The Construction Industry in Quebec is "On Break" as of March 24, 2020 - What are the Legal Impacts?

On March 23, 2020, the Premier of Quebec, François Legault, announced the suspension, from March 24 to April 13, 2020, of construction sites in progress, with the exception of those related to the provision of "priority" services[1].

It is undeniable that the consequences resulting from such an exceptional measure are major for clients, contractors, professional firms and other stakeholders in the construction industry and raise a number of legal issues that are likely to have a very significant impact on their activities. 

McCarthy Tétrault's Construction and Infrastructure Law Practice Group remains on the lookout for important developments in this sector and will be there to inform, advise and support you throughout this unprecedented crisis. To this end, we will be maintaining a blog over the next few days with questions and answers addressing key legal issues to be considered in the circumstances and in light of this important announcement. These issues may be relevant to the development and implementation of your overall response.

In this regard, we invite you to contact one of the authors of this blog by e-mail to share with us any issues that are of concern to you in the course of your activities and that could be addressed in a future post.

We will begin today with an overview of the activities covered by the suspension decreed on March 23, 2020, and its impact on your contractual obligations.

What activities in the construction industry have been suspended and what are the exceptions to the suspension?

From March 24 to April 13, 2020, all construction industry activities are suspended, with the exception of so-called "priority" activities. 

It is therefore important for each company to determine whether its work in progress is related to services or activities that would be considered a "priority". The Government of Quebec has published and regularly updates a list of services and activities deemed to be priorities. This list includes several services offered in the construction sector, such as :

  • Maintenance and operations of strategic infrastructures, which includes: energy distribution, maintenance of public infrastructures, construction and maintenance of infrastructures that may pose a risk to public health and safety, sanitary services, etc.
  • Construction firms for emergency repairs or security purposes;
  • Electricians and plumbers and other trades for emergency services;
  • Rental of equipment;
  • Firms related to building maintenance (elevators, ventilation, alarms, etc.);
  • The exclusion also extends to firms producing inputs or raw materials needed for these priority services.

The above list is not exhaustive and, given the rapidly changing situation, it may not be up to date. It is therefore important to consult the full list available at the following address: https://www.quebec.ca/en/health/health-issues/a-z/2019-coronavirus/essential-services-commercial-activities-covid19/.

Since the exceptions listed may raise several issues of interpretation, we invite you to contact us if you have any questions about this list. If you feel you are offering a priority service but it is not included on the list, you may consider making a request with the relevant authorities. We have the resources and expertise required to assist you effectively with such a request.

What are the impacts of the suspension of ongoing construction sites on your contractual obligations?

Premier Legault's recent announcement is prompting various stakeholders in the construction industry to question the status of their contractual obligations: will they also be suspended? In order to answer this question and to clearly identify the extent of their obligations despite the suspension of construction sites, construction industry stakeholders will have to turn to the exoneration of liability clauses or provisions provided for in their contracts or by law, including, in particular, those relating to superior force (force majeure).

The starting point for this analysis is the contract between the parties. Many contracts in the construction industry stipulate that superior force may release a party from certain obligations. In this respect, each contract is unique and must be analyzed on a case-by-case basis. It is important to carefully analyze the definition of superior force provided for in the contract and the impact of such superior force between the parties. For example, some contracts expressly provide that the agreed-upon delivery period is extended in the event of a pandemic, a health emergency or when the government orders the suspension of the construction site. However, other contracts may provide for a much more general definition of what constitutes superior force. This clause will then have to be interpreted in light of the current situation and the impact of the suspension on the performance of the obligations in question.

Where the contract is silent, the concept of superior force as a ground of exoneration or exemption from liability is provided for in the Civil Code of Québec. This means that when certain conditions are met, a party may fail to perform one or more contractual obligations without being required to compensate his co-contractor for the loss caused. “Superior force" (“force majeure”) is defined as an event which is unforeseeable (at the time the contract was concluded) and irresistible in that it is impossible to avoid and prevents performance of the obligation. In our view, the latter criterion is of particular importance in the present situation. Indeed, although an event can be qualified as superior force, it must also render the performance of the obligation completely impossible. The co-contractors must therefore be diligent and take the necessary means, to the extent possible, to perform their obligations or mitigate their damages while respecting the constraints imposed upon them in the current situation. Given that each case is unique, it is therefore important to analyze your particular circumstances in light of these criteria and the voluminous case law interpreting them. We therefore invite you to contact us to discuss your situation further should you have any questions or concerns in this regard.

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In addition to the issues discussed above, the temporary suspension of activities in the construction industry raises several questions that may concern you, particularly in the areas of insurance, construction liens or hypothecs and ongoing proceedings, and the impact of the suspension on the resumption of activities, which we will address in the coming days. 

In the meantime, we remain at your disposal to discuss the challenges you face and answer your questions during this period of uncertainty.

[1] Order in Council No. 223-2020 dated March 24, 2020.

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