A construction contract signed in 2020, two years after Ontario’s Construction Act replaced the old Construction Lien Act, was still governed by the former legislation. In Dalren Limited v. Loadstar Trailers Inc., 2026 ONCA 500 [Dalren], the Ontario Court of Appeal (the “Court”) held that a 2017 proposal was enough to commence the procurement process under the transitional provisions, even though the project ultimately moved to a different property and the contract wasn’t executed until years later.
For contractors, owners, and lenders involved in long-running or older developments, the decision is a warning: the date on your contract does not necessarily determine which act, and which deadlines apply to your project.
What happened in Dalren?
On July 8, the Ontario Court of Appeal’s decision in Dalren was released. It provides important new guidance to Ontario’s construction industry on an issue that can have major financial consequences: when a project is governed by the former Construction Lien Act rather than the modernized Construction Act.
The case arose from the construction of a manufacturing facility in Cobourg, Ontario. In December 2017, Dalren Limited submitted a preliminary proposal to construct a facility for Loadstar Trailers Inc. and an affiliated company. At that time, the proposed facility was to be located on Thompson Street. Negotiations continued for approximately three years. A construction contract was eventually executed in December 2020, but the project was ultimately constructed at a different property on Dodge Street.
Section 87.3 of the “new” Construction Act contains transitional provisions addressing projects that straddled Ontario’s major construction law reforms. In particular, the former legislation continues to apply to an improvement where the procurement process for that improvement was commenced by the owner before July 1, 2018.
Dalren argued that the 2017 proposal concerned a different property and therefore could not constitute the procurement process for the improvement ultimately constructed on Dodge Street. The Court of Appeal rejected that argument.
The Court held that the initial proposal and the eventual construction contract were sufficiently connected to constitute part of the same procurement process and related to the same improvement. The fact that the physical location changed during the negotiations did not necessarily create a new improvement or restart the procurement process. The Court observed that nothing in s. 87.3 required the December 2017 request for proposal to remain tied exclusively to the originally contemplated site. The Court also rejected the argument that the procurement process could not have been commenced by the “owner of the premises” because the relevant company did not yet own the property on which the facility was eventually constructed. The Court instead endorsed a functional interpretation consistent with the structure and purpose of the legislation.
Why the decision matters to the construction industry
The case is an important reminder that even 8 years later, the deadlines and process in the “old” act may apply:
- The decision demonstrates that determining which statutory regime applies is not necessarily as simple as examining the date on which the construction contract was signed. Here, the contract was executed in 2020, well after the legislative reforms took effect, yet the project remained governed by the former legislation because the relevant procurement process commenced in 2017.
- The decision confirms that courts may look at the commercial continuity of a project rather than treating every modification as the beginning of a new procurement process. Changes in property, design, price, or other project details will not automatically restart the statutory clock. Parties should therefore preserve proposals, requests for proposals, correspondence, and other early procurement documents, because they may later determine which legislation governs the project. Parties with lien rights will want to investigate procurement carefully or perhaps revert to the old shorter deadlines to preserve and perfect their liens.
For contractors, owners, lenders, and consultants involved with older or long-running developments, Dalren is therefore a warning against assuming that a recently executed contract necessarily attracts the current legislation. The history of the procurement process may be just as important as the date appearing on the contract.
The broader lesson from Dalren is straightforward: in Ontario construction disputes, the origins of the project matter. A procurement decision made years before construction begins can ultimately determine the payment rights and remedies available when the project ends in a dispute.
If your project has a procurement history that predates July 1, 2018, the deadlines and procedures governing your lien rights, holdback obligations, and payment disputes may not be what you expect. Getting this wrong can mean losing the right to lien entirely.
Miller Thomson’s Construction Litigation lawyers advise contractors, owners, lenders, and consultants on lien preservation and perfection, holdback obligations, prompt payment disputes, and the application of Ontario’s transitional provisions. Whether you are assessing which act governs your project or facing a payment dispute on a long-running development, our team can help.
