Are you prepared for Bill 216? Understanding the proposed amendments to Ontario's Construction Act

EDWARD G. BETTS: I think we'll get going now. Thank you, everybody, for joining us. Again, for those just connecting in, apologies for the late start. We lost our internet over the entire firm for a few minutes there, which threw us for a little bit of a loop, but nothing anybody on a construction project isn't used to dealing with.

So welcome, everybody. And thank you for joining us at Gowling WLG for presentation on the new amendments to Ontario's Construction Act. We've got a few slides and a few presentations to go on the many different changes. Asif, do you want to forward the slides right now?

ASIF LASANI: Sorry, I thought I had.

EDWARD G. BETTS: We've got-- yes, so we're going to start with a very brief overview of what brings us to this point and then go into some of the key changes that are coming and then close out with hopefully some time for questions. If you want to switch the slides. So as we all are aware, the Act was amended in 2018 and 2019 with some very significant changes, primarily prompt payment and adjudication. But along with those, a whole bunch of other changes to hold back and other procedures and provisions of the Construction Act.

In the spring and summer of 2024, the Ministry of the Attorney General launched a public consultation process led by Duncan Glaholt to look at those amendments and how they're doing, basically. And are there things that we need to tweak? Because certainly, there was messaging coming back from the use of those document of those provisions that we could use some tweaks, or clarifications, or some additional changes.

And so a consultation process was launched. It resulted in a report with recommendations from Duncan Glaholt. And that has resulted in the changes that we are seeing proposed in Bill 2016, Building Ontario For You Act 2024. This is a Omnibus budget bill. So it included a whole bunch of other changes. But in Schedule IV of Bill 2016, we have all of the various amendments that are proposed to the Construction Act.

The idea is to tidy up and fix and update some of the changes that were there before. If you want to forward to the next slide. Asif, thank you. It received royal assent right away, but the royal assent only comes into force on the day that the Act is proclaimed. So this has added a little bit of confusion how quickly this has come together and certainly getting royal assent so quickly. That's because it was a budget bill and includes a lot of other amendments to a lot of other statutes. But as of this morning, when we checked it, the Construction Act schedule, the amendments to our Act has not been proclaimed. So these are not in force yet, but they will be soon. And we don't have a clear sense of when that will be, but we're certainly monitoring that.

If you want to go to the next slide. There is a specific transition period. This is where it does state that when it's proclaimed, it comes into force, but it also comes into force immediately. So it will be binding on all projects that are already in play and all improvements. So it's going to be important to transition your projects to the new rules that we'll summarize in a few moments.

There are some exceptions. I would call them less exceptions and more clarifications about how these new rules apply to existing projects. How do you transition to the new holdback, the annual holdback, the new termination, how it works for design professionals? So if you have an existing project that's underway, it will be important to look at those exceptions and see, really, how do the new rules apply in the case of your existing project?

So with that, I think we'll get right into it. We do have a lot to cover, so we want to get right into it. And I'm going to introduce my partner, Aaron Hunter, who will talk about holdback requirements and lean provisions that have been changed in the amendments. Aaron, over to you.

AARON HUNTER: Thanks very much, Ted. OK, we're on the right slide now. Holdback, big changes to holdback As you may know, in the existing regime in the Construction Act, parties can agree to have annual release of holdback under certain circumstances. The contract has to be over a certain threshold value. And also, it has to be baked into the contract that holdback is going to be handled in that particular way. But it's not required. It's an option.

These amendments change that utterly. And if you've heard anything about the amendments since they came out, it's probably been this one point that owners now must release holdback annually. So on each contract anniversary, the owner has 14 days from that anniversary to publish a notice of annual holdback that it intends to release for that year that had just concluded with the anniversary. And once they publish that notice, there is a 60 day familiar length of time, 60 day period, during which any liens that contractors or subs want to register can be registered. And then that expires at the 60 day mark. And then the owner has 14 days after that to make payment of the holdback for that year that has just has just concluded.

