On November 6, 2024, the Building Ontario For You Act ("Bill 216"), which includes several key amendments to the Construction Act (the "Act"), received Royal Assent. The amendments to the Act originate from an independent review, industry consultation, and final report prepared at the request of the Attorney General.
According to the Province's Regulatory Registry, the amendments to the Act are intended to "alleviate administrative burdens experienced within the construction industry associated with payment matters by encouraging timely payment and more efficient dispute resolution."
It was initially anticipated that the amendments to the Act might come into force as early as Q1 or Q2 2025. However, the amendments have yet to take effect and it remains uncertain as to when exactly they will.
This article considers what are perhaps the three most significant changes that Bill 216 makes to the Act:
- mandatory annual release of holdback;
- broadened access to adjudication; and
- revised definition of "proper invoices".
1. Mandatory Annual Release of Holdback
The key amendments relating to holdback provide for mandatory annual release of basic holdback by an owner for all contracts, regardless of the contract price, with the requisite corresponding flow-down through the construction pyramid to contractors and subcontractors.
Specifically, the amendments require owners to publish notice, within 14 days of the anniversary of the date the contract "was entered into", of their intention to release holdback. Unless a lien has been preserved or perfected, the owner is then required to release all holdback accrued to the anniversary date within 14 days after the expiry of the new lien period – i.e., 60 days after the notice of intention to release holdback is published.
The contractor is then required to release holdback to its subcontractors within 14 days of receipt of payment from the owner and so on down through the construction pyramid with subcontractors. Payment of such holdback amounts reduces the amount to be retained by a payer under the Act to the extent of the amount paid.
Where liens are preserved or perfected, payment of holdback becomes due for release 14 days after the liens have been satisfied, discharged, vacated, declared expired or otherwise provided for under the Act.
There is a one-year transition period before annual release of holdback rules apply to contracts entered into prior to the provision's effective date, which is yet to happen.
2. Broadened Access to Adjudication
Bill 216 also includes amendments intended to broaden access to and use of statutory adjudication to resolve disputes.
Prior to the amendments, the Act limited adjudication to specific payment-related matters including payment or non-payment of amounts owing under contract, and payment or non-payment of holdback. As amended, the Act will now permit adjudication of "any prescribed matter or any matter agreed to by the parties to adjudication". Although the amended list of matters that may be adjudicated is yet to be specified by the regulations, the final report strongly suggested a broadened scope.
The amendments also permit consolidation of adjudications of disputes under different contracts on the same improvement. Previously, only a contractor could require such consolidation.
In addition, the amendments expand the availability of adjudication by clarifying the timing for when parties can refer a dispute to adjudication. In particular, the amendments permit commencement of adjudication within 90 days after the date on which the contract is completed, abandoned or terminated, unless the parties to the adjudication agree otherwise. In the case of a subcontract, this is 90 days following the date the subcontract is certified complete or the date of last supply. Prior to the amendments, parties were required to refer a dispute to adjudication before the contract or subcontract was "complete" (unless the parties agreed otherwise).
3. Revised Definition of "Proper Invoices"
The amendments also update the definition of "proper invoice" as set out below:
| Previous Language (s. 6.1 of the Act) | Amended Language (s. 6.1 of the Act) |
| 2. The date of the proper invoice and the period during which the services or materials were supplied. | 2. The date of the invoice and the period, milestone or other contractual payment entitlement to which the invoice relates. |
| 3. Information identifying the authority, whether in the contract or otherwise, under which the services or materials were supplied. | 3. Information identifying the contract or other authorization under which the services or materials were supplied, such as a contract number, contract line item number or purchase order number. |
| 6. The name, title, telephone number and mailing address of the person to whom payment is to be sent. | 6. The name, title, mailing address and telephone number of the
person to whom payment is to be sent or, if payment is to be sent
to an office or department, its name, mailing address and telephone
number. N/A |
| N/A | 6.1 Any other information that is necessary for the proper functioning of the owner's accounts payable system that the owner reasonably requests. |
The amendments to the Act also include a new provision that deems an invoice that does not meet the requirements of a "proper invoice" to be a proper invoice, unless the owner notifies the contractor, within 7 days of receipt of the invoice, in writing, of the alleged deficiency, and what is required to address it.
Practically, owners are no longer permitted to rely on deficient proper invoices as a basis of non-payment. Owners will need to be increasingly vigilant in reviewing invoices submitted by contractors and must be prepared to provide written notice of any alleged deficiency within 7 days of receipt to avoid having to send a notice of non-payment.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
