Repap BC Collapse
Contractors, Owed $70 Million, Seek Regulated Pay Protection
By Jim Stirling
Logging contractors and their subs in BC are determined not to take the fall again. That's why in the wake of the Repap BC meltdown they are turning up the heat and demanding legislative changes to enhance their business security and level their contractural playing field.
Interior BC logging associations seek two prime changes: first, the provision of a province-wide, industry-standard stipulated pay schedule. That simply means getting paid on a specified basis for work done.
Repap BC consistently extended its pay periods as it struggled vainly to get its financial house in order. It was tough for contractors seeing logs they'd harvested and hauled but not been paid for being sawn at Repap mills.
Under the present rules, there's nothing stopping licencees in Repap's circumstances from telling their contractors to accept delays in payments or the operation could be shut down. But if contractors insist on payment or work stopages, they're deemed in breach of contract. The contractors' only recourse is a costly and lengthy fight with the licencee at contract renewal time, according to the North West Loggers Association in Terrace. A stipulated pay schedule wouldn't have prevented Repap BC from seeking protection from its creditors. But it would have softened the blow for contractors because they wouldn't have lost as much of the money due them.
The contractors' solution lies in revising BC Reg. 258/91, the Timber Harvesting Contract and Sub Contract Regulation, also known as Bill 13. The revision would stipulate pay schedules to apply province-wide to licencees, contractors and sub-contractors.
"We got a very positive reaction to the Bill 13 issue from Forests Minister Dave Zirnhelt," says Bill Sauer, the North West Loggers Association's secretary manager. The association fully intends to keep the pressure on until a change in the regulation is enacted. "Changes will ensure the Repap scenario never happens again, not only in the Pacific Northwest but in the entire BC industry," he says.
The second major change contractors and their subs seek is a legislated mechanism to give them a secured creditor status. Right now there's little realistic recourse if a licencee doesn't pay a contractor.
But relatively simple and proposed legislation is available, discloses Brenda Tataryn, who does work for the Central Interior Logging Association from Quesnel.
She has been championing the cause since learning the hard way. She says she was unpaid for work in 1992 while a contract logger in Stewart in northwestern BC. In an ironic twist, the licencee that stiffed Tataryn was acquired by Repap BC. "I tried to take the current legal avenue and found I was blocked at every turn. I felt that was wrong. We have a big investment in our work."
Tataryn says loggers are in a precarious position. They invest hundreds of thousands of dollars to work on the simple trust they will be paid. "A promise to pay is not good enough. John Q Public doesn't understand the system and even some loggers that a written contract is not enough to secure payment. If a contractor goes broke who will take the case all the way to the Supreme Court? It doesn't work." What needs to be done in Tataryn's assessment has already been proposed by the then-Law Reform Commission of British Columbia. "But there's been a lack of will to do anything about it," she charges.
The Woodworker Lien Act is the only existing legislation that in theory helps people like Tataryn. And she says non-payment happens regularly for a variety of reasons, especially in the northern half of the province. The Law Reform Commission examined the Woodworker Lien Act and a 1994 report to the NDP's attorney general declared it "a legal relic." The act was introduced in 1888, was joined by another in 1895, and the two combined in 1910; since then it's been unaltered. Not a friendly dinosaur. The commission recommended dumping it and enacting the Forest Worker Security Act. It builds on an existing act , the Personal Property Security Act, with terms, language and contractural relations relevent to today's forest workers and practices.
Essentially the proposed act creates a contractor and sub-contractor security interest in wood products they've helped produce. In a payment default situation between a licencee, contractor and sub contractor, a specified secured interest in the wood products can be applied. "Our aim has been to create legislation which operates 'invisibly' in the sense that it intrudes as little as possible on the day-to-day operations of the forest industry," related the commission in its report.
Tataryn has some qualms with the commission's recommendations. She says the $20,000 for security noted in the report might be adequate for some sub-contractors but not for full-phase contractors. And in the definition of forest work she believes activities like road building, decking and loading should be added.
Unfortunately for Tataryn and the interior logging associations anxious to protect their members from unreasonable risk, the attorney general's ministry has done nothing with the commission's report. Tataryn says that has to change and urges contractors to lobby the government. "If there are 5,000 logging and hauling contractors in BC then the Minister (of Finance and Corporate Relations) should receive 5,000 letters asking for change."
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