So it would be convenient if this new scheme completely replaced the old scheme, and then you only have to learn one thing and you could just move on. But unfortunately, it's not like that. The old system or the existing system rather, where holdback and liens are all based on when certain project milestones are achieved, that still exists.

So if your contract lasts less than a year, then you're still in that kind of old system of the lien period running from publication of the certificate of substantial performance. And then for finishing work, the lien period running from when the contract is complete. So you can't just forget about everything that you used to know. There's the annual system and it's running in parallel with the system based on milestones.

The next thing, which is in Item three on this slide is about the owner's ability to set off against holdback, which exists in the Construction Act, as it exists right now in section 27.1. I haven't personally seen it used a lot, but it is there and it is now being removed. Or when these amendments come into to force, then that right to withhold from holdback or set off against it will be gone.

Item number four, another more minor one. If you are a contractor and you have referred something to adjudication and adjudication is underway, you have a bit of extra time under the existing rules to exercise your lien rights. And that is another thing that is being removed through these amendments. And finally, and this ties back to what I was saying about annual holdback, so when your lien rights expire after the annual holdback notice period, maybe this is obvious or implicit, those rights are gone, but you have new lien rights for the work you do in the current year and in future years. So you get sort of separate lien rights for that ongoing work.

Asif, would you mind going to the next slide? Great, thanks. I'm also going to speak about invoicing and prompt payment briefly. So you are probably familiar with the concept of a proper invoice in the Construction Act. It's part and parcel of the prompt payment rules. And just as a refresher, once an owner receives a proper invoice from a contractor, the owner has 28 days to pay that proper invoice, subject to the owner's right to issue a notice of non-payment within 14 days of receiving the proper invoice.

So the nuance here or the new information here for you to pay attention to is that if you receive an invoice, as an owner, you should be looking at it quickly now because after seven days, it will be deemed to be a proper invoice. You no longer-- as an owner, that is, for the owners in the audience, you no longer have the ability to sit around and not pay attention to the invoice, or look at it closely because after seven days, it will be deemed to be a proper invoice and that clock will start, that 28 day clock and the 14 day clock for issuing a notice of non-payment. So for an owner for your project, whoever is responsible, whatever team or mix of people are responsible for reviewing an invoice, they need to be-- they need to understand that there's this immediate time-sensitive task that has to be taken care of after the invoice comes in. And if it's an external party consultant or something of that nature, then it should be spelled out in their scope that they need to be attending to this promptly.

And the second thing to understand about these amendments and how they affect the concept of proper invoice is there's-- the definition of proper invoice has been cleaned up a little bit and it's very helpful. I'm not going to mention every single point. But I will mention there's this extra paragraph in the definition of proper invoice that says, a proper invoice must have any other information that is necessary for the proper functioning of the owner's AP system that the owner has requested.

And I think the practical implications for owners and contractors here is that if we want payment to flow smoothly and the system to work as it's intended to do, the owner needs to let the contractor know at the outset, ideally in the contract itself, what the requirements of the AP system are, what the form and content of the invoice need to be in order to facilitate the smooth functioning of the payment system. And for contractors, they also at the outset, if the owner is not providing that information to them on its own initiative, contractors need to be actively asking for that and making sure that they have that information. Again, ideally, I think the gold standard would be to have it in the contract so it's clear to both parties in order for payments to be made in a timely way.

BEVIN SHORES: All right, well, I think that means that you'll be hearing from me next. I'm Bevin Shores, I'm one of the partners in our Hamilton office. And I'll be going over some of the changes to the interim adjudication scheme under the changes to the Construction Act. And as I'll discuss, the thrust of these changes really appears to be intended to expand the scope of and introduce some increased flexibility to this interim adjudication scheme, which, as you'll all recall, was ruled out with the previous set of changes to the Construction Act.

