Back

FAQ.25 Certificates for Payment and Statutory Declarations

FAQ.25

Question:

Can a certificate of payment be issued without a statutory declaration from the contractor (subsequent to the first certificate)?

Answer:

The answer is that it depends on what the project manual specifications require in the construction contract between the owner and the contractor.

Standard construction contracts, such as CCDC 2-2008 (ref. GC 5.2 and 5.3), do not require a ‘Statutory Declaration’ (Stat Dec) as part of the regular monthly progress payments, but rather only require a Stat Dec be submitted along with the application for payment of the 10% lien holdback following Substantial Performance (ref. CCDC 2, GC 5.5.1.2). With the issuance of CCDC 2-2020 (ref. GC 5.2.7) Stat Decs are required with all but the first application for payment.

The contractor declares in the statutory declaration (CCDC 9A) that they have distributed monies received from the owner to pay others doing work on the project. This protects the owner in the event of a lien claim from a 3rd party subcontractor or supplier because they were not paid by the general contractor. To 'solemnly declare' is a serious thing in legal terms; as the CCDC 9A form states, "The making of a false or fraudulent declaration is a contravention of the Criminal Code of Canada, and could carry, upon conviction, penalties including fines or imprisonment."

If the contract requires Stat Decs every month, it is not something that a construction contract administrator should take lightly or waive. The same serious consideration should be given to requirements that may be specified for WSIB (Workplace Safety and Insurance Board) clearance forms every month.

Expanded Answer:

The following comments were offered by architects:

  • The un-amended CCDC contracts make no provision for not issuing a certificate because a Stat Dec was not submitted except after substantial performance. We will issue a Certificate for Payment without a Statutory Declaration or with a Stat Dec that has not been properly filled in, or has not had the CCDC seal applied to it (after having tried to obtain one from the Contractor), but based on the requirements of the Supplementary Conditions of the contract, we note the omission/deficiency/copyright issues in our covering letter to the Owner.
  • We were advised by the of the CCDC that their Stat Dec was not intended to, nor should it be used if the contractor has not yet received payment based on the first Certificate for Payment.
  • Although the older CCDC contracts may not require Stat Decs, the financing agreement with the Client may require it. It may be prudent to either request information regarding such agreements before issuing the second certificate or stating something like… “No statutory declaration has been submitted with this invoice. The client should ensure whether such documentation is required by its lender before making payment.”
  • In our case, we would send a cover letter along with our Certificate for Payment to the client, advising of the particulars of the certificate and identifying if no Stat Dec was included (and indicating the contractor’s explanation as to why it was not provided). We would also copy this to the contractor to encourage transparency between the contracting parties (client and contractor).
 
 
Share: