Ontario to exempt Construction Act from limitation period and procedural timeline suspension

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On March 20, 2020, Ontario passed O. Reg 73/20 (Regulation) pursuant to section 7.1(2) of the Emergency Management and Civil Protection Act (EMCPA), and suspended the running of limitation periods and procedural timelines in the province. The Regulation is retroactive to March 16, 2020. In our March 25, 2020 article, we discussed the implications of the Regulation for the construction industry. No doubt, an unintended consequence of the Regulation was the suspension of deadlines for the preservation and perfection of liens under the Construction Act (Act), and the uncertainty it created with respect to the release of holdback under section 22(1) of the Act.

As a result of the suspension, many parties to construction contracts became concerned about cash flow, especially for those projects where holdback is due to be released soon. On April 9, 2020, in response to calls from industry stakeholders, the government amended the Regulation by an Order in Council under the EMCPA. The Order in Council amends the Regulation and lifts the suspension of limitation periods and procedural time periods under the Act, allowing for the release of holdback payments to contractors and subcontractors in the normal course.

The Regulation will be amended as of April 16, 2020, which will provide the construction industry time to prepare for the change. Practically, the clock for preservation and perfection of liens will begin to run again from April 16, 2020, and parties will have the same amount of time to meet the deadlines that had been remaining before the suspension began on March 16, 2020.

Some uncertainty remains as to how parties will weather the intervening days until April 16, 2020. Parties should consult with their counsel to ensure they are properly prepared for the change and that their lien rights are protected, especially during this uncertain time.

Dentons’ Construction group will continue to monitor the changes and will provide updates as they become available. If you have any questions regarding to the impact of the Regulation on your construction project, please contact Karen GroulxDragana Bukejlovic or any member of Dentons’ Construction group.