So the first of these changes that I'm going to discuss is with respect to introducing private adjudicators. So under the new changes to the Construction Act, the new regime will allow private adjudicators with fees negotiated between the parties. So currently in the adjudication scheme, parties are limited to the adjudicators on the adjudicator registry with ODACC. ODACC being the Ontario Disputed Adjudication for Construction Contracts.

Right now, there's 52 adjudicators. And their fees range from $275 an hour to $800 an hour. Some of them also offer flat fee rates. And this change, if we look at the independent review that Ted was referring to at the top of our webinar, this change appears to be in response to feedback about there being some limited selection for adjudicators, and specifically, adjudicators with the full range of experience that the parties would like to see.

And so this change appears to be intended to address the limited pool of adjudicators and specifically, some effect that the ODACC fee structure may be having on that. So once the changes are enforced, the parties can select private adjudicators if they agree to them, and they'll also have to agree to the fee. So the fees won't be limited to what's prescribed by the ODACC fee schedule.

It's important to realize that both registry adjudicators and private adjudicators still have to consent to conduct the adjudication. And also, the provisions allowing ODACC to appoint a registry adjudicator if the parties don't agree on an adjudicator still remains in force. So it'll be interesting to see how that will play out if the parties want a private adjudicator but can't agree on whom.

So the next change to adjudications that I'm going to discuss is with respect to the issues that can be adjudicated. So as you're likely aware, currently, there's a set list of six defined subject matters that can be referred to adjudication. And then there's also a catch all that any other matters that the parties agree to can be referred to adjudication.

Once the changes take effect, the scope of adjudication will be set out in regulations rather than being prescribed in the Construction Act. These regulations haven't been set forth yet, but I think it's pretty clear that we can expect to see the scope of adjudication expanded once those regulations are brought forward. And specifically, there's already a signal. One of them is likely to be cross contract disputes within the same project, which is specifically enumerated in one of these changes.

Another similar change is that the timing for adjudication is going to be expanded. So it'll be available 90 days from contract completion rather than up to the date of contract completion, as it currently is. And there's similar changes being proposed for subcontracts. So all of this is funneling towards a pretty clear signal that adjudication is to be expanded.

And again, if we look at the comments in the independent review, the author of that report was pretty clear that they were of the view that parties should be free to include whatever they want in an adjudication with the concurrence of the adjudicator. So that's also interesting, too, because it could very well increase the importance on the adjudicator either accepting or declining an adjudication, particularly if there's a matter that appears really to be too complex to properly be dealt with in the adjudication context. So more to be seen on that.

A couple of other things that I'll discuss in the changes to the adjudication sphere. The next one is that any party can request a consolidation of related disputes. Under the current regime, only contractors can request that. And again, this is also in keeping with another suggestion to broaden the scope of adjudication. And it also appears to be in response to some comments in the independent review about there being a need for information symmetry and transparency among all determinations affecting one project. So rather than having a piecemeal approach to related disputes, bringing them all together under one adjudication.

There's a couple of new provisions that I'll speak to briefly as well. One is that parties are given a timeframe within which to object to an adjudicator's jurisdiction. And with this comes a sort of implication that adjudicators can rule on their own jurisdiction. This seems to have been understood by everybody so far. But this jurisdiction provision specifically appears to be related to some feedback that there was concern that parties might raise frivolous jurisdictional arguments to stop an adjudication. So the timing to bring a jurisdiction challenge to the subject matter of the dispute, once the changes take effect, will be once the party makes their submissions, rather than grinding the whole process to a halt at the outset.

And the other new provision provides a slip rule similar to what we see in the Arbitration Act that's been in effect in Ontario for a few decades. And so that allows requests for corrections to decisions to correct errors or injustices. So errors is typographical errors, errors of calculation, and similar errors. And that seems to be, again, just giving the adjudicators the opportunity to catch and correct, quote, "slips of the pen." That's how it was described in the independent review.

