The CCDC 2 has been given its first update since 2008. A lot has changed. Ontario has incorporated prompt payment legislation and adjudication. The Canadian construction industry is moving to adopt these changes in other provinces.
Major differences between the CCDC 2 (2020) and the CCDC 2 (2008), include the following:
Prompt Payment
- Prompt payment is introduced through the term “Payment Legislation”, meaning legislation in effect at the Place of the Work which governs payment under construction contracts. Previously, the Contractor submitted applications for payment to the Consultant. Now, applications for payment must be submitted to the Owner and the Consultant.
- The Contractor’s application for payment must comply with the requirements for a ‘Proper Invoice’ under applicable Payment Legislation [GC 5.2.6]. If the Owner intends to reject any part of an application for payment, it must provide the Contractor with a written notice of non-payment with reasons for the rejection or revisions to the application for payment [GC 5.3.1.1].
- The Contractor must now provide evidence of compliance with WSIB legislation with all applications for payment and, following the first payment, the Contractor must also provide a CCDC 9A Statutory Declaration swearing to the payment of subtrades [GC 5.2.7, GC 10.4.1].
- The Owner must pay the Contractor on the 28th day following receipt of the application for payment or as required by applicable Payment Legislation. The Owner must pay the final payment within five calendar days after the issuance of a final certificate for payment [GC 5.3.1.2, GC 5.5.4].
Holdback
- The Owner must pay the statutory holdback no later than 10 Working Days following the expiration of the lien [GC 5.4.3], subject to any requirements of applicable Payment Legislation. In the past, Owners often held on to the statutory holdback until they were satisfied that all deficiencies were completed. In Ontario, if an Owner does not want to pay the holdback as required, the Owner must deliver to the Contractor a notice of non-payment of the holdback and publish it on a construction notice website.
Ready-for-Takeover
- The timing for waiver of claims [GC 13.2] and indemnification [GC 13.1] is no longer determined by substantial performance and is now determined by a new term in the CCDC 2 [2020], namely Ready-for- Takeover.
- Under GC 12.1, Ready-for-Takeover is achieved when the Consultant confirms certain conditions are met, including the following: the Consultant has certified Substantial Performance of the Work; requirements for occupancy are satisfied; all manuals and operation documents required by the Contract are delivered to the Owner; final cleaning and waste removal is completed; completion of start-up testing and other conditions are satisfied.
- The Contractor must deliver to the Consultant and the Owner a written application for Ready-for-Takeover containing a list of the remaining items to be completed or corrected. After submission, the Consultant has 10 days to advise the Contractor with written reasons if the Work is not Ready-for-Takeover or confirm the date for Ready-for-Takeover to the Owner and the Contractor.
Adjudication
- GC 8.2 has been added to allow for adjudication pursuant to current legislation in Ontario and legislation being drafted in other provinces.
- Adjudication permits the quick resolution of disputes during the construction process. Lien remedies and other rights under the Contract remain available to the parties.
Valuation of Change Directives
- Changes have been made to GC 6.3 that allow the Contractor to charge for additional costs. Costs can only be charged if they contribute directly to the implementation of the Change Directive.
Cash Allowances
- Cash allowances can be reallocated to cover unexpected shortfalls. As such, the Consultant can direct funds remaining in certain cash allowances to be reallocated to cover overages in other cash allowances in which the actual cost of the Work exceeded the allowance amount. The Contractor will only be compensated for excess costs where the actual cost of the Work under all cash allowances exceeds the total amount of all cash allowances.
Safety
- The Contractor is responsible for overall health and safety on the Project even if the Owner brings on other contractors or work is completed by the Owner’s own forces.
There are other differences between the two versions of the CCDC 2 contract. Contractors that use the CCDC 2 in Ontario, whether the 2008 or the 2020 version, should be using Supplementary Conditions that modify the standard CCDC 2 contract to permit prompt payment and adjudication with terms suitable for the business of the Contractor.
If you need assistance in revising your construction contracts, feel free to contact us.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.