Article
Casey Smith
April 27, 2020

Covid-19 and Construction Projects

Virtually no industry is immune from the effects of Covid-19. Owners, contractors and subcontractors all need to be aware of the issues and obligations that may arise and be prepared to deal with them. The below addresses some of the particular items you may need to turn your mind to protect your business and employees.

Essential Service

As of March 27, 2019 most types of construction projects in Alberta were deemed essential services. For example:

  • Construction projects and services associated with the healthcare sector, including new facilities, expansions, renovations and conversion of spaces that could be repurposed for health care space;
  • Construction projects and services required to ensure safe and reliable operations of critical provincial and municipal infrastructure, including transit, transportation, energy and justice sectors beyond day-to-day maintenance;
  • Construction work and services, including demolition services, in the industrial, commercial, institutional and residential sectors;
  • Construction work and services that supports health and safety environmental rehabilitation projects;
  • Construction projects to repair or render operable / safe any public conveyance, including elevators, escalators and ski lifts;
  • Construction projects and services that are required to ensure safe and reliable operations of critical energy infrastructure or support supply chains; and
  • Any other construction project that can safely abide by the CMOH Public Health guidelines/directives.

Therefore, construction projects can continue so long as it meets the above list and complies with Health Guidelines.

OHS

Employers have a general duty under Occupational Health and Safety legislation to provide a safe work environment for workers. This can be complicated when dealing with the Public Health guidelines such as social distancing and the requirement to avoid having gatherings of more than 15 people. If a project is ongoing, employers must take necessary precautions and do all that is possible to protect its workers including cancelling large meetings, cleaning and disinfecting surfaces and providing masks when possible.

Delay

Whether a project is delayed and what remedies may be available is dependent on the precise wording of a Contract. Parties should review their contracts to understand their rights and obligations if a delay results from issues related to the pandemic. There are often explicit notice provisions for advising the other party of delay and if you miss those deadlines it may impact your ability to make a claim or rely on the cause for delay. For example supply issues because of Covid-19 may effect an ability to continue or complete work in timelines established in the Contract.

Some Contracts will also provide the Owner a specific right to suspend the Contract with or without penalty. Whether to utilize this provision will depend on numerous factors such as whether it is an essential service, the supply chain issues, and financial issues.

Application of Force Majeure Clauses

Force majeure is defined as a contract provision excusing a party from performing its contractual obligations when it becomes impossible or impracticable due to an event or effect that the parties could not have anticipated or controlled when the contract was signed. Earthquakes, floods and hurricanes are examples. Like delay clauses, whether a pandemic like Covid-19 will trigger the clause is highly dependent on the wording of the Contract. Some contracts will specifically name Pandemic as a Force Majeure, while others will not name it and you will be left to general principles to determine whether it would apply or not.

Builders Liens

So far, procedural and filing times for builders’ liens under the Builders’ Liens Act, have not been suspended unlike many other Alberta Statutes. With many companies and owners having difficulty with cash flow, it will be important for contractors and subcontractors to stay on top of their accounts receivable and file liens to secure any payment that might be possible.

Dispute Resolution

Most contracts have dispute resolution provisions where parties initially negotiate prior to an issue resulting in mediation, arbitration or resolution with the Courts. It is likely that in this unique time, many disputes will arise which will require proficient and timely attention to the issues. Thinking creatively and outside of the box will likely be necessary to ensure projects continue and parties are paid in order to keep businesses afloat and workers employed.

Conclusions

The issues in continuing construction projects in the pandemic may be myriad. However, with careful thought and attention to the issues that may arise, it is possible to face the challenges that are resulting from the Covid-19 pandemic in order to get through these difficult times and ensure your business continues and thrives in the future. The team at Walsh LLP is experienced in all these matters and together we can help safeguard your business and make sure your obligations to your contracting parties and employees are met.

Questions

If you have any questions regarding the above please contact our office at 403-267-8400.

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