As of April 16, 2020, Ontario's temporary suspension of all limitation periods and procedural deadlines, made pursuant to the Order in Council under s.7.1 of the Emergency Management and Civil Protection Act, no longer applies to the Construction Act. This means that all limitation periods and deadlines, including construction lien and holdback deadlines, will resume running per Aird Berlis.
The Attorney General of Ontario must have made this move in response to the concerns raised by industry participants in stopping of payments made on ongoing construction projects, especially as they relate to holdback funds. While this lifting of the suspension is generally of benefit to many contractors working on construction projects, it also raises a number of issues and concerns for parties involved in ongoing construction lien court proceedings. Since Ontario courts are operating at a reduced capacity at the present time, it remains to be seen whether or not parties will have the ability to meet all of deadlines under the Construction Act.
At this time, courts in many jurisdictions are not scheduling attendances unless they are urgent in nature, and parties have very limited ability to file certain court materials electronically.
As of two days ago, parties will have the same amount of time to meet a deadline that had been remaining before the suspension began on March 16, 2020.
According to Mondaq, construction liens in Ontario will no longer expire in the ordinary course. This will have serious implications for the following parties:
- Owners of a property on which a construction project is taking place
- Financial institutions and mortgagees financing construction projects
- General contractors
On March 20, 2020, the Lieutenant Governor in Council chose to suspend limitation periods and procedural time periods in Ontario. The suspension is retroactive to March 16, 2020 and will last for the duration of the emergency.
The Emergency Management and Civil Protection Act (EMPCA) provides that the maximum suspension period is 90 days but this can be further renewed in certain circumstances.
You can check Sections 31 and 36 of the Construction Act and the Construction Lien Act which has the time periods within which these construction liens must be preserved and perfected. These are listed in the Schedule to the Limitations Act, 2002.
Before the Suspension Order, a lien would expire if not properly preserved and perfected in accordance with the requirements set out in these sections. The Suspension Order extends the time within which construction liens can be preserved and perfected and prevents their expiring.
It is recommended that claimants continue to preserve and perfect their liens in the ordinary course.
The Construction Lien Act states:
"Payers are required to retain a holdback until all liens that may be claimed against the holdback have expired or been satisfied, discharged or otherwise provided for under this Act. Similarly, under the new Construction Act, all payers are required to release the holdback they have retained where all liens that may be claimed against that holdback have expired or been satisfied, discharged or otherwise provided for under this Act. As liens will now not expire for the duration of the emergency, holdbacks should not be released. Any release of holdback after March 16, 2020 may result in the payer having to make the payment again if a suspended lien is subsequently preserved and perfected."
Parties are encouraged to seek legal advice to ensure that they are taking the necessary steps to protect themselves.
The effect on the construction industry is likely to be considerable especially if the emergency continues for a long period of time.
Editor's note: This is, indeed, a confusing time for the construction industry. DataBid is working tirelessly to report and distill the news that can help you and your company make the right decisions and keep you up to date on the constant changes as they are made. We hope our coverage brings some clarity amid all the confusion.
Posted by Judy Lamelza