Crosslinx Case Indicates Courts are Sympathetic to Construction Contractors Delayed by COVID-19 Pandemic

In Crosslinx v. Ontario Infrastructure,[i] an Ontario Judge held that health and safety measures undertaken by a construction contractor in response to the pandemic triggered a process that might lead to an extension of time to complete a project. This case highlights the importance of parties following their contractual processes and working collaboratively to ensure projects move forward in a way that protects health and safety.

The contract at issue was between a provincial Crown agency (the “Crown”) and consortium of four companies (the “Contractor”) for the construction of a light rapid transit line in Toronto.  Under the contract, the Contractor was required to finish the project by the substantial completion date or face financial penalties. However, in the event of an emergency that required the Contractor to implement “additional or overriding procedures” (a term not defined in the contract), the Contractor could invoke a process to determine whether an extension of time was warranted.

The issue was whether the Contractor was required to implement “additional and overriding procedures” in response to the COVID-19 pandemic.

At the beginning of the pandemic, the Crown required the Contractor to follow government protocols to prevent the spread of the virus on site, including physical distancing, staggering start times, restricting the number of workers on site, and ensuring proper sanitation.  In fact, the Contractor was proactive and undertook these measures on its own initiative.

The Crown argued that the Contractor was already responsible for health and safety, and therefore, the COVID-19 protocols did not constitute “additional or overriding procedures”. Furthermore, the Crown said they did not need to issue procedures the Contractor already implemented them on its own.

The Court rejected the Crown’s argument, finding that the government protocols exceeded the Contractor’s pre-existing obligations for health and safety, and thus, fell within the meaning of “additional or overriding procedures”. The Crown could not escape this outcome because the Contractor was proactive. In Justice Koehnen’s words, that would “punish” the Contractor for being responsible.

In the end, the Court did not find that an extension of time was warranted, only that the Crown must follow a process that may lead to an extension. That said, Justice Koehnen left no doubt as to where he leaned, given the impact of COVID-19. Such is evident from the following excerpt:

• [71]        The concept of delay in relation to the Substantial Completion Date should be read in light of the purpose of the contractual provision.  The purpose of an obligation to substantially complete a project by a given date is to incentivize constructors to keep the project moving forward and to impose a financial penalty if they do not do so.  Owners do not want constructors abandoning their projects to work on more profitable ones. Substantial completion provisions incentivize constructors to remain on the job and complete projects in a timely, efficient manner.   Imposing financial penalties for delays caused by the pandemic does not further the purpose of including a Substantial Completion Date in the contract.  It merely penalizes a contractor who may be working with heroic efficiency to complete the project in a timely manner even though it is impossible to do so because of circumstances beyond the contractor’s control.  Imposing financial penalties on contractors for failing to meet a substantial completion date in those circumstances only incentivizes them to cut corners and imperil public health and safety. 
• [72]         […]  Social distancing on a construction site means one can have fewer workers on site at any one time.  While working with staggered shifts may diminish the amount of delay, the risk of significant delay remains. 
• [73]           This is a serious pandemic.  Millions have died around the world.  At the time of writing these reasons, 24,825 people have died in Canada.  New variations of Covid-19 have emerged that are highly infectious.  A single infection can have an exponential impact on others.  In the circumstances I do not think it appropriate to adopt an interpretation of a contractual provision that runs contrary to its purpose and that incentivizes constructors to imperil public health [emphasis added].

The outcome of the Crosslinx case turned on the facts and contractual provisions which may not exist in other cases. However, Justice Koehnen’s decision is an early indication that the courts will be sympathetic to contractors or subcontractors who are delayed by the COVID-19 pandemic.

[i] Crosslinx v. Ontario Infrastructure, 2021 ONSC 3567

The foregoing information provides only an overview of construction contracts. Specific legal advice should be obtained. If you have questions in the above regard, please contact Bryce Dillon at 613-566-2852 or at [email protected].