Construction Lien Amendment Act, 2017 Naqvi, Hon. Yasir Attorney General — Bill 142 (41st Parliament, 2nd Session)

Bill 142, 41-2

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Bill 142, Construction Lien Amendment Act, 2017

Naqvi, Hon. Yasir Attorney General

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Status

Debates

Acts affected

Original

As Amended by Standing Committee

Royal Assent

[41] Bill 142 Royal Assent (PDF)

EXPLANATORY

NOTE

This Explanatory Note was written as a reader's

aid to Bill 142 and does not form part of the law.

Bill 142 has been enacted as

Chapter 24 of the Statutes of Ontario, 2017.

The

Bill makes numerous amendments to the Construction Lien

Act in response to the report titled "Striking the Balance: Expert

Review of Ontario's Construction Lien Act", prepared for the Ministry of the

Attorney General and the Ministry of Economic Development, Employment and

Infrastructure and delivered on April 30, 2016. In addition, many housekeeping

amendments are made to update the Act and to correct errors.

The

Bill renames the Act the Construction Act (section

1 of the Bill). A number of other Acts are consequentially amended to reflect

the change in the Act's

short title (sections 75 to 79, 81 and 82 of the Bill).

Section

2 of the Bill makes a number of different amendments to subsection 1 (1) of the

Act, which set out

definitions for the purposes of the Act. These include,

(

a) amending

the existing

definitions of "contractor" and "subcontractor" to take joint

ventures into account;

(

b) adding

a definition of "monetary supplementary benefit";

(

c) re-enacting

the definition of "municipality"; and

(

d) re-enacting

the definition of "written notice of a lien" to provide for a written notice of

a lien to be provided in a form prescribed by the regulations.

Subsection

2 (2) of the Bill repeals the definition of "construction trade newspaper".

References in the Act to publication in a construction trade newspaper are

replaced with requirements to publish in the manner set out in the regulations.

The

definition of "improvement" in subsection 1 (1) of the Act is amended by adding

"capital" before "repair" in clause (a). A subsection 1 (1.1) is added to the

Act to set out what is meant by "capital repair" as used in the definition of

"improvement".

The

definition of "price" in subsection 1 (1) of the Act is re-enacted, so that

direct costs incurred are included. A subsection 1 (1.2) is added to the Act to

set out what is meant by "direct costs" as used in the definition of "price".

Section

1.1 is added to the Act to set out how the Act and the regulations made under

the Act apply in the context of an alternative financing and procurement

arrangement respecting an improvement that is between the Crown, a municipality

or a broader public sector organization on the one hand, and a special purpose

entity on the other (section 3 of the Bill). A definition of "broader public

sector organization" is added to subsection 1 (1) of the Act.

Section

2 of the Act is amended to change the thresholds at which a contract is

considered to be substantially performed for the purposes of the Act, as well

as for when it is deemed to be completed. Subsection (4) is added to

section 2

to set out the circumstances in which multiple improvements under a single

contract should be treated, for the purposes of the section, as if they were under

separate contracts.

Section

6 of the Act is amended by adding a subsection (2) setting out examples of

minor irregularities that do not automatically invalidate a certificate,

declaration or claim for lien.

new

Part I.1 (Prompt Payment) is added to the Act. It sets out timelines for

the payment of amounts payable under contracts to contractors (payable by

owners), and under subcontracts to subcontractors (whether payable by

contractors or by other subcontractors). A person is required to make payments

in accordance with the timelines, unless he or she provides a notice of

non-payment in accordance with the requirements of the Part and regulations

made under it. Amounts not paid in accordance with the timelines accrue

interest at a specified rate. A requirement to make payments in accordance with

the

Part is, however, subject to the requirements of

Part IV to retain holdback

amounts.

new

section 8.1 is added to the Act, imposing duties on contractors and subcontractors

who are trustees of trust funds under

section 8 of the Act. The duties require

the trust funds to be deposited in a specified manner and for records to be

kept that include specified details.

Section

12 of the Act is amended so that set-off by a trustee of an amount from trust

funds may only be in respect of debts, claims or damages that are related to

the applicable improvement, except in the event of a contractor or

subcontractor's insolvency. A similar amendment is made to subsection 17 (3) of

the Act.

new

Part II.1 (Construction Dispute Interim Adjudication) is added to the Act. The

Part establishes a right of parties to a contract or subcontract to require the

adjudication of certain matters under the Part. Matters that may be adjudicated

are set out under subsections 13.5 (1) and (2) of the Act. The

Part contains

various requirements respecting adjudications. A contract or subcontract may

provide for the procedures that are to apply to an adjudication between the

parties, as long as those procedures comply with the requirements of the Part. If

they do not, or if a contract or subcontract does not address adjudication

procedures, the procedures set out in the Part and in the regulations apply to

the adjudication (section 13.6 of the Act).

adjudication is conducted by an adjudicator, who is a person qualified to

conduct such adjudications by the Authorized Nominating Authority designated

under the Part for the purpose. In addition to qualifying persons as

adjudicators, the Authority is required to provide for the training of persons

as adjudicators, to maintain a public registry of adjudicators and, in the

event that parties to an adjudication cannot agree on an adjudicator to conduct

their adjudication, to appoint an adjudicator to do so. The Authority is

authorized to charge fees for its services, subject to the regulations (sections

13.2 and 13.3 of the Act).

determination on an adjudication under

Part II.1 is binding on the parties,

subject to the underlying matter being determined by a court, by an arbitrator under

the Arbitration Act, 1991 or by the parties in a

written agreement (section 13.15 of the Act). The determination of an

adjudicator may be set aside on judicial review in certain circumstances, but

an application for judicial review requires leave of the Divisional Court

(section 13.18 of the Act). The determination may also be enforced as if it

were a court decision, by filing a copy of it with the Superior Court of

Justice (section 13.20 of the Act).

