Every stakeholder in the construction industry has been thrown into a state of flux, the response and orders from the Province are ever evolving and changing and have led to confusion and uncertainty for many.
In addition to the recent amendments to the list of “essential services/businesses” which significantly reduced the number of construction projects which are allowed to continue for next few weeks (the Premiere announced over the weekend that the Regulation titled “Closure of Places of Non-Essential Businesses”, O.Reg. 82/20, as amended by O.Reg 119/20 shall remain in full force and effect until April 23, 2020 (unless extended by further order), the Province, in an effort to assist businesses and individuals cope with the suspension of a significant part of the judicial system, previously announced that all limitation periods were suspended as of March 16, 2020.
On March 17, 2020 the Lieutenant Governor’s office, by way of regulation under the Emergency Management and Civil Protection Act, made a sweeping Order that all limitation periods found in any statute were to be suspended as of March 16, 2020. At the time this order was made, it included the time periods set out in the Construction Act, more particularly the time within which a contractor is required to perfect its lien was suspended. This in turn impacted/prevented the distribution of holdback on projects. The inclusion of the time periods in the Construction Act in the Order suspending limitation periods, had the effect of preventing the release of holdback funds on a project. As our clients are well aware, unless and until the time period for registering a lien has expired, no holdback funds can be released. The suspension of the expiry of the lien period on all projects, translated to a suspension of cash flow on projects and the withholding of statutory holdbacks.
On April 9, 2020, the Lieutenant Governor ordered that the suspension of limitation periods will not apply to those provisions of the Construction Act, in other words, contractors are now required to preserve and perfect their liens in accordance with the time periods set out within the Act. This order is effective as of April 16, 2020.
This amendment will facilitate cash flow on those projects impacted. In practice, those intending to register/deliver a lien for non-payment on a project should be doing so in accordance with ordinary timelines out of an abundance of caution. To the extent one’s lien period includes days from March 16 to April 15, 2020 or elapsed within that period, those parties should be taking the requisite steps to preserve their lien rights as soon as possible and in careful consultation with their lawyers. On the other hand, those awaiting holdback or calculating payment periods should expect that those days from March 16 until April 15, 2020 to be excluded in the respective calculations. If you are unsure or have questions regarding the current orders issued by the Province please do not hesitate to contact us. As can be seen by the release of various regulations and amendments in recent weeks, the circumstances are constantly evolving. We would be happy to assist and answer any questions you may have.