SNF News

Holdback Payment and Limitation – Updated

On April 2, 2020, I notified you that the Ontario government enacted a regulation (73/20) suspending any limitation period for the duration of the emergency (commencing March 16, 2020). This created major problems regarding claims for lien, perfection of actions, and the distribution of holdback funds. I advised: “Accordingly, for the moment, payors cannot safely pay holdback – even assuming that the payors have received the holdback from other payors one rung above them on the construction ladder.”

By order in Council made April 9, 2020, the Ontario government amended O Reg 73/20 by removing its applicability to the Construction Act and its regulations on and after April 16, 2020. By doing so, the government implicitly recognised that O Reg 73/20 did apply to the Construction Act to extend times to preserve and perfect a claim for lien. Accordingly:

• If a lien claimant had a number of days remaining to preserve a lien (or perfect a lien or obtain a trial date in a lien action) so as to avoid lien expiry as of March 16, the claimant will now have the same number of days to do so commencing April 16. In effect, if the lien period had started to run and had not expired by March 16, then lien claimants can add 31 days to the number of days initially available to preserve the lien; similarly if the commencement date to perfect the lien had started to run and had not expired by March 16, then lien claimants can add 31 days to the number of days initially available to perfect the lien.
• When calculating the holdback release date, any portion of the holdback period that would normally have run between March 16 and April 16 will be deleted from the calculation. For example, if the certificate of substantial performance were published April 1, then April 16 would be the commencement date for the holdback release period.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.