A core function of law reform is to ensure that law evolves in step with social, economic and technological change. The Forestry Workers Lien for Wages Act (FWLWA or the Act) is a classic example of legislation that has fallen victim to changing times. The Act provides forestry workers with a lien over the wood they work on for the amount owing to them for their work. The Act dates back to 1891 and was intended as a form of wage protection for loggers cutting timber in the northern Ontario bush. Today, the Act remains essentially in original form, although almost every assumption underlying it has changed. It is no longer clear that lien protection for loggers remains necessary or appropriate in the modern legal and commercial landscape.
For example, in 1891, loggers were seasonal employees hired by mills to spend the winter in the bush harvesting wood. Wood lay in the bush often for months until the spring melt when it could be driven downriver to mills for processing. Logging wages were low and sometimes were not paid out until the end of the season, after loggers had invested months of labour. Loggers were physically isolated and had little or no financial reserves. Mills were often undercapitalized and prone to insolvency. In some instances, logs were delivered across the border before loggers could take steps to recover their wages. The Act provided loggers with a lien that attached to the harvested wood which could then be seized in the bush and sold in order to recover unpaid wages.
In contrast, today’s loggers are predominantly independent contractors who own their own equipment and charge a contract price reflecting the use of this equipment in addition to labour costs. These contractors are still frequently hired by mills but some loggers harvest and sell logs on their own account and are not “hired” at all. The modern industry has also developed a widespread practice of subcontracting out parts of the harvesting process. Subcontractors may be several contractual links away from the licencee holding a property interest in the harvested wood. Technology has evolved so that the industry operates year round and wood is usually processed within a matter of a few weeks rather than months. These industry changes affect the viability of an ongoing lien regime and call into question whether modern logging contractors and subcontractors remain vulnerable in the sense originally contemplated by the Act.
The Law Commission of Ontario (LCO) was made aware of the Act as a result of a 2009 court proceeding involving a number of forestry worker lien claims filed in the Buchanan Forest Products Ltd. insolvency. In the Buchanan decision, Madam Justice Pierce noted the Act’s archaic language and enforcement procedures but chose a liberal interpretation of the Act consistent with its purpose to protect forestry workers. The LCO reviewed this decision and, after conducting some preliminary research, launched this project to review the Act.
The LCO released a Consultation Paper in September 2012 that was posted on the LCO’s website and distributed to stakeholders. The Consultation Paper listed three options for reform: simply repealing the Act as obsolete, reforming the language of the Act and substantially rewriting the Act. At that time, the LCO expected that the Act could be amended to reflect the changes to the industry.
The main body of consultations took place between September and January 2013 with a wide range of stakeholders from the logging industry, government and the legal community. We consulted with the relevant government ministries, including the Ministry of Natural Resources who declined to provide comments. In November 2012, the LCO travelled to Thunder Bay for two days of meetings with forest product company representatives, forest management companies and individual logging contractors. The project benefited enormously from the generosity of these individuals who took the time to explain the complexities of the modern logging industry and Ontario’s forest licencing regime. Also crucial to the project was the input of several commercial law experts on how the Act affects Ontario secured transactions law and federal bankruptcy and insolvency law. The LCO extends its appreciation to everyone who participated in the consultations process.
With the notable exception of the Buchanan case, it appears that few forestry worker liens are filed these days. The LCO conducted an informal phone survey of several court registry offices in northern Ontario. In most cases, staff reported not having seen any liens in recent memory. In a couple of cases, staff indicated that there might have been one or two liens filed in the last few years. It is difficult to verify the number of liens being filed because they are not indexed as lien claims but, rather, according to party name.
We heard from practitioners that loggers may be dissuaded from filing claims because the language of the Act creates uncertainty as to its scope and application. The court proceedings necessary to resolve these ambiguities are beyond the financial means of most. The Buchanan claims proceeded only because the large number of claimants made it possible to share legal costs. Therefore, a concern for access to justice was a key factor motivating the LCO to undertake this project. However, it may also be that there is less need to resort to the Act in the modern industry. In consultations, several stakeholders commented that forest product companies and contractors usually fulfill their obligation to pay the contractors and subcontractors working for them. Liens are more likely to be filed where insolvency causes a mill to shut down, although the Buchanan decision is the only such decision actually reported in recent years. Whatever the case, the infrequent use of the Act supported the need for review.
This Report considers the policy rationale behind the Act in light of the changes to the logging industry over the last century and identifies numerous legal issues raised by the Act in the context of the modern industry and Ontario’s commercial law framework. It examines several statutory lien regimes as possible models for reforming the Act but finds a number of features which distinguish the Act from each of these analogues. As a result of all of these circumstances, the LCO has reached the conclusion that the Act is commercially, as well as legally, obsolete. Rather than reforming the Act as originally contemplated, the better option is to repeal the Act in its entirety. Accordingly, the Report concludes with the LCO’s recommendation that the Act be repealed.
This Final Report was approved by the LCO’s Board of Governors on September 12, 2013 and is posted on the LCO’s website at www.lco-cdo.org.
|Table of Contents