And then with respect to correct an injustice, this mirrors language that we see in the Arbitration Act. And appears just sort of if we extrapolate from how the Arbitration Act has been interpreted to allow an adjudicator or a party to address procedural fairness issues. And we've already seen that in some of the cases that have come out of adjudication already. So with that, I'll turn it over to my colleague, Asif Lasani, to talk about some of the technical and housekeeping changes for the changes to the Construction Act.

ASIF LASANI: Thank you, Bevin. That's got up here. OK, so I am dealing with the leftovers. So the remaining changes don't really fit into any category. In the independent review, these changes were described like this. There are some artifacts of a legislative process that are now in need of amendment. Some of these raise issues that are purely theoretical. Few of these have caused problems yet. Some have called these solutions in search of problems.

However, rather than leaving these to be addressed down the road, or as they come up as issues, they thought, well, we're changing the Act now, so let's make these sort of housekeeping changes. So in short, it's a hodgepodge list of changes. I'm going to deal with what I think are the more important ones. And there's probably about 10 or 20 of these. But again, I think these are the ones that will be more relevant moving forward.

So the first is the change to price, the definition of price. Now, currently, if there's no specific price agreed, the price is the market value of the services or materials supplied. Now, under the proposed amendments, the regs may specify a price other than the market value if the parties don't agree to a different price.

So this is intended to help reduce disputes over contract value. So for example, the definition of price does not translate well into other collaborative project delivery models, like IPD, construction management at risk, and progressive design build. Now, even on conventional cost reimbursable projects, price changes over time as the contract is performed. And that causes ambiguity as to the applicability of the statutory threshold for phased holdback release, for example. This is compounded by the fact that the fair market value component of the definition of price is largely illusory. There is no market in which these contracts can be bought or sold.

So the idea here is market prices is a difficult one. So why don't we have one that is prescribed in the regulations? The issue moving forward is we don't know what approach that will be taken to determine what this alternative to market price will be. So really, it's important to pay attention to these regulations as they're enacted so that, that alternative market price will be in there and you have to know what it is.

So the next change is to the written notice of lien. And it's now expanded to include a copy of the claim for lien. So currently, section 24 allows a payment to be made by a payer up to 90% of the price of the services or materials that are supplied, unless the payer receives what's called a written notice of lien in form one. Now, if a form one notice is given, then the payer must also retain, in addition to that typical 10% statutory holdback, the amount sufficient to satisfy the amount in the written notice of lien. So that often seriously-- that stops or seriously interrupts at least the flow of funds on a project.

Now, a payer who has served with a copy of the actual lien but not the form one might not be obligated to retain that lien amount. So this change just triggers the same retainage obligation. If the lien claimant just simply serves a copy of their registered lien, or if the lien doesn't attach to the premises, then gives a claim for lien to the owner. So as it stands, I think the issue is it was ambiguous as to whether that retainage obligation would apply in the same way as a written notice of lien if you just gave a copy of a registered lien.

So next is the next changes to the definition of joinder and the concept of joinder. The Act, once proclaimed, will allow joinder of a lien claim with another claim in the action. And this is to be provided in the summary litigation procedure. So it's meant to clear up the uncertainty caused by some 2017 amendments, so the overhaul of the Act.

Previously, the Act prohibited joinder, meaning the joining of a lien lawsuit with a breach of trust lawsuit. But it allowed the joinder of a lien lawsuit to a breach of contract lawsuit. The amendments got rid of both of those provisions. But then in the regulations, they added back that you could join a lien lawsuit with a breach of contract lawsuit. But they did not address whether you could actually join a lien lawsuit with a breach of trust lawsuit.

So this is meant to enable that, to allow for that. But it will have to come in the form of an amendment to the regulations. So that hasn't happened. Proclamation hasn't happened. But following proclamation, it's likely that they will amend the regulations to allow for the joinder of a breach of trust claim with a lien claim.

