Appeal Court Rules That Contract is Critical to Determining the Identity of the Constructor


Time Published on August 31, 2012

One of the most complex issues under Ontario OH&S law relates to determining which party on a construction project is the “constructor” within the meaning of the OHSA.  Many owners of construction projects who have contracted with a third party general contractor have been surprised to find themselves treated as the “constructor” by the Ministry of Labour generally on the basis that the owner had taken steps to “control” the project. 

In most of these cases, the owner had not intended to assume the role of constructor and was ill equipped to comply with the rigorous legal obligations imposed on a constructor by the OHSA.   Many of the owners had entered into written agreements which indicated that the contractor was responsible for controlling the project.  Historically, Ontario Courts have considered the contract between the parties to be a relevant factor, but have placed considerably more weight on what was happening at the project. 

In a recent appeal case from the Yukon, the Court made a number of interesting comments about the role the contract has in determining the legal status of a party as the constructor.  The Yukon OH&S legislation is very similar to the Ontario OHSA and the Court considered a number of legal decisions from Ontario.  The case involved a highway extension project where the government of the Yukon retained a contractor to perform the sub-grading and base construction.   An accident occurred when a blasting sub-contractor caused an explosion which resulted in rocks landing in a residential area.  The contract between the Yukon government and the contractor indicated that the contractor would act as the “constructor” for the purposes of OH&S legislation. 

Notwithstanding the terms of the contract, the Yukon government was charged as the “constructor” on the project.  The Prosecution relied heavily on a number of contractual provisions which gave the Yukon government a number of rights to ensure contractual compliance.  At trial, the government of the Yukon was found to be the constructor primarily on the basis of the government’s contractual rights and the trial court’s finding that the project in question was in fact part of a larger project that the Yukon government was responsible for. 

The Appeal Court overturned this finding, placed considerable emphasis on the terms of the contract and also held that the work at issue was not part of a larger project.  The Appeal Court rejected the Crown submission that the role of each party under OH&S legislation should be determined retrospectively by looking at the facts and determining which definition fits which party.  The Appeal Court was concerned that the Crown’s approach created a recipe for confusion on a construction site and noted that the protection and safety of the workers and the public require everyone on the site to know their obligations under OH&S legislation at the outset of the Project.

The Appeal Court ruled that the traditional legal test followed by Courts in determining the status of a constructor should play a secondary role to the terms of a contract. The Appeal Court stated that where an owner and contractor agree that the contractor shall assume the statutory obligations of “constructor”, it makes little sense to challenge that arrangement, unless it can be established that the reality was quite different or the owner was attempting to evade its statutory duty.  Clearly, the Appeal Court was concerned that imposing constructor obligations on an unsuspecting owner who has contracted with a third party general contractor is contrary to the public interest.  The Appeal Court was prepared to place great weight on the intentions of the parties, but was careful to point out the contract will not apply if the reality of the project is dramatically different than the contract. 

It is our view that the approach of the Appeal Court is encouraging in that the intentions of the parties with respect to the status of the constructor will be respected unless the owner has clearly taken over control of the project.   It is important to appreciate that this reasoning has not been adopted by the Ontario Courts.  The current approach of the Ontario Courts has been to place relatively little weight on the contract and engage in a retrospective review of who was controlling the project on the ground.  It will be interesting to see what kind of treatment the approach of the Yukon Court gets in Ontario in future cases.

Tag occupational health and safety