Recent Amendments To The Construction Act: A Guide For Design Professionals And Their Insurers

The Construction Act (the “Act”) governs Ontario’s construction industry, establishing the framework for key industry mechanisms to regulate cash flow, and prescribe alternative dispute resolution on construction projects throughout the Province.  Originally enacted as the Construction Lien Act¹ in 1983, the statute has been subject to significant reform in response to evolving industry practices and concerns voiced from stakeholders.  In 2017, Bill 142 first introduced sweeping amendments and formally renamed the statute the Construction Act, with the amendments coming into force as of July 1, 2018.² More recently, further amendments were introduced through Bill 60 and 216, now in force as of January 1, 2026.  

The changes to the Act are likely to impact design professionals, particularly the expansion of the types of disputes that may be adjudicated and consolidation of disputes.  Disputes related to scope of work and extensions of time frequently implicate design professionals and will potentially trigger allegations of errors or omissions.  The expedited time frame for adjudication within the Act is not well suited to complex and evidence dense claims against design professionals and may present challenges for their Insurers. This summary will focus on three changes to the Act: the expansion of matters that may be adjudicated, consolidation of disputes being adjudicated, and clarification of lien rights for design professionals.     

The Adjudication Framework

The 2017 revisions to the Act created a framework for an interim dispute resolution mechanism in relation to payment disputes which was intended to allow projects to proceed without interruption.  Once invoked, adjudication is mandatory and proceeds on strict timelines. A determination must generally be issued within 30 days of the adjudicator’s receipt of the parties’ materials, subject to a 14-day extension at the adjudicator’s request or a longer period with the written consent of the parties and the adjudicator. Adjudication is often described as delivering “rough justice”, prioritizing speed and practicality over a final and exhaustive determination on the merits. To that end, adjudicators are afforded broad procedural discretion to conduct site visits and retain experts where appropriate. Adjudication determinations are binding on an interim basis, subject to review through litigation, arbitration, or settlement, and must be complied with within 10 days of release.

Amendment #1: The Availability of Adjudication

The amendments to the Act expand the availability of adjudication. Section 13.5 of the Act now provides that a party may refer to adjudication “a dispute with the other party to the contract respecting any prescribed matter or any matter agreed to by the parties to the adjudication.” (emphasis added)

What constitutes a “prescribed matter” is outlined in s. 19 of Regulation 264/25 of the Act, which includes: 

• The valuation of services or materials provided under the contract;
• Payment under the contract, including approved or unapproved change orders and proposed change orders;
• A dispute that is subject of a notice of non-payment;
• Amounts retained by section 12 of the Act (set-off by trustee) or under subjection 17(3) of the Act (lien set-off);
• Payment of a holdback; and
• Any of the following matters, if it is reasonably necessary to resolve a dispute respecting the matter in order to make a determination on any other matter that may be adjudicated:
  • The scope of work required to be performed under the contract;
  • A request for a change in the contract price; or
  • A request for an extension of time in the completion of work required to be performed under the contract.

To commence an adjudication, a party must serve a notice of adjudication in accordance with the Act. Prior to the recent amendments, such notice was required before the completion of the contract or the subcontract the dispute pertained to. However, section 13.5(3) extends this time period to 90 days after the contract has been completed, terminated, or abandoned, unless the parties agree otherwise.

Section 13.12.1 of the Act clarifies parties' rights to challenge the arbitrator’s jurisdiction to conduct the arbitration. Such a challenge must be made either when the party first makes its submissions or as soon as the matter allegedly beyond the adjudicator’s jurisdiction is raised in the adjudication.

Amendment #2: Consolidation of Adjudications

Section 13.8 of the Act expands the procedure to consolidate  separate adjudications within a single adjudication, either with the consent of the parties; or, absent consent, the agreement of the adjudicators. Further details regarding consolidation are provided in Regulation 264/25, s. 26.

Under Regulation s. 26(1), the party seeking consolidation must deliver a notice to every party and adjudicator involved in the adjudications proposed to be consolidated. The notice must be delivered no later than five days after the adjudicator in the moving party’s adjudication has accepted the appointment and received the materials the party intends to rely on (Regulation, s26(2)). The notice must include, among other things, a description regarding the subject of the dispute, the nature of the redress sought, and the name of a proposed adjudicator to conduct the consolidated adjudication.

Section 13.8(2) of the Act together with Regulation 264/25, s. 26(5)-(6) also addresses circumstances in which one or more parties do not consent to consolidation. An adjudicator who receives a notice of consolidation may require a non-consenting party to state their reasons for refusal. However, the ultimate determination of whether the adjudication will proceed on a consolidated basis rests with the adjudicators. In accordance with s. 26(6), the Ontario Dispute Adjudication for Construction Contracts (“ODACC”) shall determine whether the adjudicators of the separate adjudications agree to the consolidation.

Amendment #3:  Design Professionals have Lien Rights

 The amendments have confirmed that design services are lienable. The clarification in Section 14.(3) confirmed specifically that the lien rights in section 14(1) apply to Architects. Section 14(4) appears intended to clarify lien rights for early development work, particularly where the proposed project does not proceed. It provides that if an owner retains a holdback in respect of the supply of a design, plan, drawing or specification for the making of a planned improvement that is not commenced, subsection (1) is deemed to apply with respect to the supply of the design, plan, drawing or specification, unless the owner proves that the value of the owner’s interest in land has not been enhanced.³      

Takeaways

The expanded list of prescribed matters, the extended time for commencing adjudication beyond contract completion, and the availability of consolidated adjudications collectively increase the likelihood that construction disputes will proceed by way of adjudication. In particular, a broadened list of prescribed matters expands the types of disputes that may fall within adjudication. Payment disputes related to scope of work, change directives, and extensions of time frequently implicate design professionals and may trigger allegations of errors or omissions.

Adjudication has been available to design professionals and is a potentially useful tool, particularly for payment disputes. It will be interesting to see whether the expansion of the prescribed matters diminishes the utility of adjudication for design professionals by heightening the risk of responding claims for negligence, a potential consequence which has long discouraged design professionals from exercising their lien rights. 

One of the most obvious challenges of expanded adjudication rights will be the expedited timeframes for adjudication within the Act, which were not changed.  Parties responding to an adjudication dispute are at a tactical disadvantage, having to respond within weeks to a claim that may have been months in preparation. The intended expedited process for adjudication appears  ill-suited to complex and evidence dense disputes involving design professionals. The challenge is particularly acute for their Insurers for whom the adjudication process allows insufficient time for notice, investigation, and determination of coverage. The Act allows for extending the timeframe to respond to a claim and for adjudication, and the process may result in an expedited arbitration. 

Footnotes

^{1 The predecessor legislation to the Construction Lien Act was the Mechanics' Lien Act, R.S.O. 1980.}

^{2 Bruce Reynolds and Sharon Vogel, “Striking the Balance: Expert Review of Ontario’s Construction Lien Act” (2016), online (pdf).}

^{3 This appears to clarify previous interpretations of Section 14(1) of the Construction Act, where courts have held that design services rendered in connection with a planned improvement that does not proceed are not lienable. See 1246798 Ontario Inc. v. Sterling, 2000 CanLII 29031 (ON SCDC) at paras 57-59; Romanov Romanov Architects Incorporated v. Cardillo Capital Corp., 2018 ONSC 6628 at para 21; Cowan v. Golden Glades Developments Ltd., [1966] O.J. No. 587 at para 2.}

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.