The next change is to the notice of termination. Right now, the Act requires the publication-- it requires that you publish-- oh, sorry here, that you issue a notice of the termination that you published. And that has to-- but there is no time for that to happen. And so the issue with that is for purposes of lien expiry and preservation and perfection, so if your contract is terminated, you can publish that, but there's no time requirement on that. Now, that has to be done within seven days. And now, there's also the confirmation that, that date of publication is the actual date of termination for the purposes of lien expiry preservation and perfection. So it just clears up that confusion as to when a contract is actually published and it terminated and when you actually have to publish that it has been terminated.

The next change is to the multiple improvement section of the Act. Non-contiguous improvements under one contract can be treated as separate contracts. This was the case in the current iteration of the Act, but it only applies with respect to when a contract is considered substantially performed. And it did not apply for the purposes of the whole Act.

And so this clears up the uncertainty as to whether the election to treat a non-contiguous improvement under one contract actually applies for the whole contract. And issues that arise relate to, well, for example, what if an owner deleted or terminated the scope of an entire segment of a contract but not the rest of it. So you have this big contract with non-contiguous improvements and the owner says, well, we're going to get rid of phase one, or this particular phase of it.

As it stands right now, you wouldn't know if you had to publish a notice of termination of that contract because technically, the non-contiguous improvement section of the Act only applies to whether the contract was considered substantially performed. This clears it up. It will apply for everything.

And the final change that I'm going to talk about has to do with the pre-construction lien for design professionals. So where an owner retains a holdback for the supply of a design plan drawing or spec for the making of a planned improvement that is not commenced, I think that's the key, a lien is deemed to be created, unless the owner proves that the value of the land has not been enhanced. Now, the idea here is that if an owner keeps a holdback with respect to supplied services, these services were obviously supplied to an improvement. So this supports the legal presumption that whenever a holdback is kept from a person supplying pre-construction design services, the services supplied are lienable, and it is up to the owner now to prove otherwise.

So that is the services did not enhance the value of the land. That's the presumption that it was now, it's up to the owner to prove that they didn't advance the value of the land. So previously, the burden was on the design consultant to prove land value enhancement to justify their lien. They've just reversed the burden now and put it on the owner to rebut the presumption. So those are the high level and more material changes in that sort of miscellaneous category of the overall changes that were recommended in the independent report. So Ted, I think that's all I have. So back to you for the question and answer period.

EDWARD G. BETTS: Excellent. There have been a number of questions. Thank you Asif and thank you, Bevin and Aaron. There have been a number of questions in the chat, the Q&A. So feel free to read through those. Or if you have specific, really narrow questions that you want to follow up on, please let us know.

I did want to clarify one thing that came out of the questions, which was a good point to add. The way the transition provisions work in 87.4 is to say if your project started before 2018, in other words, the first round of amendments in 2018, don't apply to that project at all. In that case, these amendments don't apply because most of these are amendments to amendments that came subsequent. So it obviously has to sync up with what's already binding on the project. So I did want to clarify that part.

But once the Bill's 216 schedule for the Construction Act amendments are proclaimed, these will be binding on the projects. The exceptions that are listed in 87.4, subsection 3 through to, I think it's 7, these list out a number of exceptions. But really, as I said earlier, these are clarifications to explain how these new rules, the annual payment of holdback might apply to an existing improvement, or the notice of termination if there's already been a termination or design professionals and the specific ways that these amendments will apply to those unique situations.

So if you do have follow-up questions or additional questions that are related to specific projects, or issues, or circumstances on your projects, we'd be more than happy to get on the phone and go through those in detail with you. Up on the screen right now, and we've gone through this in really good time. On time and on budget, always our motto for everybody on the call. So we do have some time to take up some more questions. I did want to note before we start looking at some of those questions, up on the screen now is a QR code for survey we like to provide these webinars because they are useful. And the more useful they are, the more helpful they are for you, the better. So we need your feedback.

