- The Forestry Workers Lien for Wages Act (FWLWA or the Act) provides Ontario loggers with a lien over the logs or timber they work on for the amount owing to them for their work.
- FWLWA was enacted in 1891 as a wage-recovery mechanism for logging employees working in the northern Ontario bush. After 122 years, it remains essentially in original form.
- Today very few liens are filed, with the exception of several liens filed in the 2009 Buchanan Forest Products Ltd. insolvency. These were the subject of a motion before Madam Justice Pierce in which she interpreted the Act but made note of the difficulties caused by its archaic language and outdated procedures.
- Key terms such as “labour” and “logs or timber”, as well as procedures and deadlines in the Act, are based on 19th century logging practices that are, in large part, obsolete.
- The Act is geographically restricted to the County of Haliburton and the territorial districts in northern Ontario. This boundary excludes a significant area of commercial logging currently taking place in the southern part of the province.
- The Act is poorly coordinated with modern statutory wage protections and is inconsistent with the policy underlying the Personal Property Security Act.
Transformation of the Logging Industry
Since FWLWA was introduced in 1891, the logging industry has changed so much as to be almost unrecognizable.
- In 1891, logging was a central component of Ontario’s economy necessary to the building of railways and other infrastructure in a period of rapid development.
- Loggers were casual employees hired seasonally by mills that were often thinly-capitalized and prone to insolvency.
- Loggers spent much of the winter living in remote areas of northern bush in rough logging camps with few comforts. They received low wages for very difficult and dangerous physical labour.
- At the time, the Ontario legislature was concerned about instances of logs being delivered across the border to Michigan sawmills without loggers being paid.
- Today, although logging remains an important industry, particularly in northern communities and for Aboriginal Ontarians, Ontario’s economy has diversified and there are much fewer loggers working in the industry. In the late 1940s, there were approximately 40,000 loggers in Ontario. Today, there are roughly 3,500 loggers.
- Legislation ensures that wood is processed in Ontario mills. Mills are more likely to be owned by well-financed, multi-national forest product companies.
- The industry is highly mechanized and operates year round. Harvested wood is processed within a matter of days or weeks rather than months.
- Loggers are independent contractors who own their own equipment and charge a contract price for their services. Labour represents only about 20-30 per cent of this price and the amounts involved may be much larger than the wage claims originally contemplated by the Act.
- Subcontracting is common in the industry and there may be several contractual links between a forest products company and a subcontractor claiming a lien for services.
- Loggers continue to face significant commercial risks due, in part, to the high cost of equipment, their economic dependence on a few mills and the industry practice of payment only on delivery of the wood to the mill. However, these risks are different from the risks the Act was intended to address.
- The industry is regulated by a sophisticated licencing regime. Many licences are held by forest product companies. However, in several cases, licencees are coops whose members include loggers in addition to forest product companies, Aboriginal communities and others with an interest in Crown timber. In a few cases, licencees are coops made up exclusively of loggers. These different licencing arrangements impact contractual relationships in the industry and, in some instances, may partially address power imbalances.
An Act Out of Step with Contemporary Social and Legal Conditions
A lien regime for loggers is no longer appropriate in the modern industrial and legal context:
- The risk that loggers will not be paid is reduced in the modern industry.
- Since wood is processed quickly, sometimes while still in the bush, a lien on the wood has limited value.
- Under the current forest licencing regime, some loggers are not hired at all but, instead, harvest on their own and sell their wood on the open market.
- Although many loggers remain economically dependent on the mills they supply, this is also the case with other small owner-operators in the logging industry and in the Ontario economy more generally.
- Several aspects of the modern logging industry are ill-suited to a non-possessory commercial lien regime:
o Wood is difficult to describe for the purpose of a registry system and difficult to identify for the purpose of enforcing a lien.
o The practice of subcontracting makes it difficult to protect all loggers while preventing multiple claims against forest product companies in relation to the same contract.
o A public registry would be administratively unwieldy in an industry which is small, fragmented and operates informally on the basis of long-term relationships.
o The economic interdependence of loggers and forest product companies complicates the creation of a priority scheme which successfully protects loggers while ensuring that forest product companies are able to access financing.
o Unlike property subject to other statutory liens such as repair and storage liens, harvested wood is merely the first input in a chain of value resulting in a finished wood product. Many service providers add value to the product along the way but it is not feasible to extend a lien to each of them.
- BC has retained and reformed its forestry worker lien legislation but BC is a much larger industry within a very different political environment. BC chose to introduce a Compensation Fund for loggers in cases of insolvency. No one during LCO consultations spoke in favour of this option.