Executive Summary

In this project, the LCO was faced with a classic law reform challenge – determining how best to adapt antiquated legislation to the legal and social conditions of modern-day Ontario. The Forestry Workers Lien for Wages Act was enacted in 1891 as a wage recovery mechanism for logging employees harvesting the forests of Northern Ontario. The Act provides loggers with a lien over the logs or timber they work on for the amount owing to them for their work.

These days, there are relatively few liens filed under the Act. However, a number of liens were filed in 2009 in connection with the Buchanan Forest Products Ltd. insolvency. The lien claimants brought an application before Senior Regional Justice Pierce to interpret the Act and, in her decision, she noted the difficulties caused by the Act’s archaic language and procedures. This decision inspired the LCO to develop a project proposal and ultimately to undertake this project.

The Report first describes the outdated features of the Act that prevent it from effectively protecting loggers in the modern industry. It then examines the historical context to the Act and identifies a number of important differences between the logging industry of 1891 and today’s industry. These include fundamental changes to the nature of logging work, the relationship between loggers and the forest product companies hiring them and the forest licencing regime and its impact on business relationships in the industry.

Next, the Report examines how the Act fits into the surrounding commercial law framework. The Act is poorly coordinated with contemporary statutory wage protections in both Ontario and federal legislation. Although the Act is strictly compatible with Ontario secured transactions law and federal bankruptcy and insolvency law, it undermines certain policies underlying these regimes. In particular, contrary to the philosophy of the Personal Property Security Act, the Act does not provide for a central registry allowing third parties to determine if liens are registered against property in which they have an interest.

The Report proceeds to examine several more specific design challenges that would have to be addressed in reforming the Act. Some of these are not easily resolvable. Logging work is regularly contracted out to subcontractors and one challenge would be to design the Act to protect subcontractors without exposing licencees to multiple liens claims arising from the same contract. Another significant issue is determining what priority lien claimants should have over other claims in the wood, particularly in insolvency situations.

Each of the above factors has implications for the continued viability of the Act and, in aggregate, they suggest that a forestry workers lien regime may no longer be commercially or legally appropriate for Ontario’s modern economy.

The Report turns to an examination of other statutory commercial lien regimes as possible comparators for reforming the Act. The most analogous statutory regime is BC’s 2010 Forestry Service Providers Protection Act. This statute is a plausible model for Ontario reform. However, the BC industry is distinguishable from the Ontario industry in several respects and one crucial element of the BC Act, a compensation fund for loggers in insolvency situations, is not likely to be a successful strategy for Ontario.

The Report concludes that, in some circumstances, the best course is not to adapt antiquated legislation to modern social and legal conditions at all. In the case of the Forestry Workers Lien for Wages Act, it seems that the need for the legislation has passed away with the historical industrial conditions that it was designed to address. Today’s logging contractors and subcontractors are no longer akin to the casual logging employees of the 1890s and the financial risk borne by modern loggers is no longer comparable to the economic circumstances experienced by their historic counterparts. In these circumstances, it is preferable to repeal the Act rather than to perpetuate an outdated lien regime. The LCO recommends that the Act be repealed.