I mean, the more you can give us in terms of content comments and quality checking, the better. That way, we can make sure that our webinars are properly addressing your concerns and needs and what's on your desk right now so that you're able to meet the changes in the law as they come. We hold webinars all the time. And we want to stay relevant to you. So please, feel free to send in the survey. We will be circulating the survey link, as well as the slide deck shortly after the call to everybody who's attended. We also are open to meet with other members of your team. If you have a bigger team and you think it would be better for us to chat with them, instead of relaying some of the conversations that we've been having today, then reach out to us, and we'd be happy to set up a time.

Looking at some of the questions that we have, there's some detailed questions. We've had about 15 questions that have been asked and already answered. We've got about 14 open questions that people are looking for answers. So I haven't caught up to those. I don't know if anybody else on our team has read them yet and want to raise anything, any of the responses directly.

ASIF LASANI: I do see one about whether the notice of termination applies to a contractor's termination of a subcontractor, or just the owner to a contractor? So they didn't actually change the language in the act as it relates to that. It simply says that the obligation is either on the owner, the contractor, or other person, whose lien is subject to expiry to publish the notice of termination. So my take would be, and because they have left that a little bit unclear, would be that if your contract has been terminated don't leave it up to chance. And I would publish within seven days, whether your contractor owner or subcontractor.

EDWARD G. BETTS: I see a fair bit of questions relating to holdback and the right to set off. So maybe you could address that because it's an important one that comes up on every project and has going back to 1983 when the Act was first introduced as the Construction Lien Act. What can we do with holdback? Can we set off?

So the amendments in 2018 brought in a new process for dealing with any kind of non-payment of holdback. It also brought in a requirement to pay holdback on the day that it's due, the day after the lean period expires effectively. And so what you had was a date when the holdback back had to be paid back at the end of the project. And a procedure that was introduced for issuing a notice of non-payment, if for whatever permitted reasons, you were not going to be paying the full amount of the holdback.

It sort of mirrored the proper invoice process, and that everybody knew what payments were coming. And the idea with that was, as we are getting close to the end of the lean period, we're after substantial performance, 40 days after the publication of substantial performance, the owner was required to issue a notice of non-payment If it intended to holdback or retain any part of the whole back. And that way, when you got to the last day of the lien period, all trades and all contractors on the project would be aware that the holdback was coming or not and to what extent it was not and before they lost their lien rights.

Section 27.1 that provided for that non-payment notice has been removed. And so we really fall back to the old world that we had, which is primarily just dealt with in Section 30, which stipulates that you cannot use the holdback to apply toward deficiencies until all lien rights have expired. So effectively, the owner cannot hold back from the holdback, unless your contract has some unique provisions that stipulate that that's permitted and it conforms with the requirements of the Act, which I'm not sure they can.

But if you get to the-- but once all liens are accounted for either by vacating, bonded off, discharged, expired, then whatever amounts are owing that is open for the set off rights that you had before. It doesn't change that. But the process and the ability to note and hold back ahead of time has been removed. So hopefully, that clears up some of the confusion that seems to be in some of the comments. Aaron.

AARON HUNTER: Ted, I created that confusion with my slide about holdback and liens because I stated maybe more definitively than I should have that deleting 27.1 removes the ability of the owner to set off against holdback. But if the consensus is that with section 30 still being there and not having been affected by the amendments, then there's still the holdback, right?

EDWARD G. BETTS: There's a question about, what's the rationale behind the owner respecting liens. I'll sort of broaden the question. And what they're trying to address here is the unique circumstance you have with a lot of the design work. So the general principle, but it's not the only principle that applies to whether or not a lien exists on a project. And you have lien rights.

But the general principle is, are you adding value to the land? And clearly, construction work is adding value to the land. There's work that's being done. You may be putting pipes in or a foundation. And even if it doesn't fully get built, there's some value that's been added to the land. Demolishing a building, adding value to the land.

