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OGCA on Supreme Court of Canada Ruling

The Ontario General Contractors Association (OGCA) published an article in its December 17, 2019 edition of OGCA News in relation to a Supreme Court of Canada ruling. It is as applicable to OAA members as it is to contractors. Many of the architectural service RFPs reviewed by the OAA contain reprisal clauses. In essence, reprisal clauses allow clients to punish architects or contractors for exercising their legal rights. 

It is republished here with permission: 

The OGCA is frustrated to learn that the Supreme Court of Canada has dismissed an appeal brought forward by contractor J. Cote & Son Excavating. This decision by the Supreme Court protects a municipality’s ability to use reprisal clauses. This clause, which was used by the City of Burnaby against J.Cote & Son Excavating, is prevalent across the entire country. 

Reprisal clauses restrict competitive bids and drive up the cost of construction because they force contractors, who may have a dispute with the city, to choose between pursuing their legal rights and bidding on future city contracts. 

This ruling has serious implications for contractors because it condones blacklisting contractors from bidding on city projects simply because they exercised their constitutional right to access the courts. 

We anticipate that the recent introduction of prompt payment legislation will increase the number of adjudications, triggering a jump in reprisal policies being applied. 

Under the new Construction Act, the requirement to trigger an adjudication is not an option, and in fact, is mandatory under certain circumstances. Therefore, a subtrade or a general contractor, following the law as they must do, can then be disqualified from any future bidding with that owner through the application of the reprisal clause.