Bill 162: An Act to amend the Building Act and other legislative provisions mainly to give effect to certain Charbonneau Commission recommendations

January 12, 2018

Tabled on December 1, 2017 by Lise Thériault, the Minister responsible for Consumer Protection and Housing, the main purpose of Bill 162 is to give effect to certain recommendations contained in the final report of the Commission of inquiry on the awarding and management of public contracts in the construction industry.

Amendments to the Building Act

Firstly, the Bill amends the definition of "officer" contained in the Building Act so as to include any shareholder of a partnership or corporation holding 10% or more of the voting rights attached to its shares, particularly for purposes of the assessment by the Régie du bâtiment du Québec (the "Board") of an undertaking’s integrity.

The notion of "guarantor" is added to the Building Act to describe a natural person who, by applying for a licence on behalf of a partnership or legal person, or by holding such a licence himself or herself, becomes responsible for managing the activities for which the licence is being issued.

In addition, the Board's powers of inquiry, verification and inspection are expanded.

Finally, the Act provides for immunity from civil proceedings and protection from reprisals for any person who communicates information in good faith to the Board regarding any act or omission which he or she believes constitutes a violation or offence under the Building Act. Certain penal provisions have also been added for the purpose of sanctioning any person who takes reprisals in response to the disclosure of such information, or who submits false or misleading information to the Board.

Additions to the Building Act

Secondly, a conviction for certain offences, which already previously warranted restricted access to public contracts, will now lead to a refusal by the Board to issue a licence, and may result in the cancellation or suspension of an existing licence. Furthermore, where such a conviction leads to a person's imprisonment pursuant to a sentence, a licence can only be issued to the person once five years have passed following the end of the said term of imprisonment.

The Board will be required to cancel a licence where the licence holder, or any officer of an undertaking holding a licence, is convicted of an offence or any indictable offence referred to in the Building Act, where the said person was already convicted of such an offence or indictable offence within the five preceding years.

The Board is given new grounds pertaining to the integrity of undertakings to refuse to issue, suspend or cancel a licence, particularly where the corporate structure of the entity enables it to evade the application of the Building Act.

In this regard, the Board is obliged, by regulation, to require any contractor to provide either a performance bond or security for wages, materials and services for the purpose of ensuring construction work continues, or the payment of creditors, in the event of the cancellation or suspension (in certain cases) of a licence.

Lastly, a new penal offence for the use of "prête-noms" (nominees) is being added, and the prescription period in penal matters is being extended from one year to three years from the date on which the prosecutor had knowledge of the offence, without however exceeding seven years from the date of commission of the offence.

Conclusion

This Bill, which notably implements four recommendations of the Charbonneau Commission, will be worth watching when parliamentary proceedings resume in the National Assembly on February 6, 2018.

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Written by

Marc-André Bouchard
Senior Associate

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July 26, 2024

A tenderer’s failure to comply with the preliminary complaint process as part of a municipality’s public call for tenders leads to a fin de non-recevoir

Introduction On June 14, 2024, the Superior Court of Québec issued a decision1 interpreting section 938.1.2.2 of the Municipal Code of Québec, which came into force in 2019. This provision gives a person interested in participating in the awarding process the opportunity to file a preliminary complaint about a requirement in the tender documents that they believe does not ensure the honest and fair treatment of tenderers. To our knowledge, this is the first time a court has considered the impact on a claim for damages for loss of profits2 when an unsuccessful tenderer fails to comply with this relatively new provision The Superior Court concluded that a tenderer’s failure to submit a complaint in a timely manner should be considered as [translation] “a form of fin de non-recevoir, or at the very least, a break in the chain of causation between the alleged fault and the damages claimed” (paragraph 40). Facts The dispute at hand pitted Transport Martin Forget Inc. (“Transport Forget”) against the Municipality of Saint-Alexis (the “Municipality”). On May 6, 2019, the Municipality issued a call for tenders for a snow clearing and salting contract. Transport Forget submitted the lowest bid, which was $150,000 below that of the winning tenderer. Transport Forget was excluded from the call for tenders given its failure to comply with the tender specifications requiring it to provide a Régie du bâtiment du Québec (“RBQ”) licence number, together with an attestation that its licence was in good standing. Further to the Municipality’s refusal to award the contract to Transport Forget, it claimed $300,000 in damages for alleged loss of profits. Transport Forget believed that its tender was compliant, that the RBQ licence requirement imposed by the Municipality was frivolous and unreasonable, that the Municipality failed to uphold the principle of equal treatment of tenderers and that the complaint process provided for in section 938.1.2.2 of the Municipal Code of Québec did not deprive it of its rights. As for the Municipality, it considered the irregularity in Transport Forget’s tender to be major and Transport Forget’s failure to comply with the complaint process concerning this requirement—both reasonable and in the public interest—was fatal to its legal action. The evidence showed that the RBQ licence number provided in Transport Forget’s tender was invalid and that Transport Forget deliberately chose not to renew said licence before submitting its tender, as it was unsure as to whether it would win the bidding process and wished to avoid needlessly paying the $1,000 annual fee required for the licence renewal. Applicable principles In order to determine the outcome of this dispute, the Court analyzed the case based on the decision in Tapitec,3 a landmark ruling in tendering matters. It reiterated the Court’s view that the decisive factor in determining whether an irregularity is minor or major is the equal treatment of tenderers. It also pointed out that municipalities can set out conditions aimed at limiting the number of tenderers, provided that this is done for an important and legitimate purpose. As for section 938.1.2.2 of the Municipal Code of Québec, the Court viewed it as a mechanism for monitoring all contracts awarded by public bodies which is designed to establish a process to ensure compliance with the principles of integrity needed to protect the public interest. According to the Court, the legislator’s intention is also to protect small municipalities such as the one in question (with a population of approximately 1,500) from potential legal action following the opening of tenders by ensuring that issues concerning the principle of equal treatment of tenderers are resolved prior to the tendering process. Tenderers that fail to comply with this requirement will not be entitled to claim damages for loss of profits, as in this case, except where there has been fraud or blatant bad faith, as in cases of collusion. The purpose of the provision in question is to prevent a tenderer that is aware of the requirements set out in the tender documents from contesting such requirements after the fact. Decision The Court found that the requirement to hold an RBQ licence number was a condition intended to limit the number of tenderers, which the Municipality was entitled to do. Although the Court recognized that there is no correlation between being able to perform snow clearing operations and holding an RBQ licence, it accepted the evidence that this condition was an appropriate and quick way for the Municipality to ascertain the credibility and organizational skills of tenderers, which was a important and legitimate objective. The Court therefore concluded that this requirement of the tender specifications was neither frivolous nor arbitrary. The Court considered the irregularity in Transport Forget’s tender to be major. Although the obligation to hold a valid RBQ licence is neither a requirement of public policy nor a substantive requirement, it is intended precisely to proscribe the lack of seriousness shown by Transport Forget when it opted not to pay the renewal fees for its RBQ licence before submitting its tender. The Municipality exercised its administrative discretion in a reasonable manner and ensured that all tenderers were treated equally. The Court found that the Municipality was right to reject Transport Forget’s tender. Although the Court dismissed the claim, it did nevertheless consider section 938.1.2.2 of the Municipal Code of Québec. In the Court’s view, Transport Forget could have lodged a preliminary complaint about the validity of the condition imposed by the Municipality to hold an RBQ licence. Doing so would have given the Municipality the opportunity to amend its call for tenders before the opening of tenders. Transport Forget’s failure to do this rendered its claim for damages inadmissible. Commentary Tenderers for public calls for tenders issued by a municipality must be aware of section 938.1.2.2 of the Municipal Code of Québec4 and understand how to apply it in a timely manner. As demonstrated by the Superior Court’s interpretation of this section in the judgment in question, an unsuccessful tenderer that has not complied with the complaint process set out in said section and who intends to sue for damages for an alleged loss of profits could have their claim turned down on grounds of a fin de non-recevoir. Transport Martin Forget Inc. c. Municipalité de Saint-Alexis, 2024 QCCS 2208 We came across the decision in Sintra inc. c. Municipalité de Noyan, 2019 QCCS 4293 (CanLII), which also deals with this provision, but in the context of an application for an interim injunction from the lowest tenderer attempting to prevent the awarding of the contract to a third party: the Court dismissed the claim, in particular because the tenderer had not lodged a complaint about the process provided for the awarding of the contract, in accordance with section 938.1.2.2 of the Municipal Code of Québec, and concluded that the prima facie case requirement had not been met. Tapitec c. Ville de Blainville 2017 QCCA 317 We would also like to draw your attention to section 573.3.1.4 of the Cities and Towns Act, which is identical to section 938.1.2.2 of the Municipal Code of Québec. We have not found any decisions interpreting this section, so we urge tenderers to be cautious and comply with the complaint process applicable to calls for tenders issued by cities and towns, to avoid having their claim turned down on grounds of a fin de non-recevoir.