So what do you do with all of the work that's done, that allows you to do the construction work, all the design? Well, it's on paper. So in one sense, you haven't done anything yet. You've put a piece of paper together and the next owner who might come along might want a completely different design. So you haven't added any value to the land in that sense.

And so we've got-- but we have a revisions to the amendments to the Act that came in, I believe, it was 2010 that added architects and engineers and gave them lien rights. So that must mean something. So we've always had this tricky gray area, where there's a certain point where the level of design that's being provided for an improvement, a future improvement, crystallize into lien rights. And the intent of these provisions is to say, you've got those lien rights to provide some clarity about the fact that even if the construction work, which is clearly an improvement, doesn't actually go forward, your rights still exist in preparing the designs and the specifications for that improvement that didn't go forward. So hopefully, that was addressed. I saw a few questions along those lines.

One of the things-- sorry, and I do apologize at the beginning, we lost our power internet connectivity all across the firm just before we started. So one of the things I did not do at the outset of our program was give you some of the context on questions. So I'm glad people picked up on that. But I also did not have the chance to read a land acknowledgment. Which I think, since we do have some time, I'd like to revisit and bring back for everybody because I think it is something that's important to acknowledge.

This is a national program, so we're all sitting in different parts of the country. But me, I'm sitting in the city of Toronto. And as I am in the city, I would like to acknowledge that we are on the traditional territory of many nations here, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit, and Métis peoples. We also acknowledge that Toronto is covered by Treaty 13, signed by the Mississaugas of the Credit and the Williams Treaties signed with the multiple Mississaugas and Chippewa bands. Thank you for listening to the land acknowledgment.

Guys, do we have any other questions? There's an adjudication question, some subcontractor question termination. I don't know if you had a chance to read those and want to address them. Notice termination applies only as between the contractor and the owner. I think that was a question.

Will there be any changes in circumstances in which deposits are paid pre-construction? So this is always a tricky situation. But just keeping in theme of the webinar here, we're looking at the amendments. And so the amendments do not make-- I don't think any of the amendments would impact how prepayments are dealt with in any different way. Prepayments are paid before the project is even an improvement potentially, but they're paid in relation to an improvement. And so the act would still apply to them. I'm not sure if that fully answers the question, but there are no specific amendments dealing with prepayments.

There's a question about the expansion of the adjudication topics and would it be reasonable to require a critical path analysis as part of a proper invoice if the delay is explicitly included in that expanded list? I guess it depends on what the dispute is relating to. If you're asking what constitutes a proper invoice, I think the aim of clarification-- and maybe Aaron can add to this if he thinks there's more to add-- the aim of the proper invoice clarifications is because we saw in the market a lot of proper invoice definitions build on the permission given in the Act. That said, here's the things that must be in your proper invoice and anything you put in the contract. And of course, a lot of things got put into the definition as a result of what constitutes a proper invoice.

And so one of the things that's commonly added as a requirement for proper invoice is an updated schedule. So this adding in a requirement for a critical path analysis would be akin to including a schedule. And my personal view on that is that it's certainly something you want every month with the invoices.

But is it the right thing for the project to include an updated critical path or an updated schedule when you're talking about an invoice? The work's been done. Trades are waiting for payment. I think you are running a risk that the more you layer in to an invoice that could invalidate the invoice and therefore result in a non payment, the more of that kind of stuff you layer in, the more problems you're going to have because you're delaying payments to people who have done the work properly, and it's been certified at that point, and you're just holding up payment. So I would be very cautious about layering in items that aren't tied to the payment process itself and the work.

Now, that doesn't mean that a payment schedule that relies on milestones, for example, is inappropriate because you do have to measure against something in that case. So it's a bit of a non-answer. But it's something I'd be very wary about including because of the problems it might cause on the project.

AARON HUNTER: Ted, it's Aaron again. All I wanted to add to that discussion is that the idea that the payment clock starts upon receipt of a proper invoice can be gamed by owners to potentially unfairly delay payment to contractors. And I think the deeming provision that will come into effect with the amendments is meant to close the window, either partly or completely, on the owner's ability to play games with that.

