Construction Act

Bill 142
On December 12, 2017, Bill 142, Construction Lien
Amendment Act, 2017 received Royal Assent and became
law, changing the Construction Lien Act to the Construction
Act. These changes will have a profound impact on every part
of the construction industry. From liens, to holdbacks, to
payment timing, to dispute resolution, the new Act will alter
all of them dramatically. This article scrutinises the Act.

Author: Merza Irfan, FCIArb

merzairfan@gmail.com

8/6/2018
 Contents

1 OVERVIEW ......................................................................................... 1

1.1 Is Your Project Affected By The New Amendments? ......................... 1

1.2 Timing – When Does This All Take Effect ........................................ 1

2 CHANGES COMING ON JULY 1ST ........................................................ 2

2.1 ALTERNATIVE FINANCING AND PROCUREMENT (AFP) ...................... 2

2.2 CONSTRUCTION LIENS & HOLDBACK ............................................ 3

2.2.1 Lien preservation and perfection .................................................................... 3

2.2.2 Early release of holdback .............................................................................. 3
2.3 MANDATORY SURETY BONDING.................................................... 4

2.4 NEW TRUST FUND RULES (S.8.1) ................................................. 4

2.5 MULTIPLE IMPROVEMENTS (S.2 (4)) ............................................. 4

3 CHANGES COMING ON OCTOBER 1, 2019 ........................................... 5

3.1 PROMPT PAYMENT (S 6.1) ........................................................... 5

3.1.1 Time periods for payment ............................................................................. 5

3.1.2 Payment disputes ........................................................................................ 6
3.1.3 Bases for refusing payment .......................................................................... 6
3.2 ADJUDICATION (PART II.1; SS.13.1 TO 13.24) ............................... 7

3.2.1 Resolving a dispute...................................................................................... 7

3.2.2 The adjudication process .............................................................................. 8
3.2.3 The Authority and adjudicators ...................................................................... 8
4 OVERALL CHANGES TO THE ACT ......................................................... 9

4.1 Updated definitions ....................................................................10

5 OTHER RELEVANT CHANGES ............................................................ 10

 ONTARIO CONSTRUCTION ACT, Bill 142

1 OVERVIEW

Bill 142, Construction Lien Amendment Act, 2017, which received Royal Assent on December 12, 2017,
amends the Construction Lien Act to:

• Modernize the construction lien and holdback rules in the Act;

• Introduce rules around prompt payment; and
• Establish a statutory adjudication process.

On July 1, 2018, the first round of amendments to the Ontario Construction Lien Act – including its new
name, the Construction Act – will come into force.

Importantly, this first set of amendments does not include the two most substantial and perhaps,
controversial, changes to the Act: (1) the introduction of a prompt payment scheme, and (2) the creation
of a mandatory adjudication system for certain disputes. These changes, among others, will not come into
force until October 1, 2019.

1.1 IS YOUR PROJECT AFFECTED BY THE NEW AMENDMENTS?

At the outset, it’s important to note that the amendments will not apply to any project where:

• The contract for the improvement (ie. the project) was entered into before the amendments come into
effect on July 1, 2018, even if subcontracts are entered into after July 1, 2018;
• The procurement process for the improvement was commenced by the owner before July 1, 2018 (e.g.
if there has been a RFQ, RFP, or call for tenders prior to July 1, 2018); or
• The premises are subject to a leasehold interest and the lease was first entered into before July 1,
2018.

For currently contemplated projects, the prime contract for the project must be executed, or the
procurement process started, before July 1, 2018. Otherwise, the first tranche of amendments of the
Construction Act will apply. As with past provisions of the Construction Lien Act, parties will remain unable
to contract out of the provisions of the legislation.

