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Construction - Transition. Dalren Limited v. Loadstar Trailers Inc.
In Dalren Limited v. Loadstar Trailers Inc. (Ont CA, 2026) the Ontario Court of Appeal considered the provision of CA s.87.3(1)(b) ['Transition, Construction Lien Amendment Act, 2017'], which involves whether the prior Construction Lien Act or the 'new' Construction Act (July 1, 2018) governs:[6] .... Under the Amended Act, the prompt payment provisions in ss. 6.4(1) and 26(1) would entitle Dalren to immediate payment of the disputed invoices, notwithstanding the ongoing dispute. Conversely, under the Former Act, 197 could lawfully withhold payment of the disputed invoices until the dispute was resolved.
[7] The Amended Act contains a transitional provision, s. 87.3, which provides, in part, that the Former Act continues to apply “with respect to an improvement if .... a procurement process for the improvement was commenced before July 1, 2018 by the owner of the premises”: s. 87.3(1)(b). The outcome of Dalren’s application hinges on the interpretation of this provision.
[8] Interpreting and applying s. 87.3(1)(b), the application judge concluded that the Former Act applied to the dispute. The application judge found that Dalren’s initial proposal in 2017 was part of the “procurement process” for the project that was eventually executed in 2020. Thus, the procurement process for the project was commenced by 197 before July 1, 2018, meeting the criteria of s. 87.3(1)(b). The application judge found it irrelevant that Dalren’s initial proposal envisioned the facility would be built on a property different from where it was eventually built.
[9] Accordingly, the application judge concluded that 197 did not have to pay the outstanding invoices until the dispute was resolved.
....
III. Legislative Scheme
1. The Construction Lien Regime
[19] Before turning to the issues raised by the parties, it is useful to briefly summarize the purpose and structure of the construction lien regime.
[20] Construction liens are a statutory creation that grant tradespeople a security interest in the premises they improve. Construction liens are meant to remedy challenges arising from the typical cash flows on construction projects.
[21] The principle is that “an owner should be liable to persons who have supplied services or materials to the improvement of his premises, and that the premises should stand as security for their payment”: Report of the Attorney General’s Advisory Committee on the Draft Construction Lien Act (Toronto: Ministry of the Attorney General, April 1982), at p. 649.
[22] The Amended Act introduced two significant changes to the construction lien regime. These changes are:(i) prompt payment provisions were implemented, pursuant to Part I.1; and
(ii) disputes became subject to interim arbitration, pursuant to Part II.1. [23] Under the prompt payment provisions in Part I.1, owners are now required to pay disputed invoices at the outset of a dispute, to be refunded if the owner is ultimately successful, rather than pay only if and when the owner is ultimately found liable.
[24] As noted above, the transition to the Amended Act was staggered. Most of the Amended Act came into force on July 1, 2018, however the prompt payment and interim adjudication provisions came into force on October 1, 2019.
[25] The transitional provision of the Amended Act, s. 87.3, outlines rules for which regime governs a particular construction dispute: (i) the Former Act; (ii) the Amended Act minus the prompt payment and arbitration provisions; or (iii) the Amended Act in its entirety. The question in this case is whether (i) the Former Act or (iii) the Amended Act in its entirety applies.
2. The Text and Context of s. 87.3(1)(b)
[26] The relevant portions of s. 87.3 of the Amended Act provide 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,
[…]
(b) a procurement process for the improvement was commenced before July 1, 2018 by the owner of the premises…
[…]
(4) Parts I.1 and II.1 do not apply with respect to the following contracts and subcontracts:
[…]
2. A contract entered into on or after [October 1, 2019], if a procurement process for the improvement that is the subject of the contract was commenced before that day by the owner of the premises… [Emphasis added.] [27] Under s. 87.3 of the Amended Act, contracts and subcontracts “with respect to” an improvement are grouped together and governed by the same statutory regime, regardless of when each contract was individually entered into: Crosslinx Transit Solutions Constructors v. Form & Build Supply (Toronto) Inc., 2021 ONSC 3396, 18 C.L.R. (5th) 143, at para. 23.
[28] Per s. 87.3(1)(b), and as described more fully below, the statutory regime governing the contracts and subcontracts for an improvement may be determined by the date of the first “procurement process” for that improvement. Section 1(4) of the Amended Act defines when a procurement process commences for the purpose of s. 87.3(1)(b):For the purposes of this Act, a procurement process is commenced on the earliest of the making of,
(a) a request for qualifications;
(b) a request for quotation;
(c) a request for proposals; or
(d) a call for tenders. Any of these four processes is sufficient to trigger the application of s. 87.3(1)(b).
[29] The term “procurement process” does not appear in the Former Act. That term only appears in the Amended Act with reference to the transitional provision.
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