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July 23, 2024

Requirements to Prevent and Reduce the Risk of Forced Labour or Child Labour: What Businesses Need to Know to Comply

On May 11, 2023, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, S.C. 2023, c. 9 (the “Act”) was passed. The purpose of this Act is to implement Canada’s international commitment to contribute to the fight against forced labour and child labour, and to require certain entities to report on the measures they have taken to reduce the use of forced labour and child labour. The Act came into force on January 1, 2024, and reporting entities and federal institutions were required to submit their first report under the Act by May 31, 2024. In addition, Public Safety Canada (the “Government”) released the Guidance for reporting entities. Scope of the Act The Act applies to government institutions and to any corporation, partnership, trust or other unincorporated organization that (i) is listed on a stock exchange in Canada or (ii) has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years: (a) it has at least $20 million in assets (b) it has generated at least $40 million in revenue (c) it employs an average of at least 250 employees (collectively, the “entities”) Or (iii) is prescribed by regulations. The obligation to report applies to any entity (a) producing, selling or distributing goods in Canada or elsewhere; (b) importing into Canada goods produced outside Canada; or (c) controlling an entity engaged in any of these activities. Entities are considered to be operating in Canada if they produce, sell or distribute goods in Canada. They may also be considered to be operating in Canada if they have employees, if they make deliveries, purchases or payments in Canada, or if they have bank accounts in Canada. It is important to note that doing business in Canada does not require having a place of business in Canada. Forced Labour vs. Child Labour For the purposes of this Act, child labour is defined as labour provided by minors that (i) is provided or offered to be provided in Canada under circumstances that are contrary to the laws applicable in Canada; (ii) is provided or offered to be provided under circumstances that are physically, socially or morally dangerous to them; (iii) interferes with their schooling; or (iv) constitutes the worst forms of child labour, as defined in article 3 of the Worst Forms of Child Labour Convention.1 Forced labour is labour provided by a person (i) in circumstances in which it would be reasonable to believe that their safety or that of a person known to them would be threatened if they failed to provide such labour; or (ii) in circumstances which constitute forced or compulsory labour, as defined in article 2 of the Forced Labour Convention.2 Entities With Reporting Obligations Any entity required to report annually to the Government under the Act must include in its report the steps taken during its previous financial year to prevent and reduce the risk of forced labour and child labour. In order to comply with the obligations imposed by the Act, the entity must also include in its report information on its structure, its activities relating to the production, sale, distribution or importation of goods, as well as the type of goods and place of operation, and the countries or regions involved in its supply chains. Lastly, the report must include a brief explanation of the entity’s due diligence policies and processes regarding forced labour and child labour, information on the training provided to employees, and the parts of its business that carry a risk of forced labour or child labour. Given that the steps taken to prevent and reduce forced labour and child labour can result in a loss of income for vulnerable families, the Act requires entities to identify the measures taken to mitigate such impact on these families. Publication of Reports Entities must not only comply with the format, approval and attestation requirements for their report before submitting it to the Government but also make it available to the public by publishing it on a prominent place on their website. They can submit their report in one of the two official languages, although the Government recommends that reports be published in both English and French. In addition, the Act requires entities incorporated under the Canada Business Corporations Act or any other federal law to provide a copy of the report to each shareholder at the same time as their annual financial statements. Offences and Fines Reporting entities that fail to submit their report or make it available to the public are liable to a fine of not more than $250,000 per offence.3 The senior executives, directors and employees of an entity are also liable to fines and criminal prosecution should the entity contravene the Act.4 Any offence committed by an entity may also entail reputational risk. Our Advice Introducing policies, procedures, audit tools and other rules—or improving existing ones—to prevent and reduce modern slavery is essential. Such policies and rules may include procedures for reporting and an investigation process to address concerns, as well as a whistleblower protection system (whistleblower policy or similar measures). Businesses should think about how they select suppliers and whether they should adopt rules for monitoring the activities of their suppliers and partners. They should also consider updating their agreements with existing suppliers or partners to ensure compliance with the requirements of the Act, in particular by including provisions prohibiting the use of forced labour or child labour in suppliers’ business activities. Other measures may include raising awareness and training staff, directors and officers on how to implement company policies and procedures aimed at identifying and preventing forced labour and child labour. Our team has developed tools to help reporting entities identify the parts of their business that carry a risk of forced labour or child labour. We will be monitoring upcoming government publications in response to the first reports that reporting entities submit and, if need be, we will release another article to clarify reporting obligations. For any questions or advice relating to your obligations under the Act, do not hesitate to contact our team. Section 1 of the Act; see also the Worst Forms of Child Labour Convention, adopted in Geneva on June 17, 1999, article 3: Link Section 1 of the Act; see also the Forced Labour Convention, adopted in Geneva on June 28, 1930, article 2: Link Section 19 of the Act. Section 20 of the Act.

