This article originally appeared on The Lawyer’s Daily website published by LexisNexis Canada Inc. on Friday, August 31, 2018.
The first phase of amendments to Ontario’s Construction Act, R.S.O. 1990, c.C. 30 (the Act) came into force on July 1, 2018. The amendments included some limited additional rights to information, pursuant to a request delivered under s. 39 of the Act to an owner, contractor, subcontractor or mortgagee. One of the main additions is the right to particulars concerning the states of accounts between players involved in construction projects. It is to be noted that landlords are now subject to requests for information, arising out of their new liabilities under the Act.
Additional rights to information may be prescribed in the future, as discussed below. There are no additional rights that would assist in dealing with the transition provisions of the Act.
Information regarding states of accounts
Owners, contractors, subcontractors and now landlords, must provide additional information pertaining to the state of accounts between an owner/contractor, a contractor/subcontractor and a subcontractor/sub-subcontractor. The new ss. 39(4.1) provides that the following information must be provided by a recipient of a written request:
- The price of the services or materials that have been supplied under the contract or subcontract;
- The amounts paid under the contract or subcontract;
- The amount of the applicable holdbacks (which includes notice holdback);
- The balance owed under the contract or subcontract;
- Any amount retained under s. 12 (set-off by trustee) or under ss. 17 (3) (lien set-off); and
- Any other information that may be prescribed.
“Prescribed” means as provided for in the regulations to the Act and so all players in the construction industry will need to monitor any updates to the regulations that may increase the rights to information provided for in s. 39. Combined with the extended timelines to preserve and perfect a claim for lien under the amended Act, these particulars should assist lien claimants in resolving their disputes early in the process, provided that the 21-day deadline for delivery of information is complied with.
Information from landlords
Landlords can no longer “notice-out” of the Act and shield themselves from liability to a lien claimant. Section 19(1), as amended on July 1, 2018, imposes a 10 per cent statutory liability for payments made by landlords to tenants for improvements to a leased premises (commonly known as the “tenant allowance”). Note that the definition for the word “improvement” now includes the word “capital” before “repair” in s. 1(1)(a).
In addition to the new information called for under the new s. 39(4.1), discussed above, landlords must also provide information as to which of the amounts paid under the contract or subcontract constitute any part of the payment of the tenant allowance. Landlords will need to be mindful of their new obligations under the Act and review their lease agreements for compliance with the new provisions.
Are we missing something?
One glaring absence in the amendments to s. 39 is a right to information that is needed to determine which version of the Act applies to a project dispute. The transition provisions in s. 87.3 state that the old (pre-Canada Day 2018) Act continues to apply in respect of an improvement if:
- a contract for the improvement was entered into before that day;
- a procurement process, if any, for the improvement was commenced before that day; or
- if the premises are subject to a leasehold interest, the lease was first entered into before that day.
Under the amended s. 39 of the Act, lien claimants do not have a right to request the date that a lease was entered into with respect to an improvement of a leased premises. Similarly, recipients of requests for information are not obliged to provide the dates of the relevant contracts or subcontracts, although it would be prudent to make the request in any event, to avoid continuing uncertainty about which version of the Act applies to a project.
Players on the lower end of a construction pyramid would also be well advised to make early inquiries regarding the dates of a contract or a lease and the start of a “procurement process,” as they do not have statutory right to this information under the amended Act.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.