The holidays have come early with a little gift from the Attorney General. On December 12, 2017, Bill 142, the Construction Lien Act Amendment Act, 2017 (Ontario) received Royal Assent and is now law. However, most of the substantive changes will not come into force until proclamation sometime in 2018.
While many provisions of Bill 142 are now in force and incorporated into the Construction Lien Act, the significant and substantial changes to the Construction Lien Act in Bill 142 will not come into force until those particular provisions are proclaimed in force by the Lieutenant Governor. Proclamation is expected early in 2018, pending finalization and approval of regulations and prescribed forms upon which those provisions rely.
So when will Bill 142 be fully in force? It depends on the section as the Bill will come into force at different times in accordance with section 85 of Bill 142. Attached is a table that sets out which provisions came into force on Royal Assent. Note that most of the significant amendments to the Construction Lien Act will only come into force upon proclamation, so we are not there yet. This includes prompt payment, adjudication, change in the lien preservation and perfection periods, mandatory payment of holdback, trust accounting rules, and so on. It is likely that the balance of the Construction Lien Act Amendment Act, 2017 will be proclaimed fairly early into 2018.
For prompt payment and adjudication, these will be in force when proclaimed after finalizing the related regulations and multiple prescribed forms. In addition, the adjudicator nominating authority needs to be set up and then adjudicators certified before the prompt payment and adjudication can work so we may see these provisions proclaimed but then delayed further until all of that administration is taken care of. Various groups have asked for a long transition and education period. So we really do not know the timing yet unfortunately. The Attorney General's office has stated that it will make a clarifying announcement on timing in January 2018.
In an amendment to Bill 142 introduced at Third Reading, the Act will now grant grandfathering of existing projects/improvements/contracts. In new section 87.3, the current Construction Lien Act continues to apply with respect to an improvement if:
- a contract for the improvement was entered into before that day, regardless of when any subcontract under the contract was entered into;
- a procurement process, if any, for the improvement was commenced before that day by the owner of the premises (including the making of a request for qualifications, a request for proposals or a call for tenders); or
- the premises is subject to a leasehold interest, and the lease was first entered into before that day.
- Parts I.1 (Prompt Payment) and II.1 (Adjudication) apply in respect of contracts entered into on or after the day subsection 11 (1) of the Construction Lien Amendment Act, 2017 (i.e. the adjudication provisions) comes into force, and in respect of subcontracts made under those contracts.
Gowling WLG has been deeply immersed in the reform process. We have held several events and published several articles since the first reading of Bill 142, and will continue to monitor its progress as it becomes the new Construction Act.
We are planning several educational events and workshops, and additional analysis of the impact of the amendments introduced by Bill 142 over the coming months to help educate and inform parties about these changes to our industry. This includes a work shop program on adjudication at which some of our UK partners will discuss the UK experience with adjudication.
Please visit our Construction Lien Act Reform website "hub" for the announcement of proclamation, and for information and dates about all of our events and activities.