Canada: Somewhat Lost In Transition?

A Review of the Intent and Operation of the Transition Period in Ontario's Construction Act

As the roll out of the modernization provisions of Ontario's newly named Construction Act (the "Act") approaches on July 1, 2018, stakeholders have advised that they feel slightly lost in relation to the transitional elements of the legislation (i.e. Section 87.3). Concerns have been raised about what is changing under the new provisions and when those changes will take effect. While we certainly recommend speaking with a lawyer in relation to particular fact scenarios arising during this transition phase, below is a summary of the intent and operation of the transition period.

The amendments to the Act are to be implemented in two phases. Phase I (amendments related to modernization of the lien and holdback rules) takes effect on July 1, 2018. Phase II (amendments related to prompt payment, adjudication and municipalities) does not take effect until October 1, 2019.

One key reason for this two phased approach is that time is needed to set up the Authorized Nominating Authority (to support the adjudication process) through a government run application process. To set up the Authority and to produce an initial cohort of adjudicators with appropriate training and certification will take time. It is currently anticipated that this process will be administered in the fall of 2018. Industry participants also need time to adjust their contract forms to account for the new provisions taking effect, and to prepare for prompt payment and adjudication.

When considering Phase I, we note that the modernization provisions include all of the updates to the definitions, the lien and trust provisions, and the provisions in relation to surety bonds. Of particular importance are the following changes:

  • The change to the definition of "price" to include certain direct costs (s. 1(1));
  • The addition of definitions of "capital repair" and Direct costs (s. 1(1.1) and (1.2));
  • The introduction of AFPs under Section 1.1 and related provisions (e.g. deeming the SPV as owner)(s. 1.1);
  • The increase in dollar values in respect of when a contract is substantially performed and deemed completed (s. 2);
  • The addition of further duties on contractors regarding trust funds (i.e. the New York style bookkeeping requirements)(s. 8.1);
  • Allowing certain contracts to provide for payment of holdback on a phased or annual basis (ss. 26.1 and 26.2);
  • The increase in the time for preserving a lien from 45 to 60 days (s. 31);
  • Modifications to the provisions for wilfully exaggerated or false claims (s. 35);
  • The increase in the time for perfecting lien from 45 to 90 days (s. 36);
  • The addition of clarity in respect of the meaning of the term "state of accounts" (s. 39);
  • The movement of Court Procedures from the body of the Act to the Regulations; and
  • The addition of Part XI.1 re: mandatory Surety Bonds.

Phase I

Section 87.3 of the Act describes the transitional period new legislated amendments to the Construction Lien Act. Section 87.3 (1) and (2) provide as follows:

87.3 (1) This Act, as it read immediately before the day subsection 2 (2) of the Construction Lien Amendment Act, 2017 came into force, continues to apply with respect to an improvement if,

(a) a contract for the improvement was entered into before that day, regardless of when any subcontract under the contract was entered into;

(b) a procurement process, if any, for the improvement was commenced before that day by the owner of the premises; or

(c) the premises is subject to a leasehold interest, and the lease was first entered into before that day. 2017, c. 24, s. 61 (1).

Examples, procurement process

(2) For the purposes of clause (1) (b), examples of the commencement of a procurement process include the making of a request for qualifications, a request for proposals or a call for tenders. 2017, c. 24, s. 61 (1).

As noted above, the relevant date for the transition is the "day subsection 2(2) of the Construction Lien Amendment Act, 2017 came into force". Subsection 2(2) of the Construction Lien Amendment Act, 2017 (i.e. Bill 142), relates to the repeal of the definition of "construction trade newspaper" in subsection 1(1) of the Act. In this regard, subsection 1(1) of the Act indicates that the definition of construction trade newspaper is repealed on July 1, 2018. While somewhat technical to follow, we understand that this form of 'placeholder' is common in legislative drafting for transition purposes.

On April 25, 2018, Yasir Naqvi (the Attorney General of Ontario) released an e-mail update to stakeholders intended to clarify the transition provisions and in particular, to remind the industry that "transition rule follows the long-standing presumption of statutory interpretation that legislation is not given retroactive effect, unless made so expressly."

In other words, the "old legislation" will still apply in those circumstances set out under Section 87.3(1) and (2), i.e.:

  • the contract for the improvement was entered into before July 1, 2018, regardless of when any subcontract under that contract was entered into;
  • a procurement process (i.e. request for qualifications, a request for proposals or a call for tenders), if any, for the improvement was commenced before July 1, 2018 by the owner of the premises; or
  • the premises is subject to a leasehold interest, and the lease was first entered into before July 1, 2018.

It is important for clients and lawyers to be aware of these provisions when taking steps to enforce their rights under the Act. When determining whether a 45 or 60 day lien preservation period applies you will want your lawyer to review the date on which the contract was entered into in order to determine which rules apply to your matter. If the prime contract was entered into on June 30, 2018, you can expect to be operating under the old legislative regime. However, if the prime contract was entered on July 2, 2018, the new rules apply unless the procurement was commenced prior to July 1, 2018.

Out of an abundance of caution, or where there is any lack of information or clarity, lien claimants may choose to continue to assume a 45 day preservation period, at least for the time being.

To address such issues, on May 18, 2018, the Toronto Construction Lien Masters issued a notice to construction practitioners that provided as follows:

Significant sections of the new Construction Act are proclaimed into force effective July 1, 2018. The court will require evidence concerning the transition provisions (Construction Act, section 87.3 (1)) on all motions and proceedings where the transition provisions are relevant. This applies in particular to motions under sections 44, 45 and 47.

The Masters added that, in essence, "affidavit evidence will have to include the facts relied on when asserting that the old or the new rules (as the case may be) apply." In this regard, on relatively routine motions, counsel will be required to provide affidavit evidence in relation to, for example, the dates contracts were entered into or procurements commenced.

Phase II

While we continue through this initial adjustment phase of the Act, it is also important to be aware of the implementation of Phase II on the horizon. In that regard, Section 87.3(3) describes when the prompt payment and adjudication provisions of the Act come into effect as follows:


(3) Parts I.1 and II.1 apply in respect of contracts entered into on or after the day subsection 11 (1) of the Construction Lien Amendment Act, 2017 comes into force, and in respect of subcontracts made under those contracts. 2017, c. 24, s. 61 (2).

As noted in this provision, Parts I.1 and II.1 (i.e. prompt payment and adjudication) apply in respect of contracts entered into on or after October 1, 2019 (as that is the date specified by the subsection 11(1) placeholder noted above). Importantly, this provision does not apply in the same manner in which Section 87.3(1) applies in that the transition applies only in relation to when a contract is entered into and has no relation to the commencement date of a procurement, if any. For example, should a procurement be initiated prior to October 1, 2019, that will have no bearing on whether or not the Phase II provisions of the Act apply. Adjudication and Prompt Payment will only apply to contracts that are entered into on or after October 1, 2019.

These provisions are complex but navigable with the assistance of counsel.

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
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
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