By James LeBer and Marcia Oliver
Special to Ontario Construction News
This article was originally distributed by the firm to its large base of general contractor clients as a “Client Alert” on March 22. It is republished here with the permission of the authors.
We recognize different factors will generally be at play for our general contractors in the road and bridge building sector. Many projects are just about to begin work following winter shut down. They are mostly being constructed in open outside environments, and not enclosed quarters.
Regardless of these differences, our clients tell us they have the same reasonable fears about labour shortages, productivity impacts on labour when it is available, and pending material shortages or supply chain disruption. These realities are becoming apparent, and might be said by MTO or others, with hindsight, to have been evident from the date of the province’s Declaration of Emergency on March 17.
We raise this concern now with you as our partner Jim LeBer argued a case in court on February 5, 2020, over the proper interpretation and application of the MTO’s contract language over EOT’s and Liquidated Damages. The judge’s decision in that case has not yet been released. However, one of the elements in dispute arose from the internal contradiction in the MTO EOT process in GC3.06.01 which requires on one hand that a request be made “as soon as the need for such extension becomes evident” while mandating the use of the prescribed form indicating the precise amount of time extension required. Arguably, until the impact has been nearly fully sustained, you can’t know the precise duration of the impact and therefore declare“the length of extension required.”Which demand trumps: as soon as evident – or – when the length of extension required is known?
During argument in that court process MTO’s lawyers declared that if “the length of extension required” cannot be determined then the construction industry should be submitting multiple EOT’s along the way, for a single delay cause, updating your anticipated length of extension required whenever it begins to appear likely your estimate will have been exceeded. MTO’s lawyers argued that is not contrary to the provision and is the practice that should be followed, rather than await greater certainty on the probable duration of the impact before submitting the EOT, assuming the need for an extension is becoming evident.
Whether the judge accepts this position as a reasonable interpretation of what the contractor should do, our message to the Industry is clear:
MTO has argued you have failed to give timely notice and your EOT should be rejected when notwithstanding uncertainty about duration, a contractor did not submit the EOT as soon as it can be said that the need became evident. We strongly recommend submitting an EOT now based on the March 17 Declaration of Emergency and related MOH directives on social distancing, and the resulting and known impacts of those constraints.
MTO says you must do so even without a reliable prediction of the length of extension required. This is not a practice we at Advocates have typically seen adopted by our clients, and so we bring it to your attention. The response of MTO to such notices, remains to be seen. We will be keen to observe how they will be managed by CA’s and MTO staff as well.
The language of GC 3.07.01 (d) has similarities to those discussed above in the context of CCDC2 language about public authorities – AND – is also a compensable delay.
“A stop work order issued by a court or public authority, provided that such order was not issued as the result of an act or omission of the Contractor…”
We believe that the same consequences of Ontario’s March 17, 2020 State of Emergency declaration and related MOH directives can be said to flow from those orders issued which stop work both within the available space at the project site, and across time for workers trying to responsibly comply with the self-isolation directive. We repeat those comments again below.
Advocates argue that a stop work order has been issued by another “public authority”, in the form of the mandate that people must not gather in numbers larger than 50 and should not be in closer proximity than 2M from one another. If either of these limitations to the way in which work on your site can be carried out, has a practical consequence of impacting productivity or entirely precluding certain tasks, then notice of delay can be given. If the same provisions are expected to cause material shortages, notice can be given. If the 14 day self-isolation obligation is expected to cause labour shortages, notice can be given.
We recommend submitting a Request for Extension of Time caused by the constraints imposed by the Declaration of Emergency of March 17th and related MOH directives, with a best “guestimate” of the length of extension and an affirmative statement that the estimate of the length of time required will be revised and updated as further certainty is gained in the passage of time.
The consequence of submitting an EOT request is that the obligation to keep DWR’s is triggered immediately for all work potentially impacted by the delay.
We frequently see claims rejected by MTO for a failure to prepare, submit and reconcile DWR’s weekly on any project where a delay is believed to be ongoing, and where notice of an EOT has been given, (or is subsequently given at some later date).
Our recommendation is to submit your EOT now and begin immediately keeping DWR’s for all tasks which have the potential of being impacted by the impending delay. Given the wide ranging nature of the delays which could arise to both labour and material across multiple subcontractor groups, it looks like all tasks could be tracked in the DWR’s you are going to be submitting.
Conclusion
The team at Advocates remain available while working from our various remote locations. We are just a video call away. We’d be glad to hear from you! Let us know if these comments have raised specific questions or concerns for you. We are ready to review your own contract’s specific language, to consider its supplementary general conditions, and the unique facts you are facing on your job site, if you need legal advice about alternatives you may want to implement now, to preserve your options going forward.
A PDF copy of this article may be downloaded here.
Jim LeBer and Marcia Oliver are certified specialists in construction law and partners in the firm Advocates LLP, a construction and commercial litigation firm. J.LeBer@AdvocatesLLP.com and M.Oliver@AdvocatesLLP.com, Advocates LLP, One London Place, 1620 – 255 Queens Ave., London ON N6A 5R8, phone: (519) 858-8220, fax (519) 858-0687.