Canada: The Reinforced Building Act: Obtaining And Retaining A Contractor's Licence Has Become More Difficult

On September 4, the Building Act became much stricter regarding the conditions for obtaining and retaining a contractor's licence. It now gives broad powers to Quebec's construction regulator, the Régie du bâtiment, requiring stakeholders in the construction industry to be pure as the driven snow.

The Act to amend the Building Act and other legislative provisions mainly to give effect to certain Charbonneau Commission recommendations (the "Act") came into force on September 4. Directly mirroring the recommendations of the Charbonneau Commission, the Act increases the surveillance and inspection powers of the Régie du bâtiment (the "Board") in order to root out collusion and corruption in the construction industry.

The Act provides for a significant increase in the Board's powers of inquiry, verification and inspection. It now has control over the assessment and monitoring of the integrity of contractors. Close examination of these recent amendments yields a better understanding of the extent of Act's new requirements and the Board's new powers.

Going forward, a "guarantor" – the natural person who applies for a licence on behalf of an enterprise and qualifies the enterprise by passing muster before the Board – becomes responsible in the eyes of the Board for managing the activities for which the licence was issued. More specifically, guarantors must "participate actively and on an ongoing basis" in "managing the activities in the field for which their knowledge or experience has been recognized by the Board". This provision begs the question: what will "actively and on an ongoing basis" be construed to mean? This may not be a major issue for a small firm, but what about a large one? Is a guarantor specialized in health and safety matters required to be personally involved on all of the company's construction sites? If so, it is hard to imagine how any guarantor could participate actively and on an ongoing basis in the activities related to his or her area of expertise throughout the entire territory where the company is operating.

In addition, the Act expands the definition of "officer" to include any shareholder holding at least 10% of the voting shares of an enterprise. Previously the threshold was 20%. This new threshold will allow the Board to closely scrutinize more of the shareholders of an enterprise when determining whether its "officers" meet the integrity criteria under the Act.

Regarding the integrity requirement, the Act adds new grounds for refusing to issue a licence, which in several cases have nothing to do with the operation of a construction company. For example, committing an offence involving trafficking, manufacturing or importing drugs1 allows the Board to refuse to issue a licence or to cancel one already issued. While virtue is a laudable consideration, this new integrity-related requirement seems to go beyond what is necessary. Consider for example the case of a young adult who at age 21 is convicted of selling a few grams of cannabis – arguably a youthful indiscretion: the Board will refuse to issue him a licence before he turns 26. We understand the aim: to prevent organized crime from using legal construction activities to launder money from drug trafficking. But this new provision seems to go considerably further than that, probably too far.

Another major new feature: the Board now has the power to refuse to issue a licence if it considers that the enterprise's structure would enable the holder of the licence or any other person to evade the application of the Building Act2. The Board can also refuse to issue a licence to an applicant related to another person who would not have qualified for a licence3.

These new requirements under the Building Act and the broader powers of the Board are certain to lead to court challenges, particularly regarding the constitutionality of some of the new provisions. The legislature seems to want to limit access to the construction industry to individuals beyond all reproach. In light of these recent legislative amendments, it is all the more important to consult a legal advisor when you receive a statement of offence or contravention, be it by the CNESST, the CCQ or the Board, or by the police, the AMF or the Régie des alcools, des courses et des jeux. Why? Because any such transgression will be taken into consideration by the Board in deciding whether to issue or cancel your contractor's licence.

Footnotes

1 Section 8 of the Act

2 Section 13 of the Act

3 Section 15 of the Act

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.

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