This material is for information purposes and is not intended to provide legal advice in relation to any particular fact situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.
March 12, 2020
A Tale of Three Construction Newspapers: Triple the Searches, Triple the Risk in Ontario?
Historically, under the Construction Lien Act, R.S.O. 1990, c.C30, certificates (or declarations) of substantial performance have had to be published, to give notice to lien claimants that their lien rights against the basic holdback would expire if not preserved within 45 days. In 2010, the Act was changed to also require owners to publish a notice of their intention to register a condominium. With the recent Construction Act changes, the 45-day lien expiry has been extended to 60 days and two additional documents now require publication: the notice of non-payment of holdback and the notice of termination of a contract.
With the increase in the number of documents to be published, of course, comes an increase in the need for publication searches. This, in part, because the negative consequence of failing to know about a publication can be substantial: absent knowledge that a certificate of substantial performance or notice of termination of contract has been published, for example, a lien claimant may unknowingly allow their lien rights to expire.
Under the prior Construction Lien Act, publication was to be made in a “daily construction newspaper”, which was defined to mean:
“a newspaper having circulation generally throughout Ontario, that is published no less frequently than on all days except Saturdays and holidays, and in which calls for tender on construction contracts are customarily published, and that is primarily devoted to the publication of matters of concern to the construction industry”.
Under the Act, any newspaper that met the criteria would suffice. However, for as far back as the writer can recall the only newspaper that met the criteria was the “Daily Commercial News”. Accordingly, construction participants and lawyers would not give much thought to their search method: they would search the Daily Commercial News.
Under the Construction Act, however, the publication requirements have changed. First, they are now “as prescribed” (which means they are to be set out in Regulations passed by the Attorney General under the Act). Second, while the Regulations still require publication in a “daily commercial newspaper”, the definition for that term has been changed to include electronic, on-line, publications. This has opened up the marketplace to competitors, of which there are now (at least) two: Ontario Construction News and Link2Build.
We believe that generally speaking competition is a good thing and have no quarrel with either of these entities stepping into the marketplace. It should be understood, however, that construction participants and their lawyers must now take care to search all three publications to determine whether or not a document has been published. Also, further competitors might enter the marketplace and there is no list of the entities that meet the criteria available. Those responsible for searches must accordingly also turn their minds to whether or not additional newspapers have begun to offer the service. We are thankful, in this regard, to Sandra Astolfo of Weir Foulds who informed us that the third of the current publications had begun to offer the service. Indeed, that we were unaware of this fact in part proves our point: it is difficult, if not impossible, for participants to know, in a timely fashion, that a new entity has begun to publish documents.
We do not believe the current approach makes sense. The need to perform an untold number of searches will most certainly add to the time and expense of both contract close-out and construction dispute resolution. In addition, the likelihood that mistakes will be made increases substantially with each additional publication source. It might be preferable for one entity to be tasked with the responsibility to publish Construction Act documents (much as Teranet is the sole entity responsible for the registration of documents against land titles in Ontario). At a minimum, however, we believe that a mandatory list of the entities that meet the applicable criteria should be made available, on line, so that participants will know where they need to go to perform their searches. Another solution might be to require the publishing entities to include the publications in a central database of all publications, were participants can confidently perform a single search. Regardless of how we get there, however, we suggest that solutions to these issues are most definitely required.