Construction Litigants Beware: Unresolved Gaps, Confusion and Inconsistencies in the Construction Act, R.S.O. 1990, c.C30.

  • November 05, 2019
  • Robert Kennaley and Josh Winter, Kennaley Construction Law

The many individuals, stakeholders and legislative entities responsible for shepherding Ontario’s new Construction Act provisions through should be commended.  It was a monumental task.  Still, the new Act’s provisions contain gaps and inconsistencies which will in our view lead to confusion and potential problems going forward.  We have identified some of them, below.  Many will no doubt be addressed in due course, although many most likely will not.  Our thoughts in this regard follow, in no particular order.

Notice of Termination of a Contract

The Act provides that lien expiry timeframes will commence from (among other potential events) the date the contract is terminated (s.31).  Curiously, (and unlike the approach taken with Certificates of Substantial Performance) the date of termination is deemed to be the date set out in the applicable Notice of Termination and not the date of the Notice’s publication.  This is problematic, because the date of publication could be days, weeks or even months after the date set out in the Notice.  Indeed, if the Notice is published more than 60 days after the date set out in same, a lien claimants’ lien may be expired by the time it sees the Notice.  The solution, we believe, is to have the timeframe for lien expiry commence on the date of publication, as is the case with Certificates of Substantial Performance.

There is also no requirement that a Notice of Termination of a contract be given or provided to anyone.  The publication of the Notice is the only notice required under the Act.  We submit that, at a minimum, it would be more efficient for Notices of Termination to be both published and then provided, as is the case for Notices of Non-Payment of Holdback. 

In addition, any “person whose lien is subject to expiry” is entitled to publish a Notice of Termination of a Contract, so as to trigger the expiry of the lien claims from the date set out in the Notice (s.31(6)).  As the liens of a subcontractor will expire relative to contract termination (s.31(b)), this means that a subcontractor can effectively terminate (at least for the purposes of lien expiry) the contract.  We are not sure why this was necessary or desirable.

Finally, the prescribed form for a Notice of Termination contemplates that a subcontract can be terminated using same.  Under the Act, however, no Notice of Termination of a subcontract is contemplated:  under s.31, all liens expire from the date of termination of a contract.  The form will no doubt lead to confusion where a Notice of Termination of a subcontract is published.