Section 13.19 of the Act sets out timelines

for the payment of amounts owing under a determination. The

section also specifies

the implications of not paying within the timelines: the accrual of interest on

amounts owing and the permissibility of a suspension of work on the

improvement, subject to payment. A requirement to make payments in accordance with

an adjudicator's determination is, however, subject to the requirements of

Part

IV to retain holdback amounts.

Section

16 of the Act is re-enacted. Currently, a lien does not attach to the interest

of the Crown in a premises of which it is the owner, nor to the interest of a

municipality in a premises that is a public street or highway owned by the

municipality. The re-enactment of

section 16 provides that a lien does not

attach to the interest of a municipality in any premises that it owns.

Complementary amendments are made to subsection 17 (4) and to

section 34 of the

Act.

Subsection

19 (1) of the Act is re-enacted to provide that if the interest of the owner to

which a lien attaches is leasehold, and if payment for all or part of the

improvement is accounted for under the terms of the lease or any renewal of it,

or under any agreement to which the landlord is a party that is connected to

the lease, the landlord's interest is also subject to the lien, to the extent

of 10 per cent of the amount of such payment. A subsection 19 (5) is added to

the Act to confirm that a landlord may still be considered an owner of a

premises for the purposes of the Act if he or she meets the criteria set out in

the definition of "owner" in subsection 1 (1) of the Act. Complementary

amendments are made to

section 39 of the Act, which sets out information that

must be provided on request in specified circumstances, in order to expressly

address information that must be provided by a landlord to whom subsection 19

(1) applies.

new subsection 22 (4) is added to the Act to specify the various forms in which

a holdback may be held under the Act. Sections 26 and 27 are amended so that

the payment of the basic holdback (under

section 26) and of the holdback for

finishing work (under

section 27) is requisite; the current wording of the

sections states that a payer may, without jeopardy, make payment of the

holdbacks. Sections 26.1 and 26.2 are added to the Act, to provide for the

payment of basic holdbacks on an annual and on a phased basis, respectively. A

new

section 27.1 of the Act provides that a an owner may refuse to pay some or

all of a holdback amount if he or she publishes, within a specified time,

notice of non-payment in accordance with the regulations, and notifies the

contractor of the publication. Contractors and subcontractors who are not paid

holdback amounts may refuse to pay related holdback amounts to other

subcontractors, provided that the matter is referred to adjudication under

Part

II.1 of the Act.

Amendments

are made to

section 31 of the Act in order to extend the timelines for the

expiry of liens. The

section is also amended to make express reference to the

termination of a contract as a factor in whether or not a lien is expired. A

new subsection 31 (2.1) is added to specifically address the expiry of a lien

of the trustee of a workers' trust fund.

Subsection

32 (2) of the Act is amended to provide for changes in the information that

must be included in certificates or declarations of substantial performance, and

subsection 34 (5) of the Act is amended to provide for changes in the

information that must be included in a claim for lien. Additional amendments

are made to

section 34, including,

(

a) adding

a requirement that a person who preserves a lien that relates to an improvement

to the common elements of a condominium must give notice of the lien's

preservation to specified persons (subsection 29 (10) of the Bill); and

(

b) providing

for the extension of the times for a lien's expiry if the matter that is the

subject of the lien is also the subject of an adjudication under the new

Part

II.1 of the Act, but only for the purposes of

section 34 (subsection 29 (11) of

the Bill).

Section

35 of the Act is re-enacted to provide for the liability of a person who preserves

a claim for lien or gives written notice of a lien that results in another

person suffering damages as a result, if the person who preserved the lien or gave

notice knew or ought to have known that the amount of the lien was wilfully

exaggerated; the current

section refers to an amount which the person knew or

ought to have known is grossly in excess of the amount owed. A subsection (2)

is added to

section 35 to give the court authority to, on motion, reduce a lien

amount by any exaggerated portion, as long as it finds that the person who

preserved the lien or gave notice acted in good faith.

Subsection

36 (2) of the Act is amended to extend the timeline for the perfection of a

preserved lien.

addition to being amended to address landlords under subsection 19 (1) of the

Act,

section 39 of the Act is amended to specify a "state of

Document details

Collection	Ontario — Bills
Citation	Bill 142, 41-2
Type	bill
Volume / chapter	p41 s2 bill 142 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	9f45ab9cd42ca3e8d2808ef3a45f4774efc66214

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