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May 6, 2024

New provisions governing disguised expropriation in the Act respecting land use planning and development: Impact of the declaratory effect and transitional provisions

On December 6, 2023, an amendment to the Act to amend the Act respecting municipal taxation and other legislative provisions1(“Bill 39”)was adopted during a clause-by-clause consideration of Bill 39 in parliamentary committee. Two days later, the Bill received assent. This amendment introduced new provisions to circumscribe the circumstances in which a municipality’s use of one of its powers may be considered disguised expropriation,2 particularly when the power exercised is provided for in the Act respecting land use planning and development3 (the “Act”). Legislative framework for disguised expropriation Certain provisions have been codified in the new section 245 of the Act, in line with case law on disguised expropriation.4 The Act now expressly states that a planning by-law may restrict the exercise of a right of ownership, without giving rise to an indemnity, unless the restrictions are so severe as to prevent any reasonable use of an immovable.5 It has now been established by law that a municipality’s act affecting the use of an immovable creates no obligation to indemnify under article 952 of the Civil Code of Québec6 (“C.C.Q.”). To enable municipalities to exercise their role in protecting the environment, as well as the health and safety of people and property, a presumption is now applied in their favour to the effect that the infringement of a right of ownership is justified solely insofar as it results from an act that meets one of the conditions listed in paragraph 3 of section 245 of the Act. The presumption thus applies when the expropriator demonstrates that the purpose of the act is to: protect wetlands and bodies of water; protect another environment of high ecological value; or that the act is necessary to ensure human health or safety or the safety of property.7 Declaratory effect A noteworthy change is that the new section 245 of the Act is declaratory, meaning that it has a retroactive effect. Generally, the principle of interpretation is that new laws have no retroactive effect, as set out in the Interpretation Act.8 The intention behind making section 245 of the Act declaratory was to give the provision retroactive effect from the date that it came into force. It is important to note that this declaratory effect is absolute, such that the courts are bound to comply with it, as if the section had always existed and had such effect. It cannot therefore be associated with the general rule that legislation is prospective, meaning that it only has an effect in the future.9 In enacting declaratory legislation, the legislature assumes the role of a court and dictates the interpretation of its own law, such that it becomes akin to binding precedents10. As a result, such legislation may overrule a court decision in the same way that a Supreme Court decision would take precedence over a previous line of lower court judgments on a given question of law.11 That being said, the declaratory effect of the Act’s new section 245 will only apply to disputes instituted since its coming into force and before December 8, 2023, as well as to cases taken under advisement by a trial judge, and cases that are pending and under advisement before the Court of Appeal of Quebec. It will therefore not be possible to apply to have a judgment that has acquired the effect of res judicata amended by invoking this declaratory effect. Incidentally, as recently as January 2024, the Court of Appeal had decided to allow a municipality appealing a decision raising issues related to the content of Bill 39, to add further arguments to the existing appeal brief.12 According to the appellant municipality, the “new