1.2 TIMING – WHEN DOES THIS ALL TAKE EFFECT

Some technical and translation changes of Bill 142 came into force immediately; however most of the
substantive changes will be proclaimed and come into force in two stages:

• All of the substantive changes, regulations and forms, other than those relating to prompt payment
and adjudication, will be proclaimed and come into force on July 1, 2018; and
• The prompt payment and adjudication provisions, regulations and forms will be proclaimed and come
into force on October 1, 2019 in order to allow sufficient time for the Authorized Nominating Authority
to be established, to develop a regime for the certification of adjudicators, and to certify adjudicators.

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 ONTARIO CONSTRUCTION ACT, Bill 142

2 CHANGES COMING ON JULY 1ST

The two most significant are the clarification of how the Act applies to Alternative Financing and
Procurement (“AFP”) model projects, and changes regarding the release of statutory holdback.

2.1 ALTERNATIVE FINANCING AND PROCUREMENT (AFP)

Alternative Financing and Procurement (AFP) is a made in Ontario approach to financing and procuring
large, complex public infrastructure projects. It leverages partnerships with the private sector to expand,
modernize and replace Ontario's aging infrastructure.

Under AFP, provincial ministries and/or project owners establish the scope and purpose of a project, while
design and construction work is financed and carried out by the private sector. Typically, only after a
project is completed will the province complete payment to the private-sector company. In some cases,
the private sector will also be responsible for the maintenance of a physical building or roadway.

The AFP model allows projects to be delivered more efficiently and more cost effectively than traditional
procurement. AFP also protects taxpayers from cost overruns by transferring project risks to the party
with the expertise, experience and ability to handle that risk best.

In relation to AFP model projects, the amendments seek to bring clarity as to how the Act applies to these
projects; whose longer duration and multiple levels of contracts are ill-suited to the existing regime.

The amendments to the Act take into account P3/AFP Projects, which were not, contemplated when the
last major amendments were implemented in 1983. These project structures involve a government entity
entering into an agreement (the Project Agreement) with a special purpose entity (Project Co) to complete
a project. It is Project Co that then enters into an agreement with the contractor.

Project Co will be deemed to be the owner for certain purposes, including the certification of substantial
performance, expiration of liens, and requests for information. The agreement between Project Co and the
contractor is deemed to be the contract for all of the foregoing, and holdbacks and substantial
performance are to be determined based on this agreement.

After the introduction of the Bill, there was industry concern about risk being stranded at the Project Co
level, and this section of the Bill underwent significant evolution before receiving Royal Assent. One of the
amendments was to include a deeming provision that the Act will apply to the Project Agreement as if it
were a contract, which extends the reach of prompt payment and adjudication to the upper tier of the
project structure between the government entity and Project Co.

The agreement between Project Co and the contractor will also be deemed to be a public contract between
the contractor and the government entity for the purposes of mandatory surety bonding, which is
discussed later.

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 ONTARIO CONSTRUCTION ACT, Bill 142

2.2 CONSTRUCTION LIENS & HOLDBACK

A construction lien is a charge or security on a property that can be registered on title to the property by
anyone who has supplied services or materials to improve the property.

A holdback is a requirement that all owners, contractors and subcontractors withhold 10% of the cost of
the services or materials they supply on a project. This helps to make sure that there is enough money to
satisfy any lien claims that may come up.

The amendments to the Act do not alter the core principle that each payer upon a contract or subcontract
under which a lien may arise must retain a holdback of 10%. However, there are important changes to the
time periods relating to liens and the release of holdback.

2.2.1 Lien preservation and perfection

Holdback cannot be released until all liens that may be claimed against the holdback have expired, or
have been satisfied, discharged, or otherwise provided for under the Act. With respect to the expiration of
lien rights, the amendments to the Act will result in this occurring at a later point in time, as a result of
the time period for the preservation (registration or delivery) of liens being increased from 45 to 60 days.

Accordingly, the title search prior to making an advance under construction financing will now be
conducted 61 days after publication of the certificate of substantial performance, rather than 46 days
thereafter. On this point, however, note that the transitional provisions must be reviewed, which state
that contracts signed or for which the procurement commenced prior to July 1, 2018 are grandfathered
and dealt with under the old time limits. The transitional provisions are complex, and legal advice should
be sought in that regard.

