- Connor McDavid winning the Stanley Cup on Monday after beating the Panthers on Friday. Thanks, everybody.

OLGA S. MOROZOVA: Thank you, guys.

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