This case involved the Eglington Crosstown LRT and focused on the effect and operation of the transition provisions in the Construction Act, specifically the effect of ss. 87.3(1) and (2) where a prime contract for an improvement was entered into before July 1, 2018 but a relevant subcontract was entered into after July 1, 2018.
Facts
On July 21, 2015, Crosslinx Transit Solutions General Partnership entered into a prime contract with Crosslinx Transit Solutions Constructors (“Crosslinx”) for the design and construction of the LRT system.
In 2019, Crosslinx entered into two subcontracts with 10760919 Canada Inc. (o/a Harbels) for the supply of formwork and concrete to Avenue and Leaside stations in the LRT system. Harbels in turn entered into two sub-subcontracts with Form & Build Supply (Toronto) Inc. (“Form & Build”).
On December 11, 2020, 56 days after Form & Build’s last stated date of supply at both stations, Form & Build registered two claims for lien against title to the lands of the two stations. On January 14, 2021, both liens were vacated upon Crosslinx posting lien bond security into court.
Subsequently, Crosslinx sought orders declaring that the two liens Form & Build had preserved were already expired and returning the two lien bonds. Form & Build opposed such, requesting a declaration that its liens were in fact preserved in time.
The Applicable Legislation
Section 87.3 of the Construction Act, RSO 1990, c C.30 contains the transition provisions which govern the continued applicability of the Construction Lien Act. Specifically, ss. 87.3(1) and (2) read as follows:
87.3 (1) This Act and the regulations, as they read on June 29, 2018, continue to apply with respect to an improvement if,
(a) a contract for the improvement was entered into before July 1, 2018;
(b) a procurement process for the improvement was commenced before July 1, 2018 by the owner of the premises; or
(c) in the case of a premises that is subject to a leasehold interest that was first entered into before July 1, 2018, a contract for the improvement was entered into or a procurement process for the improvement was commenced on or after July 1, 2018 and before the day subsection 19 (1) of Schedule 8 to the Restoring Trust, Transparency and Accountability Act, 2018 came into force.
Same
(2) For greater certainty, clauses (1) (a) and (c) apply regardless of when any subcontract under the contract was entered into.
Arguments of the Parties
Form & Build argued there was ambiguous wording in ss. 87.3(2) and its intent was focused on preventing contractors who had entered into a contract before July 1, 2018 from benefitting from the Construction Act. Thus, s. 87.3 should only apply to subcontracts entered into before July 1, 2018. As Form and Build’s subcontracts with Harbels were entered into after July 1, 2018, Form and Build was entitled to the 60-day lien preservation period under the Construction Act.
Crosslinx disagreed, arguing there was no ambiguity in ss. 87.3(1) and (2). Further, Crosslinx cited Court decisions that interpreted s. 87.3 such that the Construction Lien Act continues to apply to an improvement (and liens and lien actions arising from it), where the construction contract was entered into before July 1, 2018. Thus, as the prime contract for this improvement was entered into on July 21, 2015, Form & Build was only entitled to the 45-day lien preservation period under the Construction Lien Act.
Master Robinson’s Decision
The Master first reviewed the Court decisions cited by Crosslinx. The Master agreed with Form & Build that the cases were factually distinguishable (they did not involve a prime contract entered into before July 1, 2018 and a subcontract entered into after July 1, 2018, nor were the transition provisions an issue), but held that the general statements made regarding s. 87.3 remained accurate in this situation.
The Master then addressed Form & Build’s argument of ambiguous wording in ss. 87.3(2). The Master found no genuine ambiguity when reading s. 87.3(2) in its grammatical and ordinary sense, in the context of both s. 87.3 and the Construction Act in their entirety. The Master held there is only one plausible meaning of ss. 87.3(2) and it is clear: ss. 87.3(1)(a) and (c) apply regardless of when a subcontract was entered into. Further, ss.87.3(2) does not clarify or vary the preamble to ss. 87.3(1), which connects the applicable act and regulations to “an improvement”, as opposed to a “contract” or “subcontract”.
The Master emphasized that ss. 87.3(1)(b) must also be read harmoniously with the rest of s. 87.3 and the Construction Act. Form & Build was unable to adequately explain how ss. 87.3(1)(b) would operate if the Court accepted its argued interpretation (that the date a contract or subcontract was entered into governs which act and regulations applies), given the terms “contract” and “subcontract” are not used. Further, referencing “commencement of a procurement process prior to July 1, 2018” would then become superfluous when assessing which act applies – a statutory interpretation the court is to avoid.
Ultimately, Master Robinson stated:
s. 87.3 provides that a single legislative scheme applies to the entirety of “an improvement”. All rights, obligations and remedies of all persons involved in that improvement are governed commonly and consistently by the same version of the act and regulations. That consistent application of the act and regulations is reasonably achieved by reference to the date of the procurement process for the improvement, where there is one, or a prime contract.
This interpretation allows ss. 87.3(3) and (4) to be read harmoniously. It also eliminates conflicts in legislative operation, and consequent uncertainty and administrative burdens to all parties, which would ensue if variant versions of the act and regulations applied to different contractors and subcontractors in the same improvement (given the differences between the Construction Lien Act and Construction Act).
The Master further emphasized that because subcontract work, by definition, is a portion of the work to be performed under a prime contract, it logically follows that the same legislative scheme governs both the prime contract and any subcontracts. An interpretation of s. 87.3 that allows variant lien rights for different parties (i.e. contractors vs. subcontractors) in the same improvement would require clear legislative wording that is absent in the provision.
Application to the Facts
Per ss. 87.3(1)(a), as the prime contract was entered into before July 1, 2018, the Construction Lien Act continued to apply to the involved improvement. Thus, Form & Build had 45 days from its last stated date of supply to preserve its liens. As the liens were preserved after 56 days, both liens had expired when Form & Build registered its claims. Accordingly, Crosslinx was entitled to both of its sought orders.
Conclusion
The date a subcontract was entered into is not relevant in determining whether the current Construction Act or former Construction Lien Act applies to an improvement.
If you are representing a lien claimant and are still unsure of which act and regulations apply, following the shorter lien preservation and perfection timelines under the Construction Lien Act will help ensure your client’s lien rights do not expire.