law” would have the effect of sealing the fate of the case in question.13 On June 18, 2024, following its hearing of this same case on the merits, the Court of Appeal found that “[TRANSLATION] it was not able, on the basis of the case on appeal as constituted, to render an abstract decision on an issue that was not truly debated at trial.”14 Consequently, the Court of Appeal overturned the findings at trial for the sole purpose of allowing the trial judge to decide the case in light of the parameters set by new section 245.15 It would therefore seem that the referral of appeal cases back to the trial stage is the route preferred by the Court of Appeal in accordance with the declaratory effect of the new legislative provisions. Various other amendments Other provisions also include amendments related to the conditions described above. Technically speaking, the provisions of Bill 39 relating to expropriation came into force as soon as it received assent. However, the transitional provisions created certain exceptions. Firstly, as of June 8, 2024,16 municipalities will be required to send a notice to the owner of an immovable concerned by an act referred to in one of the three presumptions. Such notice must be sent within three months of the date of entry into force of the act.17 Secondly, the owner of an immovable who has suffered an infringement of their right of ownership that prevents all reasonable use of the immovable may now bring a proceeding before the Superior Court for the payment of an indemnity under article 952 of the C.C.Q. Such a proceeding is prescribed three years after the date of coming into force of the act. This period began to run on December 8, 2023, for regulations in force on that date, without extending periods that had already begun to run. Finally, it is important to note that it is now possible for a municipality that has been found guilty of disguised expropriation to acquire the immovable concerned. The municipality can therefore decide to acquire the immovable or put a stop to the infringement of the right of ownership.18 Under the transitional provisions, in any dispute where the judge has not taken the matter under advisement by December 7, 2023, the Court must consider these rules concerning the possibility for a municipality to put an stop to an infringement of the right of ownership.19 Conclusion The sections added to the Act under Bill 39 provide a framework for interpreting and applying the principle of disguised expropriation. The declaratory effect was clearly intended to accommodate municipal authorities wishing to benefit from the principles of this new legislation in pending cases. B. 39, 1st Sess., 43rd Legis., Quebec, 2023. The Ministère des Affaires municipales et de l’Habitation opted instead for the term “expropriation de fait” (de facto expropriation) in the Muni-Express on the adoption of Bill 39 (see the Act to amend the Act respecting municipal taxation and other legislative provisions – Muni-Express (gouv.qc.ca)) CQLR, c. A-19.1. Municipalité de Saint-Colomban c. Boutique de golf Gilles Gareau inc., 2019 QCCA 1402; Dupras c. Ville de Mascouche, 2022 QCCA 350. Minister’s comments in support of the amendments to section 245 of the Act. CCQ-1991. New section 245, para. 3 of the Act. CQLR, c. I-16, s. 50 Régie des rentes du Québec v. Canada Bread Company Ltd., 2013 SCC 46. Id., para. 27. Id. Ville de Saint-Bruno-de-Montarville c. Sommet Prestige Canada inc., 2024 QCCA 25, para. 5. Id., para. 1. Ville de Saint-Bruno-de-Montarville c. Sommet Prestige Canada inc., 2024 QCCA 804, para. 30. Id., paras. 30 and 31. Bill 39, section 87, para. 1. New section 245.1 of the Act. New section 245.3 of the Act. Bill 39, section 87, para. 2.

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December 5, 2022

Construction: An unwarranted contestation may be considered an abuse of procedure

