On Friday May 24, 2019, the Ministry of the Attorney General released a series of amendments to the regulations under the new Construction Act (“the Act”) to support the recent amendments to the Act itself, and to provide greater clarity and guidance for the construction industry. These amendments to the General, Forms, and Procedures for Actions under Part VIII of the Act regulations came into force on May 23, 2019 when the regulations were filed. The amendments to the Adjudication regulation under Part II.1 of the Act (and relevant provisions of the Forms and General Regulations) will come into force on October 1, 2019 when the new Prompt Payment and Adjudication provisions take effect.

An overview of some of the key amendments are detailed below.

General Provisions

  1. Reg. 304/18 (General) has been amended to address some concerns with holdback as well as a few other housekeeping matters.

Section 7 of O. Reg. 304/18, relating to non-payment of holdback, has been revoked and replaced in its entirety with amendments intended to address concerns with timeliness and procedures in the event of non-payment of holdback, as well as some transition issues related to the non-payment of holdback. Previously, Sections 7(2.1) through (2.3) did not take effect until the Prompt Payment and Adjudication provisions came into force. The new amendments to the regulations address this issue in relation to providing notice of non-payment of holdback for contracts entered into after July 1, 2018.

A new section 11.1 has now been added to the General Regulation to provide further clarity on the “giving” of a claim for lien to a municipality and address Sections 34(3) and 87(1.2) of the Act. Section 11.1(1) provides a municipality with the opportunity to detail the preferred method for the “giving” of a claim for lien by publishing on its website a statement which details one or both of the following methods:

  1. Sending a copy of the claim for lien by email to a specified email address.
  2. Completing and submitting the claim for lien through a specified web portal.

If a municipality specifies a preferred method in accordance with section 11.1(1), a copy of the claim for lien shall be given to the clerk of the municipality in accordance with the chosen method. If it fails to do so, the status quo under the Act will be maintained such that the lien must be given in accordance with the process of Section 87(1) and to the office specified under O. Reg 304(18) s. 11. Further, the new section provides that a claim for lien must be provided by 5:00 p.m. local time, or it is deemed to have been given on the following business day.

Procedures for Actions Under Part VIII

The new regulation amending O. Reg. 302/18 (Procedures for Actions under Part VIII) contain only one minor amendment to this Regulation. Specifically, Section 3, relating to joinders, has been amended by the addition of subsection 3(2) which provides the plaintiff with the option of joining a lien claim and a claim for breach of contract or subcontract.

Adjudications Under Part II.1 of the Act

A number of amendments have also been made to O. Reg. 306/18 which provides further guidance on adjudications commenced under Part II.1 of the Act. These amendments are intended to clarify the highly anticipated adjudication regime which comes into force on October 1, 2019 and include a number of minor modifications as well as several more substantial amendments which are detailed below.

In relation to the adjudicator code of conduct, the amendments (i.e. striking out part of s. 7(1) and revoking s. 7(3) and (4) of the Regulations) remove the requirement for Minister approval of the code of conduct, the ability of the Minister (on written notice) to require the Authority to make changes to the code of conduct and the restriction on the ability of the Authority to make changes to the code of conduct without the Ministers’ consent. Presumably, applicants for the Authority thought this was overly intrusive in relation to setting their process. Depending on the final form of the code of conduct for adjudicators, though, this change could be problematic.

Section 15.1 is a new section that provides the Authority the option to provide administrative support services to facilitate the conduct of adjudications.

Section 16.1 clarifies the procedure for documents which are to be delivered to the adjudicator and other parties under section 13.11 of the Act. Section 16.1(1) provides that the documents required to be provided to the adjudicator or a party shall be served on the adjudicator or another party in accordance with the rules of the court for service of a document that is not an originating process.

Section 16.1(2) provides that the documents that must be provided under clause 13.11(b) of the Act are subject to the following requirements:

  1. The documents shall be provided to the adjudicator together with the copy of the notice under clause 13.11 (a) of the Act.
  2. The documents shall be provided to the other party or, in the case of a consolidated adjudication, to every other party, on the same day as they are provided to the adjudicator.

Finally, section 16.1(3) requires the adjudicator to provide the parties with written confirmation of receipt of all required documents as soon as possible once received, and this confirmation is to state the date on which the documents were received. This change is intended to limit uncertainty amongst adjudicating parties in circumstances where parties may not be forthcoming or prompt in relation to providing relevant dates and information.

Section 17 of O. Reg. 306/18 has been revoked, and substituted with a more comprehensive section which provides the much sought after clarified process for responding to a notice of adjudication. For example, section 17(1) provides that a party responding to a notice of adjudication shall provide copies of its response to the adjudicator, the party who provided the notice of adjudication, and, in the case of a consolidated adjudication, to every other party.

Section 17(2) provides that copies of the response shall be served on the adjudicator or a party in a manner permitted under the rules of court for service of a non-originating document. The timeline for a response is to be determined by the adjudicator, and a party must provide its response to the adjudicator and to every other party on the same day.

Section 22(1)(b) has also been amended and now provides the adjudicator with seven days to provide a certified copy of the determination to the parties, instead of the previous five days.

Forms

  1. Reg. 303/18 (Forms) has been amended to add necessary forms to be utilized under the Act. Specifically, the following new forms have been added:
1.1 Owner Notice of Non-Payment (Subsection 6.4 (2) of the Act) 2019/01
1.3 Contractor Notice of Non-Payment if Dispute (Subsection 6.5 (6) of the Act) 2019/01
1.5 Subcontractor Notice of Non-Payment if Dispute (Subsection 6.6 (7) of the Act) 2019/01

Further, forms 23, 28, and 29,which were to be used for Small Claims Court actions only, have been revoked and substituted with new forms which provide for a monetary jurisdiction of under $25,000. This amendment ensures that there is no confusion in the event that the monetary jurisdiction of the Small Claims Court is altered.

As can be seen from the foregoing, there are a number of changes to the Act, many of which have not yet come into force. We look forward to the implementation of these new provisions relating to prompt payment and adjudication, which come into force on October 1, 2019.