Ontario’s Construction Act is Carved Out from Limitation Period Suspension

On March 20, 2020, Ontario passed regulation 73/20 under the Emergency Management and Civil Protection Act to suspend all statutory limitations periods and time periods to take procedural steps. The suspension was retroactive to March 16, 2020 and was intended to preserve limitations periods that would have otherwise been impacted by the COVID-19 pandemic.

The wording of the regulation as of April 8, 2020 read as follows:

  1. Any provision of any statute, regulation, rule, by-law or order of the Government of Ontario establishing any limitation period shall be suspended for the duration of the emergency, and the suspension shall be retroactive to Monday, March 16, 2020.
  2. Any provision of any statute, regulation, rule, by-law or order of the Government of Ontario establishing any period of time within which any step must be taken in any proceeding in Ontario, including any intended proceeding, shall, subject to the discretion of the court, tribunal or other decision-maker responsible for the proceeding, be suspended for the duration of the emergency, and the suspension shall be retroactive to Monday, March 16, 2020.

On April 9, 2020 the Attorney General (“AG”) of Ontario clarified that as of April 16, 2020, the Construction Act is carved out from the province’s suspension of statutory limitation periods and procedural steps, and amended O. Reg. 73/20 accordingly.

The AG’s Order in Council amended Ontario Regulation 73/20 to explicitly exempt both the Construction Act and the Niagara Escarpment Planning and Development Act from having their statutory limitations periods and procedural timelines suspended.

The Order reads as follows:

Construction Act

  1. On and after April 16, 2020, sections 1 and 2 do not apply to provisions of the Construction Act or of the regulations made under it if the provisions establish a limitation period or period of time within which any step must be taken in a proceeding, including an intended proceeding. 

This change is the AG’s answer to the construction industry’s concern that the suspension of limitations periods and procedural deadlines applied to lien deadlines. The extension of lien deadlines in turn arguably suspended the deadline to pay holdback on construction projects across Ontario.

In a letter dated April 9, 2020, AG Doug Downey confirmed the intentions of the regulation and the problem it was designed to fix:

The emergency order has been amended to lift the suspension of limitation periods and procedural time periods under the Construction Act. This 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 suspension will be lifted on April 16, 2020, to give the industry time to prepare for these changes. Once 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.

Construction industry stakeholders across Ontario now have until April 16, 2020 to prepare for the regulation to come into effect.

Ontario Updates List of Essential Construction Workplaces

On April 3, 2020, Ontario updated its list of construction workplaces considered “essential”. All other non-essential construction workplaces must close by no later than April 4, 2020 at 11:59 pm while the emergency COVID-19 regulation remains in effect.

The closure was planned to last for at least 14 days, until April 18, 2020. On April 14, 2020 the emergency workplace closure was extended 28 days to May 12, 2020. The Ontario news release announcing the extension can be found here

Importantly, construction companies remain responsible for occupational health and safety requirements during the shutdown. 

Daily Commercial News reported that there were 583 Ministry of Labour inspections over week prior to the April 3, 2020 announcement and five Ontario construction sites were shut down. During Premier Ford’s April 3, 2020 announcement, he stated that “Those few sites that will remain open will be placed under the highest level of scrutiny possible.”

Construction projects supporting “critical” provincial infrastructure, healthcare, and healthcare-related manufacturing have been deemed essential and are permitted to remain open. Certain residential projects that have permits granted or renovation work that started prior to April 4, 2020 have also been spared from the shutdown.

A copy of Ontario’s list of “essential” construction services is included below and accessible here:

Construction

  1. Construction projects and services associated with the healthcare sector, including new facilities, expansions, renovations and conversion of spaces that could be repurposed for health care space.
  2. Construction projects and services required to ensure safe and reliable operations of, or to provide new capacity in, critical provincial infrastructure, including transit, transportation, energy and justice sectors beyond the day-to-day maintenance.
  3. Critical industrial construction activities required for,
    1. the maintenance and operations of petrochemical plants and refineries,
    2. significant industrial petrochemical projects where preliminary work has already commenced,
    3. industrial construction and modifications to existing industrial structures limited solely to work necessary for the production, maintenance, and/or enhancement of Personal Protective Equipment, medical devices (such as ventilators), and other identified products directly related to combatting the COVID-19 pandemic.
  4. Residential construction projects where,
    1. a footing permit has been granted for single family, semi-detached and townhomes
    2. an above grade structural permit has been granted for condominiums, mixed use and other buildings, or
    3. the project involves renovations to residential properties and construction work was started before April 4, 2020.
  5. Construction and maintenance activities necessary to temporarily close construction sites that have paused or are not active and to ensure ongoing public safety.