In the decision in 9058-4004 Québec inc. c. 9337-9907 Québec inc.1 rendered on October 21, 2022, the court granted compensation to a subcontractor for its extrajudicial fees further to a general contractor’s unfounded contestation of its claim as part of a hypothecary action. The facts In May 2019, Portes de garage Citadelle Ltée (“Citadelle”) and general contractor 9337-9907 Québec inc. (“AllConstructions”) concluded a contract for the provision of services and materials needed to install unloading docks in a building under construction. On May 16, 2019, notice of the contract was given to the building owner, 9058-4004 Québec inc. (“Transport Pouliot”). The first two phases of Citadelle’s work were completed between June and August 2019. In late September 2019, AllConstructions allegedly vacated the worksite after a dispute with Transport Pouliot. The third phase of Citadelle’s work was completed in October 2019. On November 25, 2019, Citadelle sent a statement of account to AllConstructions and registered a legal hypothec on the building two days later. On December 23, 2019, after registering a prior notice of the exercise of a hypothecary right, AllConstructions brought a hypothecary action against Transport Pouliot in the Superior Court, claiming the sums it was owed. For its part, Citadelle brought a hypothecary action against the owner, Transport Pouliot, and instituted legal proceedings against AllConstructions in April 2020. It is important to note that during the proceedings, AllConstructions admitted that it had received payment from Transport Pouliot for the sums invoiced by Citadelle. To justify its refusal to pay its subcontractor Citadelle, AllConstructions argued summarily that the services and materials provided were inadequate and did not meet standards. Despite its weak position and the lack of compelling evidence, AllConstructions maintained its argument. Citadelle had no choice but to pursue its legal proceedings and apply to have AllConstructions’ action declared abusive in order to recover its extrajudicial fees. AllConstructions’ abuse of procedure Citadelle claimed that AllConstructions’ defence was unfounded, frivolous and intended to delay. AllConstructions only had testimonial evidence to support its allegations, and it failed to file any expert opinions or exhibits. The contract did not contain a “pay when paid” clause, and AllConstructions admitted in the proceedings that it had received payment from Transport Pouliot for the sums invoiced by Citadelle. AllConstructions claimed that it had serious arguments to make in response to the application to have its action declared abusive. It stated that the work performed by Citadelle was inadequate and that the materials and services provided were not up to standards. It maintained its position, despite the fact that it had vacated the worksite a month before Citadelle’s work was completed and, therefore, could not have verified the actual quality of the work performed. In March 2022, AllConstructions ultimately abandoned its contestation of Citadelle’s claim a few days before the trial and nearly a year and a half after the proceedings began. The judge allowed Citadelle’s application to have AllConstructions’ action declared abusive. AllConstructions’ defence was unfounded, frivolous and intended to delay. It had no solid factual or legal basis. The allegation that Citadelle failed to comply with standards in the performance of its contract is mere speculation, as AllConstructions left the worksite in September 2019. Citadelle incurred unnecessary extrajudicial fees as a result of AllConstructions’ unfounded contestation of its claim. The judge awarded Citadelle a sum of $9,000.00 as compensation for the legal fees that it had paid. What it means A general contractor that cannot justify a deduction from its subcontractor’s claims after the work is completed but does so anyway risks having its contestation declared abusive. Jurisprudence has established that abuse of procedure may consist of légèreté blâmable [blameworthy conduct]2 or témérité [recklessness] resulting from allegations that do not stand up to careful analysis or are exaggerated beyond the scope of the dispute between the parties.3 A manifestly unfounded action is a civil fault that may be subject to legal proceedings and sanctions in accordance with article 51 of the Code of Civil Procedure.4 A party that considers itself the victim of abusive proceedings may, in addition to applying to have the proceedings declared abusive, claim the reimbursement of reasonable legal fees it has paid.5 This is precisely what Citadelle did and what it obtained. AllConstructions irresponsibly managed its dispute with its subcontractor. It made arguments based only on unverified assumptions, even though the evidence set out in the application was relatively solid and complete. As a victim of abuse of procedure, Citadelle was granted a reimbursement of its legal fees in addition to the sums that it was owed by AllConstructions. Court file No. 760-22-011912-204 Royal Lepage commercial inc. c. 109650 Canada ltd., 2007 QCCA 915 El-Hachem c. Décary, 2012 QCCA 2071 2741-8854 Québec inc. c. Restaurant King Ouest, 2018 QCCA 1807 (CanLII) Only extrajudicial fees deemed reasonable are reimbursed in full. The factors considered in establishing a total reasonable amount are summarized in paragraph 32 of the case at hand and are cited from Groupe Van Houtte inc. c. Développements industriels et commerciaux de Montréal inc., 2010 QCCA 1970, and Iris Le Groupe visuel (1990) inc. c. 9105-1862 Québec inc., 2021 QCCA 1208

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