Construction Reform: Bill 142 Receives Royal Assent

Last month, Bill 142 received Royal Assent and is now law.

The Bill proposed major changes to the Construction Lien Act, seeking to modern the Act and introduce long-overdue reforms to the construction industry.

We have also produced a handy infographic that highlights the key updates to the Construction Lien Act. You can view it here.

What happens now?

While the Bill is now law, most of its provisions will not take effect until later in the first quarter of 2018, as regulations and prescribed forms are completed. Also, improvements and contracts that were commenced prior to the new Act will continue under the former Act, provided that they can meet a threshold test of “commencement”.

It is also noted that grandfathered parties will not be grandfathered with respect to prompt payment provisions in the new legislation. Those provisions will apply to all contracts.

Key provisions

Here is a list of just a few of the changes to the Act:

1. Time for Perfecting Liens extended from 45 days to 60 days
2. Time for Preserving Liens extended from 45 days to 90 days
3. Phased payment of holdbacks on larger projects
4. Payment of holdback upon expiry of lien claims is mandatory
5. Provisions introduced to deal with liens against leasehold interests
6. New Prompt Payment regime
7. Mandatory adjudication where a dispute involves a “Proper Invoice”
8. Adjudication process introduced for other disputes where determination of adjudicator may be enforced as an order of the court.
9. Where a lien is preserved but not yet perfected and the substance of the lien action has been referred by one of the parties to adjudication, the period in which to perfect the lien is extended to 45 days
10. Adjudication does not eliminate recourse to the court or to arbitration
11. Changes dealing with P3s , including “who is the owner” on P3 projects
12. Changes to the trust set-off provisions
13. Updates to the definitions
14. The dollar value used to determine substantial performance is increased to 3% of the first $1,000,000 of contract price and 2% of the next $1,000,000 of contract price.

The ministry will be working to complete the necessary regulations and forms to implement the new legislation. We will provide further updates as those are released, and you can expect further news in that regard sometime in February 2018.

For more information about these changes, contact the Commercial Litigation Group.