Ontario Construction News staff writer
Ontario’s construction industry is awaiting a fix to a COVID-19 legal bottleneck that has caused owners to refuse to release statutory holdback funds, tying up millions of dollars for contractors around the province.
The problem relates to the government’s emergency pause on “limitations”, as well a suspending necessary steps in actions and contemplated actions, because the provincial court system cannot operate normally during the pandemic. Unfortunately, this means that Ontario Construction Act’s lien holdbacks cannot be released without jeopardy to the payors even though there is no dispute about the services being rendered, and contractors have published the proper Certificate of Substantial Completion (CSP) notices in a daily construction trade newspaper.
OGCA president Clive Thurston says the government invited it to draft amending regulations that would allow owners to safely release holdback provisions when the problem became apparent a couple of weeks ago. Lawyer Glenn Grenier from McMillan LLP drafted the necessary changes with amendments to section 73/20 of the Construction Act.
“It’s been sitting at the Attorney General’s office for over a week now with no action,” Thurston said on Sunday. “This is a no-brainer. Why is it being held up?
“This is a very simple exemption that fits within the Construction Act as written,” he said.
“And I hate to say it, but our government contacts tell us that the delay is because the government doesn’t want to make the change until they get labour’s approval. And this has nothing to labour.
“The longer this takes, our members are going to be adversely affected, because if we don’t get our money, we can’t pay our bills.”
The OGCA says it is also concerned about conflicting instructions between public sector owners to continue working on projects, and the COVID-19 emergency regulations that restrict construction work to narrowly defined categories.
There are many cases where there are conflicting interpretations, and members are having trouble getting a clear answer about whether they are covered by the emergency regulations or not.
One one side, contractors face the potential for severe penalties including liquidated damage claims for failure to perform their contracts.
On the other side, the emergency regulations include severe penalties for violating the regulations. A director or officer of the corporation that violates the Essential Services List Regulation may be fined up to $500,000 and imprisoned for up to a year, and a corporation can be fined up to $10,000,000 each per day of the contravention.