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COVID-19 Emergency Regulation

 

On March 17, 2020, the Ontario Government declared the outbreak of the COVID-19 coronavirus disease an emergency pursuant to section 7.0.1 of the Emergency Management and Civil Protection Act. On March 20, 2020, O. Reg. 73/20 was filed with the Registrar of Regulations. Under that Regulation:

  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.

Although it is not  currently clear to what extent this Regulation will affect the various timelines imposed by the Ontario Construction Act, we offer our initial views below:

Preservation and Perfection of Liens

Section 1 of the Regulation addresses limitation periods.

It is unlikely that section 1 of the Regulation would apply to preservation and perfection of liens, since courts have held that those sections are distinct from the concept of limitations. As the court held in Logger Town Homes Ltd. v. Sadeghian, 2013 ONSC 6056 (Div. Ct.):

Section 2(1) of the Limitations Act provides that the Act applies to "claims pursued in court proceedings". Section 1 defines a "claim" to be "a claim to remedy an injury, loss or damage that occurred as a result of an act or omission". I do not think that a lien under the CLA is either a "claim" for purposes of the Limitations Act nor is it "pursued in court proceedings".

Bristow, Glaholt, Reynolds & Wise, Construction, Builders’ and Mechanics’ Liens in Canada, states that “[s]ince lien legislation is intended to be a complete code in respect of lien actions, it has been held that the Limitations Act, 2002 has no application to the concept of preserving a lien, and cannot extend the time to do so”.

While that probably excludes the application of section 1 to the preservation and perfection of liens, section 2 seems broad enough to cover preservation and perfection.

Sections 31, 34 and 36 of the Act are clearly provisions “establishing any period of time within which any step must be taken”. While preserving a lien is not a step in a “proceeding”, it may very well be a step in an “intended” proceeding. Perfection starts a proceeding, so that is likely covered as well.

Unlike section 1, however, the suspension of time under section 2 is subject to the discretion of the court, tribunal or other decision-maker responsible for the proceeding, so it is not automatic.

Since it is entirely unclear at this point how courts will exercise this discretion, the counsel of prudence is to preserve and perfect liens in the ordinary course and within the time frames stipulated by the Act.

Setting down an action for trial

It is clear that section 1 of the Regulation would not apply to section 37 of the Construction Act, since the Divisional Court has categorically stated that the section 37 is not a limitation period, but a provision that extinguishes a lien: Krypton Steel Inc. v. Maystar General Contractors Inc., 2018 ONSC 3836 (Div. Ct.).

However, setting down an action under section 37 is clearly a step in a proceeding, so again, this is likely covered by s. 2 of the Regulation, subject to the discretion of the court, tribunal or other decision-maker Again, however, this would be subject to the court’s discretion, and where possible, actions should be set down in the ordinary course and within the two years stipulated by the Act.

Trust claims

The provisions of the Limitations Act, 2002 apply to actions for breach of trust under the Construction Act: Bristow, Glaholt, Reynolds & Wise, Construction, Builders’ and Mechanics’ Liens in Canada, c. 9.9.5. Those time periods would likely be suspended under section 1 of the Regulation.

Adjudication and Prompt Payment

The timelines imposed in the Construction Act for prompt payment are neither limitation periods nor are they provisions for steps in a proceeding. They are therefore almost certainly not affected by the Regulation. On March 23, 2020, the Ontario government ordered the closure of all non-essential businesses starting Tuesday, March 24, 2020 at 11:59 pm for an 14-day period. Essential businesses permitted to remain open include most construction activities. It is likely that for any projects currently subject to the provisions of Part I.1 of the Construction Act, prompt payment rules will continue to apply despite the Regulation.

As for adjudications, the Regulation does not define “proceeding”. However, given the use of the broad terms “proceeding” and “other decision-maker responsible for the proceeding” in section 2 of the Regulation, it is likely that the various timelines established in Part II.1 of the Construction Act  are suspended by the Regulation, subject to the discretion of the adjudicator.

These provisions apply only where a contract in respect of the improvement was procured or entered into on or after October 1, 2019, meaning that work that was underway prior to those dates is not subject to prompt payment or adjudication.

 

This bulletin does not constitute legal advice. Please consult with counsel if you have any questions related to the content of this bulletin or contact us directly at info@glaholt.com.