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Construction issues

Things to know

  • Architectural and engineering professionals are provincially/territorially regulated, and both individuals and businesses engaged in these practices must be licensed.
  • Licences for general contractors are generally not required, other than in Québec.   Regardless, all provinces/territories require specific registrations and filings for issues ranging from occupational health and safety (OHS) to workers’ compensation.   In addition, the conduct of specialized trades or activities such as electrical work must be licensed.
  • Non-resident businesses performing work in Canada are subject to a statutory withholding tax.
  • Canada has a “contract-based” approach to competitive procurement – including tendering and requests for proposals – which, along with duties implied by jurisprudence, can result in duties and liabilities for bidders and bid-calling entities alike.  This is applicable to both the private and public sectors. 
  • Québec is a civil law province, with unique requirements for procurement and contract matters, including anti-corruption compliance when contracting with the public sector. 
  • Standard-form design and construction contracts are issued by the Canadian Construction Documents Committee (CCDC), the Royal Architectural Institute of Canada (RAIC), and other organizations depending on geography and industry.  However, standard forms tend to be modified by supplementary conditions or replaced entirely depending on the owner, industry, and the project.
  • Each province/territory has legislation that requires statutory holdbacks (the equivalent of a “retainage” in the U.S.) and creates lien rights. Some provinces have legislation creating trust rights.
  • Since 2019, Ontario adopted U.K./U.S.-style “prompt payment” regimes along with a U.K.-style adjudication regime; since then, other jurisdictions in Canada including Nova Scotia, Saskatchewan, Alberta, and the federal government, have since followed with similar initiatives.
  • Understanding and compliance with one’s obligations and duties under occupational health and safety legislation is critical, as accidents and injuries can lead to corporate and director and officer liabilities, as well as charges under the Criminal Code of Canada.

Things to do

  • Identify key provinces/territories of interest, and understand the applicable procurement, licensing, and registration requirements.
  • Develop a corporate structure for the contracting entity (e.g. branch or subsidiary), including consideration of non-residency tax issues, and how much and how regularly work will be performed in Canada.
  • Determine what contracts you are expected to enter into and want to use in Canada, and develop the necessary forms (including “Canadianizing” if applicable) for the province/territory at issue.
  • Develop an internal “playbook” to assist and coordinate your various business units and divisions within your organization, including procurement, contract administration, accounts payable, and claims and disputes.
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