Contractors are generally required to provide quittances (total or partial, as the case may be) and/or statutory declarations regarding the distribution of progress payments and the release of holdbacks for both themselves and their subcontractors.
Contractors are generally required to provide quittances (total or partial, as the case may be) and/or statutory declarations regarding the distribution of progress payments and the release of holdbacks for both themselves and their subcontractors.
This is indeed a pre-condition for receiving progress payments and the release of their contractual holdback.
If you would prefer to avoid receiving a judgment with the following conclusions:
“The Court finds on the evidence that the amounts claimed by the general contractor are not subject to any reserves pursuant to the statutory declarations and quittances it issued to the project owner for the periods concerned as a precondition for receiving progress payments and release of the holdback.
“The oral evidence the general contractor seeks to adduce regarding such reserves is inadmissible, as it is intended to contradict a written document in the absence of any commencement of proof.
“For these reasons, the Court dismisses the action brought by the general contractor against the project owner, with costs.”
Then you should pay close attention to the wording of such documents in order to ensure they contain, if need be, all the reserves that are required to preserve your rights and recourses against the project owner.
By way of example, the standard form of the Statutory Declaration of Progress Payment Distribution by Contractor (CCDC 9A) provides the following exceptions to the total amounts covered by the declaration from the contractor:
• holdback monies properly retained (usually 10 per cent of downpayment requests);
• payments deferred by agreement (for example, changes to the work for which the parties have agreed to negotiate a contract price adjustment and the schedule for performance before transmitting billing; it could also be the indirect costs associated with changes for which only direct costs have been negotiated);
• amounts withheld because of a legitimate dispute (for example, a claim of the contractor based on the discovery of unforeseen conditions of construction, challenged by the project owner).
It is preferable to specify, in order to avoid any ambiguity, the scope of the quittance handed over by the contractor, all the information regarding the above-mentioned exceptions and any other information you would like to include, both in the statutory declaration and in the quittances delivered to the project owner.
You could refer to an attached schedule specifying in addition to the basic exceptions mentioned above:
• changes to the work that have not been included because, for example, they are still being negotiated or are being processed pursuant to a cost-plus arrangement;
• claims declared or submitted for certain additional costs and/or time extensions; for example, indirect costs associated with a change order where under only direct costs have been agreed to and the contractor wishes to reserve its rights with respect to indirect costs. Follow the contractual procedure carefully to preserve your rights and recourses in this connection, as courts are quite strict in this regard;
• amounts for work performed during the period covered by the declaration and quittance but not able to be timely billed because of delays by subcontractors in requesting payment;
• any exceptions included in the statutory declarations and quittances of your subcontractors and suppliers, etc.
You could also agree during the project launch meeting on exceptions that will apply systematically to your statutory declarations and quittances, although it is still preferable to expressly specify them on each such documents. You will thus avoid the risk of having the contents of your statutory declarations and quittances being used against you in a court of law. IH
Jean Patrick Dallaire is a partner with the construction law and commercial litigation group with Langlois lawyers in Quebec City.