The time period for the perfection of a lien (commencing the action and registration of the Certificate of
Action) will also be increasing, from 45 to 90 days, resulting in the combined preservation and perfection
period lengthening from 90 days to 150 days. The purpose of these longer time periods is to allow more
time for parties to resolve their disputes.

The release of holdback will be mandatory at the end of the applicable lien period (i.e., the 61st day after
substantial performance for the basic holdback). The owner will be allowed to set-off or withhold, but to
do so, it will be required to publish a notice of non-payment/set-off by no later than the 40th day after
substantial performance.

Release of holdbacks will be permitted on a phased basis for projects with different phases or stages, and
on an annual basis for longer term projects, if the project is over $20 million and the early release of
holdback is set out in the contract.

2.2.2 Early release of holdback

One of the issues on a large or lengthy project is that contractors or subcontractors that perform work
early in the process may have to wait a long period of time, sometimes several years, after the completion
of their own work before receiving their holdback. To address such issues, the Bill has introduced several
mechanisms that will facilitate the early release of holdback on an annual, phased, or segmented basis.

The annual and phased release of holdback sections operate in a similar manner. In both cases, if the
contract exceeds a prescribed amount (set by the Regulations at $20 million) and the contract so
provides, then holdback may be paid out annually or as phases of the work are completed, provided that

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 ONTARIO CONSTRUCTION ACT, Bill 142

as of the payment date there are no preserved or perfected liens, or all liens have been satisfied,
discharged, or otherwise provided for.

Another amendment to the Act is a deeming provision pursuant to which multiple improvements under a
single contract will be deemed to be separate contracts for the purposes of determining substantial
performance and completion if: (i) each of the improvements is to lands that are not contiguous, and (ii)
the contract so provides. An example would be a contract to construct multiple buildings in different
locations throughout Ontario, and this deeming provision would allow the parties to agree to the release of
holdback on a building-by-building basis, as opposed to having to wait until the completion of the last
building to pay out holdback on the first.

2.3 MANDATORY SURETY BONDING

The Act will require that certain surety bonds be provided in relation to a public contract, which is defined
as a contract respecting an improvement if the owner is the Crown, a municipality, or a broader public
sector entity.

A contractor to a public contract must provide both a labour and material payment bond and a
performance bond. The Regulations provide that these bonds will only be required if the public contract
price is $250,000 or greater. If required, the Regulations require that the minimum coverage for each
bond will be 50% of the contract price up to a maximum of $50 million in coverage (reached at a contract
price of $100 million).

2.4 NEW TRUST FUND RULES (S.8.1)

The Act will not implement a requirement for project-specific bank accounts, but there are some new rules
relating to the deposit, administration, recording and traceability of project trust funds. On all new
projects after July 1, 2018, trust funds will need to be held in a separate trust account. Further, the party
holding those trust funds must keep books and records for those funds as though they were segregated.
Set offs against trust funds will be permitted, but only for amounts owed and liabilities on the same
improvement.

2.5 MULTIPLE IMPROVEMENTS (S.2 (4))

If a contract includes work on multiple, separate improvements or projects, the parties will be allowed to
treat each improvement as a separate contract if the improvements are on non-contiguous lands and the
contract expressly allows for it. This will have an impact on when lien periods and lien rights expire, the
date of substantial performance and completion and the holdback release dates.

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 ONTARIO CONSTRUCTION ACT, Bill 142

3 CHANGES COMING ON OCTOBER 1, 2019

Prompt payment and adjudication will come into force on October 1, 2019.

3.1 PROMPT PAYMENT (S 6.1)

Prompt payment is a commercial discipline which requires businesses to:

• Agree fair and reasonable payment terms with their contractors, subcontractors, and suppliers
• Ensure contractors, subcontractors, and suppliers' invoices are approved and paid within agreed
terms
• Encourage adoption of the same practices throughout their supply chain.