EDWARD G. BETTS: Yeah.

BEVIN SHORES: And I just took myself off mute and came on camera briefly to pipe up with. I think, what the issue that question is getting at is really just the expanded scope of adjudication will really open up the ability for these disputes to be dealt with while the project is still ongoing. Which is a bit of a change from the existing scheme, where a lot of things are dealt with after-- along the timing of the lien claim. So usually, once the project is done or in the later stages. And so I think that will require some careful thought about documentation and being ready to deal with these kind of disputes during the life of the project as they come up. So really being on top of things like delay issues and really just basic documentation because it's pretty clear from both these changes and from the independent review that the intention is to have these disputes litigated a lot faster and a lot earlier than we've seen.

EDWARD G. BETTS: There's a few questions about what to do now. We've got an existing contract, or we're in the middle of negotiating a contract for a project now that-- and we don't have the law. It's not law yet, these changes. And I think we've all had this that right now because we're all busy lawyers working away on existing projects that are about to get going.

I'm going to give the classic lawyer response, and that is it depends. I mean, some of these clauses are only effective because they are law. And so you don't want to be offside committing to things that maybe get changed. I wouldn't expect that there's going to be significant changes, if any, to Bill 116-- sorry, 216. But it could be, it's not law yet. And it could take a long time. So I'd be a little bit careful.

Having said that, some of these are-- most of them, frankly, are clarifications on how the rules should apply. So, for example, annual payment of holdback on an annual basis, that is there now. It is permitted for certain types of projects, over $10 million, that say in their contract that you can release holdback on an annual basis. Putting in the terms and the process that they've got for publication, it can't hurt on that front. So it's following along the rules that are coming.

In other circumstances, you might want to anticipate them by dealing with it directly. In other words, the Act as it stands now applies. But when the new act comes into force, these rules apply, or this is how we will apply the new rules, or some changes to our contract that will be implemented at that point.

So it's a little bit tricky to deal with when you know these are coming. You don't know when. And they will impact some of the payment procedures, especially or adjudication rights. On the expanded list of adjudication, that will be effective right away. So there's no harm in agreeing right now in the contract to what matters you can agree are going to be adjudicated. That's something you're allowed to do right now. So you might as well agree to that if you know what's coming. So the approach would depend on what issues are of concern and specifically where you are with that contract.

As I said earlier, we are monitoring for the date that gets proclaimed. And we'll certainly be issuing a building brief. If you've come to this meeting through our distribution list, you will get that automatically. If somebody has forwarded the invitation to this meeting, this webinar, to you, we would encourage you to register for our distribution list so that you get an update directly yourself.

Question about how the one year holdback, annual holdback release works with a specific release to a specific subcontractor. Section 26 of the Act is not amended. Section 20-- sorry, 25 of the Act is not amended. That's where a subcontract is certified to be fully complete, or the owner and the contractor declare that it is fully complete. And that still operates on its own.

So if mid-year, a subcontract is fully completed, there's nothing stopping those rules from applying. The owner and the contractor either agree, or it's certified by the consultant that it is fully completed. In which case, the holdback for that subcontractor can be released. And then you take an accounting for that on the annual release. Obviously, you subtract what holdback has already been released before releasing the annual amount.

I think we're coming up on time. We have a number of additional questions. We'll try to respond to those in due course directly to the individuals. But I want to thank everybody very much for joining us. It's obviously very important to stay current on changes to the Act, changes to effect our projects, our improvements as we're working on them. And so it's good to keep tabs of this.

We will have more webinars coming up as we get the proclamation for these amendments and certainly, if there's any further amendments that come to the Construction Act. Thank you very much for joining us today. Hope you found it educational and a good learning experience. Again, we will follow up with an email that will include a survey link, as well as a copy of the slides. Thank you very much.