Bill 216 Improves Construction Act But Gaps Remain

On November 6, 2024, the Ontario Legislative Assembly passed Bill 216 into law.  Bill 216 fixed several bugs in the Construction Act, including the following:

• Most contractors were not engaging the prompt payment provisions of the Act because they were not rendering “proper invoices” to the owner. Bill 216 makes a contractor’s life easier by deeming any invoice rendered by a contractor to an owner to be a “proper invoice” unless the owner objects to the form of invoice within 7 days.
• Early and mid-project trades were still waiting years for the release of their holdback. However, Bill 216 requires the owner to release accumulated holdback annually, even if the contract work is ongoing.  And contractors must pay their subcontractors holdback within 14 days of the date that the contractor receives holdback from the owner.  Therefore, contractors and subcontractors should never have to wait more than a year for their holdback.
• Previously, the right to refer a dispute to adjudication expired when the contract or subcontract work was complete. That was stupid:  Most payment disputes arise after the contract or subcontract work is complete.  Bill 216 permits a contractor or subcontractor to refer a dispute to adjudication for up to 90 days after the completion, abandonment, or termination of the contract or subcontract work.

So, Bill 216 is a step in the right direction, but it is not perfect.  A gap that did not get filled by Bill 216 is that, in many cases, a subcontractor’s right to refer a dispute to adjudication will still expire before the final tranche of their holdback is due.  So, the Construction Act remains a work-in-progress.