Emergency Order Suspending Limitation Periods Will No Longer Apply to Construction Act

Published on: April 2020 | What's Trending

Construction site in the background with fading piles of gold coins in the front

Since we posted ‘Province Suspends Limitation Periods – Consequence for Construction Liens’ on March 24, 2020, the question of whether lien rights were really suspended by operation of the order, O. Reg. 73/20, made under the Emergency Management and Civil Protection Act, which suspended limitation periods and procedural time periods retroactive to March 16, 2020, became the source of much controversy. Were the preservation and perfection deadlines set out in the Construction Act  ‘limitation periods’ covered by the first part of the emergency Order such that lien rights expiring on or after March 16, 2020 were extended? Some legal authors emphatically answered ‘yes’ to that question, while others were not so sure. However, there was no controversy in the construction legal community or the construction industry about the potentially serious unintended consequences of the Order on the flow of funds on construction projects. These consequences were described in our March 24, 2020 post.

Various legal and industry groups made submissions to the Ontario government about the adverse impact of the emergency Order on the construction community. Recognition that legislative remedial steps were needed came quickly. The Attorney General announced on April 9, 2020 that the emergency Order has been amended to lift the suspension of limitation periods and procedural time periods under the Construction Act. The suspension will be lifted on April 16, 2020, to give the industry time to prepare for the change.

Attorney General Doug Downey clarified that once the suspension is lifted, “parties will have the same amount of time to meet a deadline that had been remaining before the suspension began on March 16, 2020.” He also commented that this amendment to the previous Order “will allow for the release of holdback payments to contractors and subcontractors in the normal course, helping to resolve a potentially significant cash flow problem as a result of the order for the construction industry”.

The previous Order was made to help those having difficulty meeting limitation periods and procedural time periods as a result of the COVID-19 outbreak. However, the impact of the pandemic never created an inability to take all steps required to preserve or perfect liens in Ontario in accordance with the Construction Act. We advised against relying upon the previous Order as a way to extend lien rights. In any event, after April 16, 2020, it will be ‘business as usual’ under the Construction Act.