Canada: Ontario's New Construction Act Has Arrived

Bill 142, Construction Lien Amendment Act, 2017 received Royal Assent on December 12, 2017.   It amends the Construction Lien Act which will be renamed the Construction Act (the "Act").

The Act has not yet come in to force and the regulations have not been finalized. The effective dates will be:

            July 1, 2018 – Amendments to liens and holdback rules

            October 1, 2019 –  Amendments dealing with prompt payment, adjudication and municipalities

The Act represents a complete overhaul of the existing Construction Lien Act (the "Former Act") which was enacted in 1983, with only minimal amendments having been made since then. Prompt payment and adjudication are brand new substantive regimes introduced for the first time in the Act.

How We Got Here - Background

In 2016, the Ministry of the Attorney General released a report named, 'Striking the Balance: Expert Review of Ontario's Construction Lien Act'. The Report made 100 recommendations for reforming and modernizing Ontario's Construction Lien Act.  On May 31, 2017, Bill 142, 'Construction Lien Amendment Act, 2017' was introduced.  The Bill adopted almost all of the recommendations made in the Report.

The Big Changes

The new Act is ground-breaking.  Most notably, it includes new provisions for prompt payment, a new statutory default scheme for adjudication, extends the timelines for preservation and perfection of liens, and otherwise modernizes the Former Act.  The following are some of the key changes.  

1. Preservation and Perfection of Liens

The timelines for preservation of liens under the Former Act were often not workable given the average age of receivables in the construction industry. The New Act extends the deadlines for preservation of a lien to 60 days (from 45 days) and for perfection of a lien to 90 days (from 45 days) from the preservation deadline.  This allows more time for parties to negotiate and utilize the new interim adjudication process in the Act.

2. Payment of Holdback

The Former Act did not mandate that the holdback be paid when all liens that could be claimed against it expired, were discharged or satisfied.  The Act now requires payment of the basic and finishing holdback, unless a notice of non-payment is delivered setting out the reason for non-payment, and the issue is referred to adjudication.

The Act now allows payment of accrued holdback on an annual or phased basis.   

Trust Obligations

The Act imposes new duties on contractors and subcontractors who are trustees of trust funds. Specifically, trustees are required to deposit funds received on account of their contract/subcontract price into a bank account in the trustee's name. They must maintain written records which detail the amounts received into and paid out of the trust funds, any transfer made for the purposes of the trust and other prescribed information. If more than one trust is involved, the trust funds may be deposited into a single account; however, the trustee must maintain separate records for each trust.

In addition to enhanced record keeping requirements, the Act has limited the trustee's right to set-off. The Former Act allowed a trustee to set-off money owed for any outstanding debt claim or damages whether or not related to the improvement.  The Act now restricts the right to set off to claims or damages related to the specific improvement.

3. Jurisdiction and Procedure

Most of the provisions of the Former Act dealing with jurisdiction and procedure were repealed and the revised rules will be in the Regulations.  Notably, leave for interlocutory steps will no longer be required, lien and trust claims may now be brought in one action and the  requirement to commence a lien action in the jurisdiction where the land is located has been removed.

4. Prompt Payment

The Act tries to address the many concerns about timely payment.  It provides mandatory minimum time periods for payment and a procedure for disputing/withholding payment. A contract or subcontract is permitted to have more favourable (but not a less favourable) payment terms.  The regime is intended to operate as follows, with the triggering point being the delivery of a 'proper invoice' by a contractor to an owner.

Between Owner and Contractor

A) An owner must pay the contractor within 28 days from receipt of a proper invoice.  If the owner disputes a proper invoice, the owner must deliver a 'notice of non-payment' to the contractor within 14 days of receipt of the proper invoice.  If only part of the proper invoice is disputed, the undisputed portion must be paid.     

Between Contractor and Subcontractor

B) A contractor, who receives payment of a proper invoice, must pay the subcontractors that were included in the proper invoice no later than 7 days after receiving payment from the owner. If, notwithstanding payment by the owner, the contractor disputes a subcontractor's entitlement to payment, the contractor may withhold payment by giving notice of non-payment in the prescribed form.

If the owner fails to pay any part of the proper invoice within 28 days, the contractor must nonetheless pay each subcontractor the amount that was included in the proper invoice, unless the contractor delivers a notice of non-payment to each subcontractor. The notice of non-payment includes an undertaking to refer the matter to adjudication.

If the contractor receives partial payment which is specific to the work of the subcontractors, those subcontractors must be paid within 7 days, and, if not, the payment to subcontractors must be made rateably.

The provisions with respect to prompt payment between subcontractors are the same as the provisions for prompt payment between a contractor and a subcontractor except for certain necessary adjustments regarding timelines for payment and delivery of notices of non-payment.

5. Adjudication

The Act introduces a default scheme for quick dispute resolution in the form of interim adjudication during the project.  The Act makes adjudication available to all parties in both the public and private sectors.  Parties are free to agree on the adjudication terms to be included in their agreement.   However, where the provisions are incomplete or inconsistent with the Act, this new statutory default scheme is deemed to apply.  Adjudication works alongside the lien provisions in the Act; a party may preserve and perfect a lien while at the same time pursuing adjudication. The costs of the adjudication are shared equally between the parties.

The various types of disputes that may be referred to adjudication include delays, set-offs/deductions, security, proper invoices and the valuation of work, services, and materials supplied and claimed as well as 'any other matter that the parties to the adjudication agree to'.

An Authorized Nominating Authority (the "Authority") will be responsible for establishing a registry of adjudicators.  An adjudicator is nominated only when a dispute has arisen and a contract or subcontract cannot appoint an adjudicator in advance.

The adjudication provisions have strict timelines to ensure the timely resolution of disputes, including the selection or appointment of an adjudicator from the registry. A Notice of Adjudication initiates the process. The adjudicator must make a written determination, with reasons, within 30 days of receiving the documents from the party who requested the adjudication. A decision rendered late is of no force or effect.

The determination is binding on an interim basis and enforceable. The Act requires that payment be made from one party to another pursuant to an adjudicator's determination no later than 10 days after the decision is communicated to the parties and imposes mandatory, non-waivable interest on all late payments. Further, the Act allows a party to suspend work if payment is not made pursuant to an adjudicator's determination, but there is no right to suspend work during the adjudication process.  The decision is only binding on the parties until there is a determination by the Courts, an arbitrator or there is a written agreement between the parties concerning the matter.

Pallett Valo LLP Construction Practice

Litigation risk management in the construction industry requires the advice and guidance of experienced construction lawyers. The Pallett Valo LLP Construction Practice has particular expertise in the resolution of all types of construction disputes. Their practical and timely advice assists our construction clients in meeting their day to day challenges.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Fogler, Rubinoff LLP
Gowling WLG
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Fogler, Rubinoff LLP
Gowling WLG
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions