Ontario’s new Construction Act:
What changes on July 1 and how
can you prepare for the new rules?
OGCA president Clve Thurston with Chris
Stanek, a partner at Gowling WLG at the
CDAO Construction Act seminar
Canadian Design and Construction Report staff writer
When Ontario’s new Construction Act goes into effect
July 1, there will be major changes in the way owners,
contractors and design professionals fulfill their legal
obligations and protect their interests. However, the
biggest changes are another 18 months away, when sig-
nificant prompt payment and new adjudication rules go
into effect.

The Ontario legislation is significant elsewhere in the
country because the federal government and several
other provinces are preparing new construction laws in-
corporating many of the provisions of the new Ontario
legislation. Several lawyers and consultants outlined the changes
– including challenging transitional provisions – at a May
14 seminar sponsored by the Construction and Design
Alliance of Ontario (CDAO).

Geza Banfai with McMillan LLP outlined the reasons
for the new rules, which trace their roots to lobbying sev-
eral years ago from the National Trade Contractors Coali-
tion of Canada (NTCCC), which led to a private member’s
bill that failed to move forward after government min-
istries and agencies, private owners, general contractors,
consultants and lenders raised strong objections.

However, the provincial government agreed to com-
mission lawyers Bruce Reynolds and Sharon Vogel to
conduct an extensive review of old Construction Lien Act,
dating back from the 1980s. After extensive consultation
12 – Spring 2018 — The Canadian Design and Construction Report
with stakeholders, Reynolds and Vogel submitted 101
recommendations, which became the foundation for the
new Construction Act, which was passed and proclaimed
just before Christmas last year.

By late April, government officials had drafted the nec-
essary enabling regulations.

The changes in Bill 142 include several fundamental
changes in lien periods, holdbacks, trust obligations,
claims and procedures, said Ted Betts, the head of Gowl-
ings WLG’s Infrastructure and Construction Sector
Group. “A lot of these (legislative) changes are in the ‘modern-
ization’ bucket,” he said. “It’s worthwhile for everyone to
read through all of them.”
The so-called “modernization” changes include:
• An extension of the lien “preservation period”, from 45
to 60 days and a longer lien “perfection period” from
45 to 90 days after the last day the lien could have
been preserved; both of these ensure there “is more
time to negotiate and work out disputes rather than
come to the lawyers;” and
• Mandatory holdback release by the end of the hold-
back period, unless owners publish their intentions
not to release the holdback in a public notice no later
than 40 days after the publication of the Certificate of
Substantial Performance.

“There’s a large deliberate gap,” Betts said. “An
owner has to put their cards on the table” so that con-
tractors and subtrades know where they are ahead of the
lien filing deadline. Effectively, the new rules give the
contractors and owners “an extra 20 days to settle dis-
putes and avoid standoffs.”
The new legislation also allows for owners and con-
tractors to release holdback on larger projects ($10 mil-
lion or more) before the project is completed.

“The theme throughout all of the changes, in these
subtle changes, is getting cash flowing through the pro-
ject faster from the owners through the contractors to
suppliers and subcontractors, and avoiding disputes.

There are other changes, as well:
• Multiple improvements can be treated as separate
contracts for the purposes of determining the sub-
stantial performance date and lien periods; so con-
tractors don’t have to wait for every bundled part of
the overall project to be completed before receiving
their holdbacks. However, this provision applies at the
owner/general contractor level, and Betts said “It’s not
clear how this will play out on subcontractors and sup-
pliers.”