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Exclusion clauses a ‘form of intimidation’: CCA

0 337 Associations

by Warren Frey

Canadian Construction Association (CCA) board members are not mincing words on the subject of exclusionary causes, calling the practice offensive and a possible infringement of the Charter of Rights and Freedoms.
Exclusion clauses a ‘form of intimidation’: CCA

"We intend to fight (exclusionary clauses) and really don't feel they serve the industry or the taxpayer well," CCA president Michael Atkinson said.

The matter recently surfaced during the CCA's fall board meeting in Fort McMurray, Alta. Exclusionary or reprisal clauses can be used by a municipality to restrict a company from bidding on future public projects for a set period of time if that company is currently or has previously been involved in litigation with that city over work or services.

The CCA's civil infrastructure council met on Sept. 27 as part of the board meeting and decided to aid in a B.C. contractor's legal battle against the City of Burnaby's use of an exclusion clause.

The council approved $20,000 of its own funds, with the BC Road Builders and Heavy Construction Association contributing $10,000, to aid J. Cote and Son Excavating Ltd.'s civil suit against Burnaby City Hall, which will be heard in B.C. Supreme Court. It should be noted that no decision has been made yet to the CCA to formally proceed.

"There's at least one case in Quebec that suggested those kinds of clauses do in fact infringe on the Charter of Rights and Freedoms and we also find those clauses are way too far on the spectrum in responding to the concerns of the problems they have," Atkinson said.

While the Quebec case (Cie de construction & de developpement Cris ltee c. Societe de developpement de la Baie James, [2001]) proved favourable to the industry in terms of limiting the use of exclusionary contracts, Quebec uses a civil code while the rest of Canada uses common law.

While the Quebec decision is under a different legal system and thus offers no direct precedent, Atkinson said he is hopeful a similar judgment will take place in British Columbia, which is the first instance outside of Quebec of such a case going before the courts.

In the J. Cote case, exclusionary or reprisal clauses were implemented in 2014 shortly after the company sued the city for payment from a 2012 contract. Under the new clause, the city would not accept tenders from any company or person that took legal action against the city of Burnaby in the last two years.

"It's an extremely offensive solution to a problem that perhaps would be better dealt with through some kind of prequalification or performance evaluation system. It's a form of intimidation really, when you think about it, when you say 'if you're going to put a claim in and we're wrong and you're right, that we're not going to let you bid on publicly funded work anymore,'" Atkinson said.

Municipalities across Canada have made use of exclusionary clauses, a report to the CCA civil infrastructure council stated. According to the report, the cities of Toronto and Halifax are both set to discuss the matter in the fall with stakeholders.

Under the low bid system used in many municipalities for procurement, a city government has a limited ability to exclude bidders. Should a contractor issue change orders to recoup costs after submitting the lowest bid or habitually litigate, an exclusionary clause allows a municipality to better choose the right contractor for the right job, Atkinson said.

"But you're excluding someone from accessing the courts, which is their constitutional right, and that's why the CCA is challenging (the practice)," Atkinson said. "It is way too strong a response to a problem that could be addressed in a more reasonable fashion."

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