Articles 2020

A summary of important legal information for Ontario businesses in construction to keep in mind during the COVID-19 / coronavirus crisis.

The lag between a subcontractor completing its work on a project and the subcontractor being paid has been a longstanding source of tension in the construction industry. In the past, subcontractors typically had to wait for the contractor to be paid by the owner before money would flow down to them and, even then, there was no guarantee that they would be paid within weeks or even months of completing work on a project.

Force majeure provisions are often overlooked, but when drafted and invoked properly, they can be useful risk allocation tools. In the construction context, they can be used to allocate risk in case of a shortage of raw materials, extreme weather or a labour strike, among other events. Force majeure clauses excuse a party’s performance under a contract in full or in part, to the extent that the failure to perform is due to certain circumstances outside of the party’s control.

Ontario’s reformed Construction Act has been fully in force since October 1, 2019. The changes to the Act and its regulations are still settling across the province, at times in surprising ways. In the Ontario Superior Court’s recent decision, The Gatti Group Corp v. Zuccarini, 2019 ONSC 7050 (“Zuccarini”), the Act amplified the defendants’ successful second security for costs motion, resulting in an order that the plaintiff post $95,000 into court in 30 days.

Prior to October 1, 2019, the only lands to which a lien could not attach were federally and provincially owned lands. Municipal lands, other than public streets or highways owned by a municipality, were subject to lien registrations just like any other privately-owned land. Effective October 1, 2019, liens no longer attach to any municipal lands, which means that registering a lien against municipally owned land is not an option.

This article is a continuation of our previous article on gaps, confusion and inconsistencies in Ontario’s Construction Act. Here, we focus on the transition provisions which apply to the Act’s changes effective July 1, 2018 and October 1, 2019.

Statutory adjudication of construction disputes in Ontario is in its early stages. Because of the section 87.3(4) transition provisions of the Construction Act (the “Act”), adjudication does not apply to most current contracts and subcontracts; but as new projects are bid, adjudication will gradually become the norm in the province.

The Ontario Court of Appeal in CM Callow Inc. v Zollinger, 2018 ONCA 896 (“Callow”) recently rendered a decision that could have important consequences for parties seeking to terminate commercial agreements. Specifically, Callow may have significant ramifications for the law of good faith in Ontario, and in particular with respect to the duty of honest performance first recognized in Bhasin v Hrynew, 2014 SCC 71.