The significant length of time that contractors, subcontractors, and suppliers typically have to wait to
receive payment following the submission of an invoice has been a long-standing issue in the construction
industry. To address these concerns, the Ontario Legislature has previously considered the implementation
of prompt payment legislation, specifically in 2011 through Bill 211, and again in 2013 through Bill 69, but
both of these Bills failed to materialize as legislation and the current amendments to the Act represent the
first prompt payment legislation in Ontario.

Bill 142 introduces a strict prompt payment regime in Ontario. It will be applied to both private and public
sector projects, to all parties in the construction pyramid, and to all sizes and types of improvements.

3.1.1 Time periods for payment

The new bottom line: owners will have 28 days to pay a contractor after delivery of a proper invoice, and
contractors will have 7 days to pay a sub-contractor (after getting paid by the owner).

Prompt payment will be mandatory for all contracts. Parties will be permitted to establish milestones,
payment schedules, or other payment structures that are not based on monthly progress payments if it is
set out clearly in their contract, but the 28 day clock will start once an invoice is submitted in accordance
with that payment structure. The owner and general contractor will be able to agree on some details for
the submittal of an invoice but if they do not agree, they will be required to submit invoices on a monthly
basis. Owners will be permitted to dispute all or parts of an invoice; however, they will now be required to
deliver a notice of non-payment within 14 days of receiving the proper invoice from the contractor. The
notice of non-payment must set out all of the owner’s reasons for not paying. Any undisputed amounts
will have to be paid.

Similarly, contractors must also deliver a notice of non-payment to subcontractors (and subcontractors to
sub-subcontractors) if they do not intend to pay the full amount of the invoice. If an owner pays all or a
part of the contractor’s invoice, the contractor will need to deliver the notice of non-payment to that
subcontractor within 7 days of receiving the payment from the owner. If the owner does not pay any part
of the contractor’s proper invoice, the contractor has 35 days after its proper invoice to deliver the notice
of non-payment to its subcontractors.

It is very important for contractors to understand that the prompt payment rules do not create a true “pay
when paid” protection for contractors. While s.6.4 (1) provides that a contractor must pay subcontractors
within 7 days of getting paid by the owner, s.6.4 (4) provides that, if an owner has not paid, then within
35 days of sending in the proper invoice a contractor must either (1) commence adjudication against the
owner, or (2) pay the subcontractor (unless it has delivered a notice of non-payment). So if the contractor

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 ONTARIO CONSTRUCTION ACT, Bill 142

does not wish to commence a dispute with the owner, it will have to pay the subcontractor out of its own
pocket.

If a party fails to pay when due under the prompt payment rules, statutory interest will accrue and
become due on the payment. The rate of interest will be the greater of the amount set out under the
Courts of Justice Act and the amount agreed to in the contract.

If a party fails to pay when due after the non-payment is adjudicated, the party entitled to be paid can
suspend work or terminate their contract. Contractors and subcontractors will have a right to charge
mandatory interest on late payments beginning when the amount is due. Interest would be the
prejudgment rate determined under the Courts of Justice Act or the rate set out in the contract or
subcontract, whichever is higher.

3.1.2 Payment disputes

In cases where there is a dispute about the amount owed or the quality of the work:

• owners will be permitted to deliver a notice of non-payment to the contractor within 14 days of
receiving the invoice from the project owner
• contractors will be permitted to deliver a notice of non-payment within seven days to the
subcontractor
• subcontractors will be permitted to deliver a notice of non-payment within seven days to other
subcontractors they hire

3.1.3 Bases for refusing payment

The prompt payment regime recognizes that there may exist legitimate reasons for a payer to refuse
payment, such as deficiencies in the work performed, notwithstanding that the requirements of a proper
invoice may have been satisfied. The regime articulates a process for non-payment and it imposes
stringent timelines that must be adhered to, which is in keeping with the spirit of prompt payment.

