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Construction - Improvements. Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction
In Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction (Div Court, 2024) the Divisional Court considered a JR of a Construction Act (CA) adjudication, here regarding transitional provisions.
Here the court considered 'improvements', and their role in the CA concept of 'contract':[31] An “improvement” is defined in the Act as follows:in respect of any land,
(a) any alteration, addition or capital repair to the land,
(b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or
(c) the complete or partial demolition or removal of any building, structure or works on the land; (emphasis added) [32] First, it should be noted that the concept of an “improvement” is tied to land. The definition is “in respect of any land.” ...
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[43] Caledon argues that, as a matter of first principles, the default assumption is that a contract is in respect to the same improvement – unless the contract expressly provides otherwise. In making this argument, Caledon does not once refer to the statutory definition of “improvement”. Instead, Caledon relies on s. 2(4) of the Act for the proposition that “[w]here there is no express contractual provision stating that there are multiple improvements, the default assumption of a single improvement applies.” This statement is wrong in law and finds no support in the language of s. 2 of the Act, which reads as follows:Contracts, substantial performance of a contract
When contract substantially performed
(1) For the purposes of this Act, a contract is substantially performed,
(a) when the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purposes intended; and
(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,
(i) 3 per cent of the first $1,000,000 of the contract price,
(ii) 2 per cent of the next $1,000,000 of the contract price, and
(iii) 1 per cent of the balance of the contract price.
Same
(2) For the purposes of this Act, where the improvement or a substantial part thereof is ready for use or is being used for the purposes intended and the owner and the contractor agree not to complete the improvement expeditiously, the price of the services or materials remaining to be supplied and required to complete the improvement shall be deducted from the contract price in determining substantial performance.
Adjudication Amounts
(2.1) For the purposes of this Act, if an adjudicator makes a determination under Part II.1 in relation to a contract before the certification or declaration of the substantial performance of the contract under section 32,
(a) any amount determined by the adjudicator to be payable by a party to the contract shall be added to the contract price in determining substantial performance; and
(b) any amount determined by the adjudicator to have been overpaid by a party to the contract shall be deducted from the contract price in determining substantial performance.
Same
(2.2) Subsection (2.1) ceases to apply if,
(a) the adjudicator’s determination ceases to be binding on the parties to the adjudication under section 3.15; or
(b) the determination of the adjudicator is set aside on judicial review.
When contract deemed completed
(3) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of,
(a) 1 per cent of the contract price; and
(b) $5,000.
Multiple improvements under a contract
(4) If more than one improvement is to be made under a contract and each of the improvements is to lands that are not contiguous, then, if the contract so provides, each improvement is deemed for the purposes of this section to be under a separate contract. Subsection 2(4) presupposes that more than one improvement may be the subject matter of a contract. It does not state, or imply, that a contract is presumed to be in respect to a single improvement. Nor does it state, or imply, that there is such a presumption unless it is displaced by contract. Unlike all the other subsections of this provision, it does not apply “for the purposes of this Act” but rather “for the purposes of this section” and addresses a particular problem that arises where a contract is in respect to more than one improvement: establishing the date of substantial completion of the contract. In this subsection, the Legislature has provided that substantial completion will arise on an improvement-by-improvement basis if the parties to the contract have so agreed by their contract – and by necessary implication, substantial completion of the contract will be determined by reference to all improvements that are the subject of the contract if the parties have not agreed to the contrary in the contract. The provision does not change or modify the nature of what an “improvement” is under the Act, and it does not provide that “improvement” is co-extensive with “contract”.
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