Canada: Public Contracts: Overpayments Targeted By The Government (Again)

On December 3, the Government of Quebec tabled Bill 26, An Act to ensure mainly the recovery of amounts obtained as a result of fraud or fraudulent tactics in connection with public contracts (the Bill). A similar bill had been tabled on November 13, 2013, under the previous government, but there was no effective follow-up. The current Bill applies to all public contracts, whereas the previous bill applied only to public contracts in the construction industry.

Among other things, the Bill proposes an amendment to the Act respecting contracting by public bodies (the Act) to allow the Autorité des marchés financiers (AMF) to exercise its discretionary power with respect to enterprises found guilty of offences listed in the Act that wish to be able to obtain or preserve an authorization to enter into a contract/subcontract with public bodies.

Recovery of amounts improperly paid

To facilitate the recovery of amounts improperly paid by a public body as a result of fraud or fraudulent tactics in the course of the tendering, awarding or management of a public contract, the government is proposing various measures, including:

  • Creation of a presumption of injury and a presumption of the value of such injury. Upon proof that an enterprise has committed fraud or engaged in a fraudulent tactic in the above circumstances, the enterprise will be presumed to have caused injury to the public body concerned. The injury is presumed to correspond to the amount claimed by the public body if the amount does not exceed 15% of the total amount paid for the contract concerned. Since the existence and the value of an injury are "presumed" rather than "deemed," it seems that the lawmakers wish to give the enterprises an opportunity to try to demonstrate the absence of injury or the value of the injury is less than 15%.
  • Solidary liability of officers and directors. The Bill provides that the officers of the enterprise in office at the time the fraud or fraudulent tactics occurred will be held liable unless they prove that they acted with the care, diligence and skill that a prudent person would have exercised in similar circumstances. The same holds for the directors of the enterprise if it is established that they knew or ought to have known that fraud or fraudulent tactics were committed in relation to the contract concerned. The officers and directors will be solidarily liable with the enterprise.
  • Prescription period extended and past public contracts brought within the scope of the Bill. Under the Bill, an action to recover improperly paid amounts may be brought by a public body for injuries caused up to 20 years before the coming into force of these new provisions, provided the action is brought within five years of the coming into force of the new provisions. Moreover, actions that, before the date of coming into force of the new provisions, were dismissed on the grounds that the right was prescribed may be instituted again within five years after that date.
  • Registration of a legal hypothec on the property of the enterprise and the officers and directors concerned. A public body may, in an action brought under the new provisions, register a legal hypothec on the property of any enterprise or of its officers or directors, on the authorization of a judge. Such authorization may be granted if the public body's claim appears to be well-founded and if there is reason to fear that recovery of the claim might be jeopardized without such authorization.

Voluntary reimbursement program

The government will establish a reimbursement program so that any enterprise or any of its officers or directors may reimburse the amounts obtained from a public body in the previously described circumstances. A discharge may then be obtained regarding the contracts concerned. The program will be of a limited duration. If a transaction is entered into under the reimbursement program, the names of the parties to the transaction, the reimbursement amount and the period concerned will be made public.

The details of this reimbursement program have yet to be announced. The Bill states that this reimbursement program will be published as a draft program in the Gazette officielle du Québec so that any interested person may comment on it within the time period prescribed for such purpose.

AMF's discretionary regime strengthened

We bring to your attention that, under the Act respecting contracting by public bodies, enterprises wishing to enter into a contract/subcontract with a public body must first obtain an authorization for such purpose from the AMF in the circumstances set out in that Act. For more information on this topic, we refer you to our previous Legal update, with the reminder that the monetary threshold currently in effect is $5 million.

Furthermore, in its current form, the Act respecting contracting by public bodies requires the AMF to refuse to grant or renew or to revoke an authorization if the enterprise concerned has, in the preceding five years, been found guilty of an offence listed in Schedule I of the Act or if it has, in the preceding five years, been found guilty by a foreign court of an offence which, if committed in Canada, could have resulted in criminal or penal proceedings for an offence listed in Schedule I of such Act. While such convictions will continue to be considered by the AMF before granting, renewing or revoking an authorization, the AMF will now have discretionary power in this area. This appears to be a major change that will provide the enterprises concerned with the opportunity to try to convince the AMF that they are still meeting the high standards of integrity the public is entitled to expect from enterprises wishing to enter into public contracts/subcontracts.


Given that the previous Quebec government had tabled a similar bill and the current government is taking up the issue again with this Bill, it is expected that these provisions will be passed shortly.

The provisions could provide an incentive to the enterprises concerned to take advantage of the reimbursement program in order to prevent a situation where their officers and directors may be held personally liable.

Moreover, while there may now be hope for enterprises found guilty of offences listed in Schedule I of the Act respecting contracting with public bodies that they will nevertheless be able to obtain or preserve their authorizations, they will still have to implement the measures needed to satisfy the high standards for integrity. More than ever, it is in the interests of enterprises to adopt and comply with ethics and governance rules—for example, by adopting a code of ethics and professional conduct—in order to remain ethically above reproach.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.