If an owner intends to refuse to make payment, then within 14 days of receipt of the proper invoice the
owner must give the contractor a notice of non-payment that sets out the amount not being paid and the
reasons for non-payment.

The situation for a contractor or subcontractor that intends to refuse to make a payment is slightly
different than that of the owner, due to their position within the payment chain. Specifically, if a
contractor or subcontractor intends to refuse to make payment, then they must elect to base their refusal
on: (i) not having received funds themselves due a non-payment, or (ii) disputing the entitlement of their
payee. This election has important implications. If a contractor or subcontractor refuses to pay on the
basis that they were not paid themselves, then they must pay through any amounts they receive and
provide an undertaking to refer the matter to adjudication within 21 days of providing notice to their
payee (unless such an undertaking was already given by a party higher in the payment chain). In
contrast, if they choose to dispute the entitlement of their payee (essentially taking the fight on
themselves), then they do not need to pay through amounts received or refer the matter to adjudication,

but they must provide a notice of non-payment specifying the amount not being paid and detailing the
reasons for non-payment. Undisputed amounts must still be paid in accordance with the time periods set
out in the Act, which may require that these amounts be apportioned among several payees. In such
circumstances, the prompt payment regime provides that payees not implicated in the dispute are to be

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 ONTARIO CONSTRUCTION ACT, Bill 142

paid in full, with the other payees implicated in the dispute to be paid on a rateable basis. In all other
cases, all payees are to be paid on a rateable basis.

3.2 ADJUDICATION (PART II.1; SS.13.1 TO 13.24)

Adjudication is a legal ruling or judgment, usually final, but can also refer to the process of settling a legal
case or claim through the court or justice system. It usually refers to the final judgment or
pronouncement in a case that will determine the course of action taken in reference to the issue
presented.

Adjudication is a legal term that refers to the process of hearing and settling a case. It usually represents
the final judgment or pronouncement in a case that determines the required course of action in reference
to the issue presented. Adjudication can also refer to the process of validating an insurance claim as well
as a decree in the bankruptcy process between the defendant and the creditors.

The amendments to the Act include the introduction of an interim adjudication regime, which is intended
to promote the prompt resolution of disputes. Adjudication is viewed as a necessary adjunct to prompt
payment for the purpose of ensuring that there is a rapid enforcement mechanism to support the
objectives of timely payment. However, while the types of disputes referred to in the Act as the proper
subject of an adjudication relate to payment, the scope of adjudication is broader and can include other
matters to which the parties and the adjudicator agree.

3.2.1 Resolving a dispute

Adjudication process allows an alternative route to court to resolve payment disputes. The key features of
the adjudication process are as follows:

• adjudicators will be experts with extensive experience in the construction industry and experience
or training in dispute resolution
• a private body, known as an Authorized Nominating Authority (ANA), will develop and oversee
training and qualification for adjudicators, maintain a registry of qualified adjudicators, and perform
other functions outlined in the legislation and a new adjudication regulation
• disputes will be heard by an adjudicator from the registry of adjudicators, who may be selected by
the parties or by the ANA
• the parties and the adjudicator may agree to the fees of the adjudicator. If they cannot agree, the
fees will be determined by the ANA
• the adjudicator will issue a determination in approximately six weeks, which will be binding on the
parties, on an interim basis, until the dispute has finally been resolved in court or arbitration, or by
agreement of the parties. If the parties are satisfied with the determination, they may agree to
treat it as final.

If, after adjudication, the individual or business owing money refuses to comply with the determination,
the party that is owed the money has the right to:

• stop work under the contract;

• charge mandatory interest on late payments; and
• enforce the adjudicator’s determination by filing a certified copy in the Superior Court of Justice.

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 ONTARIO CONSTRUCTION ACT, Bill 142

• The adjudicator’s determination cannot be appealed, but it can be challenged on certain grounds,
such as adjudicator bias.

3.2.2 The adjudication process

A party to a contract or subcontract can refer a matter to adjudication at any time prior to the contract or
subcontract being completed, even if the matter in question is already the subject of a court action or
arbitration. This right to refer a matter to adjudication is protected by the Act and the parties cannot
contract out of interim adjudication.

The adjudication process is initiated when one party serves the other with a notice of adjudication, which
must set out, among other things, a description of the dispute and remedy sought, as well as the
proposed adjudicator – the adjudicator cannot be determined in advance by way of contract. If the parties
cannot agree on an adjudicator, or the adjudicator does not agree to conduct the adjudication, within four
days of the notice of adjudication, then the referring party must request the appointment of an
adjudicator by the Authorized Nominating Authority (the Authority), and the Authority must make the
appointment within seven days of receiving the request.

Once an adjudicator is selected, the party that initiated the adjudication must provide the adjudicator with
the notice to adjudicate the contract or subcontract, and any documents on which the initiating party
wants to rely. The adjudicator will then conduct the adjudication in an inquisitorial manner and must make
a determination within 30 days of receiving the documents from the referring party, subject to extensions
that are agreed to by the parties. Any amounts payable in accordance with the adjudicator’s determination
must be paid within 10 days, and if such amounts are not paid then the unpaid contractor or
subcontractor may suspend further work.

It is important to note that although adjudication will provide quick decisions to ensure that funds flow
between the parties during the performance of the contract or subcontract, the determinations of
adjudicators are interim and the parties may proceed to have the matter determined in accordance with
their contractually agreed upon dispute resolution procedures or by the courts. However, the experience in
the United Kingdom, which introduced adjudication almost 20 years ago, has been that parties tend to
accept the decisions of adjudicators as final.

3.2.3 The Authority and adjudicators

The adjudication regime will be overseen by an organization called the “Authority”, which will be
designated by the Minister. The Regulations provide that the Authority will be responsible for adjudicator
training programs, issuing certificates of qualification to adjudicators, maintaining a public registry of
adjudicators, establishing a code of conduct, establishing a fee schedule, and developing educational
materials for the public. The Authority will be required to issue an annual report, to be publicly available,
providing information on the number of adjudications, amounts both claimed and paid, fees owing and
paid, as well as segregating the foregoing information on an industry sector basis.

The Regulations also address the requirements for an individual to become an adjudicator. Specifically, an
adjudicator will be required to have at least seven years of working experience in the construction
industry, and some or all of this experience may be from outside of Ontario. Adjudicators will also be
required to have completed a training program for which the Authority is responsible, but this educational
requirement may be waived by the Authority within the first year of the regulations coming into force.
Adjudicators will be required to comply with the code of conduct, and the Authority may suspend an

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 ONTARIO CONSTRUCTION ACT, Bill 142

adjudicator’s certificate of qualification if they cease to meet the requirements for the certificate, or are
found to be incompetent or unsuitable to conduct adjudications.

4 OVERALL CHANGES TO THE ACT

• Extension of the lien period from 45 to 60 days, and extension of the period to perfect a lien from
45 days after the last day to lien to 90 days;
• contractors and subcontractors will have 60 days to register a lien and 90 days to start a court
action
• contractors and subcontractors will have to follow specific bookkeeping rules to protect
subcontractors in the event of bankruptcy
• public sector owners, such as the Crown, municipalities and broader public sector organizations,
will be required to have a surety bond on public contracts above a prescribed amount, and
alternative financing and procurement arrangements (AFPs<) will be subject to a minimum
coverage limit, to protect subcontractors and workers if the general contractor files for bankruptcy
• condominium unit owners will be allowed to remove liens from their unit that are related to
improvements to the common elements, such as corridors, lobbies, the garage and the roof
• parties may request that a judge refer construction lien claims under $25, 000 to the small claims
court
• Project owners and other payers will be required to pay contractors and subcontractors holdbacks
once the timeline to file liens has passed. This helps contractors and subcontractors plan, accept
contracts for new work and have more certainty about when the holdback will be paid
• Increased obligations in relation to trust funds, including depositing trust funds in a bank account
in the trustee's name and an obligation to maintain written records regarding the trust funds;
• Changes to the monetary thresholds in the formula for determining substantial performance;[3]
• Revising the definition of "improvement" to include any "capital repair" that extends the "normal
economic life" of the land - as a result, true ordinary maintenance work is expressly not considered
an improvement and does not give rise to lien rights;
• Revising the definition of "price" to include any direct costs incurred by the contractor as a result of
delay that is not caused by the contractor - such amounts can accordingly be included in a lien;
and
• Requiring all contractors working under a "public contract" to provide labour and material bonds
and performance bonds with a minimum coverage limit of 50% of the contract price for contracts
valued at $100M or less, and a minimum coverage of $50M if the contract value is $100M or more.

The amendments to the Act will also permit the release of holdback on an annual basis or phase/milestone
basis, where certain conditions are met:

• The contract provides for an annual or phased release of accrued holdback;

• The contract price is over the prescribed amount (currently set at $10,000,000) – note this
threshold will not apply if the only phase for which holdback will be released is the design phase;
• The contract time is scheduled for over one year, or provides for work to be completed in identified
phases; and
• There are no liens registered that have not been either vacated or discharged at the time the
accrued holdback is to be released.

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 ONTARIO CONSTRUCTION ACT, Bill 142

4.1 Updated definitions

The definition of “improvements” is expanded to include capital repairs that extend the normal economic
life of a structure. This means that lien rights are also expanded. A definition of “capital repairs” has been
added which helps clarify the line between true construction repairs which attract lien rights, and
maintenance, which do not.

The Amendment Act introduces many other new, updated or replacement definitions to take into account
modern project structures, including “owner”, “contractor”, “subcontractor”, “broader public sector
organization”, “municipality”, and “price” among others.

5 OTHER RELEVANT CHANGES

• Municipalities (s.16): Re-enactment of provision stating liens do not attach to premises of a

municipality, as well as Crown. Nor will liens attach to public highways any more (s 34(2)).
• Set-offs (s.17 (3)): Set-offs will be allowed, but only if they relate to the same
improvement/project.
• Tenant Improvements (s.19): Contractors performing work on tenant improvements that are
funded by the landlord will have an automatic lien right against the landlord’s fee simple interest in
the land. The amount of the lien will be up to 10% of the amount of the tenant improvement
funded by the landlord. The “funding” is defined broadly to include any kind of credit or rent
abatement.
• Termination Notice required (s.31 (6)): If an owner or a contractor terminates their contract, the
terminating party must publish a notice of termination in a construction trade newspaper, and a
copy of the notice must be provided by the contractor to its subcontractors.
• Exaggerated or False Lien Claims (s.35): A lien claimant can be held liable for an exaggerated or
false liens claim if the claim is wilfully exaggerated, not just grossly as is the case now. Also, s.47
allows a court to discharge a lien that is frivolous, vexatious or an abuse of process.
• Claims Procedures (Part VIII): There are many changes to the summary procedures in Part VIII of
the Act relating to construction dispute and claims process. Many of the procedures have been
moved from the Act and into the Regulations to allow more flexibility for easier and more frequent
updating. Some of the changes include: allowing a party to combine lien, trust and contract dispute
claims without requiring leave of the court; small construction disputes can be brought in small
claims court; and construction claims will be subject to case management.
• Technical Amendments: There are also numerous and various technical amendments, including to
substantial performance certificates (32(2)), written notices of lien (defined), vacating lien
requirements (44(3.1)), and requests of information (39).
• Use of Forms: Generally, there is a much heavier use of prescribed forms, with altogether 18
entirely new forms.

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