Government preparing to review proposed Ontario Construction Act updates

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Mark Buckshon

Ontario Construction Report staff writer

As the last major changes to Ontario’s construction legislation approach their fifth anniversary, the provincial government is reviewing a collection of updates to the Ontario Construction Act.

Glenn Ackerley, chair of the Construction Practice Group at WeirFoulds, is leading the review process from the industry’s perspective, in line with earlier recommendations from Bruce Reynolds and Sharon Vogel that formed the foundation of the original 2019 legislation.

Speaking at the Ontario General Contractors’ Association (OGCA) symposium last Friday (April 12),  Ackerley said the Construction and Design Alliance of Ontario (CDAO) including the OGCA, and the Council of Ontario Construction Associations (COCA) asked hm to prepare a list of recommendations.

He says he prepared a 150-page report with 85 recommendations for changes to the Act and regulations in the summer of 2023. As well, the Ontario Bar Association submitted 24 recommendations to the Mistry of the Attorney General (MAG) in February, 2024.

These recommendations flesh out “procedures and processes to better implement” the initial recommendations behind the Act, and address “gaps, inconsistencies, ambiguities between and among (the Act’s) sections,” he said.

“Generally, these are not new policies but fixes to existing policies,” Ackerley said.

In February, the MAG appointed Duncan Glaholt as an independent expert advisor to review the proposed legislative and regulatory changes.

The proposed changes will be consolidated in an expert report on changes to be made, possibly as early as May, Ackerley said. Industry/stakeholder consultations are likely during the summer, followed by anticipated draft amendments to the Construction Act and regulations in the fall.

Significant suggested changes include clarifications of some key definitions in the legislation

For example, there needs to be clarification of the “contract price” (relevant for bonding and holdback release thresholds) for construction management, cost-plus contracts, and integrated project delivery contracts which have “no fixed price up front.”

The solution would be to “add an additional definition of ‘contract price’ based on reasonable estimate of anticipated costs, such as the building permit value,” Ackerley said.

The current Act is also unclear about the legal rights under the Act (for things like liens and prompt payment) for design professionals working before the “commencement of making the improvement.”  The solution here will be to clarify wording with the option of “pre-improvement services,” he said.

Further clarity is needed in outlining the rules for projects with multiple improvements, since these can be completed under a single or several contracts.  Notably, there could be revisions to the Certificate of Substantial Performance (CSP) “to accommodate multiple improvements under one contract.”

There are also challenges with projects nearing completion, especially as it relates to the preservation, perfection and the expiry of liens, as these circumstances sometimes collide with the Act’s adjudication provisions (which applies at present only to contracts before the work is completed.)

The current Form 8 (Notice of Termination) is problematic, says Ackerley.  While the form must be published much like the CSP document, the Act doesn’t say who needs to publish the form, or when, and it has an outdated reference to “subcontract termination”. Clarification is also needed about landlord and tenant lien rights and obligations, especially for holdback obligations.

Mandatory holdback payment provisions are also challenging under the current rules. “The wording suggests (a general) contractor may have to pay holdback to the subcontractors before receiving the holdback form the owner.”

The solution here may be to “create a payment cascade for holdback release with timing of payments specified” much as the current prompt payment system.  As well, the contractor should have the right to set-off against subcontractor holdbacks.

On larger and longer projects, the provisions for earlier holdback release need some attention, he said.

While there is adequate notice on project completion (through the CSP publication) “there is a lack of information and advance release of notice for everyone else in the project, under provisions that allow owners and contractors to release holdback either annually or once milestone phases are completed. As well, there is a need for “phased release of the holdback for pre-construction services (such as consultants) prior to the start of construction.”

Further specific changes relate to trust accounts ensure clarity with claims and obligations.

Ackerley said that within the prompt payment system, some improvements in the “proper invoice” definition are needed. The invoice should:

  • include details about when services or materials were provided;
  • information identifying the authority whether in the contract or otherwise, under which the services or materials were supplied;
  • and, “the name title, telephone number and mailing address of the person to whom the payment is to be sent.”

Overall, the statutory requirements for a “proper invoice’ need to be simplified, and there is also a requirement for some sort of timely notification system if an owner deems the invoice isn’t “proper” (because without this clarification, the contractor and sub trades may find they only are not being paid when they fail to see a payment at the mandated scheduled time.

As well, there is a need to require contractors to “include the value of subcontractors’ undisputed work in (the) proper invoice.”

Subcontractors also need to know when the general contractor is actually submitting the “proper invoice.”

One key change will be to allow the adjudication process to be extended to 90 days after the project’s conclusion or termination.

Ackerley also has recommended some changes to the bonding provisions including recovery rights for sub trades and sub-sub contractors, along with “alternative ‘approved’ bonds for collaborative projects.

He also said there is a need for better clarification about which publications qualify as a “construction trade newspaper.”

“The regulations should be amended to provide for a process of government approval of websites/publishers and provide a public list of approved websites,” he said.

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