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

By Karen B. Groulx and Dragana Bukejlovic
April 11, 2020
  • COVID-19
  • Limitation Periods contained in "Other Acts"
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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 Groulx, Dragana Bukejlovic or any member of Dentons’ Construction group.

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Karen B. Groulx

About Karen B. Groulx

Karen is a partner at Dentons Canada LLP in our Construction, Litigation and Real Estate groups. Her practice includes negotiation and drafting of various types of construction documents on behalf of owners and general contractors as well as dispute resolution and litigation involving the awarding of contracts, construction liens and related proceedings on behalf of owners, general contractors and subcontractors as well as mortgagees. Karen handles trust and bond claims, negligence claims and contract claims including claims relating to construction defects, product liability and other disputes such as professional negligence claims, engineers and architects liability cases.

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Dragana Bukejlovic

About Dragana Bukejlovic

Dragana Bukejlovic is an associate in our Litigation and Dispute Resolution group, with a practice that focuses on complex civil litigation matters and construction disputes. Dragana has particular experience in disputes involving construction liens, contract termination, and holdback claims. She also has experience in the negotiation and drafting of various construction and procurement documents.

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