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CSP publication: Change is good…only when done right

Mark Casaletto
CSP publication: Change is good…only when done right
SHUTTERSTOCK

Higher risks of lien claims. Vulnerability to legal action. Non-compliance.

This is what I am seeing more and more often as the landscape for the publication of Certificates of Substantial Performance (CSP) and other certificates and notices evolves in Ontario with the recent changes to the Construction Act.

Mark Casaletto
Mark Casaletto

As an industry leader, it is important I speak out to increase awareness of the risks unfolding for construction owners, general contractors and other contractors due to new publication entrants in this regulatory space. Certain new entrants are claiming they are providing a “long-awaited” disruptive alternative. It is the position of the DCN that this disruption is creating confusion and undermining the objective of the provincial legislation the industry so rightly supports.

As the market adjusts to the new legislation, new entrants must not take license in their interpretation of the new Construction Act. What I mean is CSP and notice publications should be mindful not to introduce unnecessary material risks into our industry without adequate peer review, or legal consensus. Websites that are claiming to meet the legislative requirements of a “construction trade newspaper” and further mislead unsuspecting contractors with under-examined legal analysis are doing industry participants a huge disservice.

In order to get a better perspective on this critical issue at hand for the industry, we contacted Glenn Ackerley, one of Ontario’s pre-eminent construction industry lawyers. Glenn is chair of WeirFoulds LLP’s construction practice group and is fully versed in the nuances of the Construction Act.

The following are some answers to questions I asked of Glenn as I explored a comparative analysis in the current CSP and notices publication space in Ontario

 

Q: The Construction Act requires that CSPs be published in a construction trade newspaper, and a certain legal opinion obtained by Link2Build claims that its website (one of the new entrants in the CSP publication space) does in fact meet that qualification. Do you agree with this conclusion?

According to the statutory definition, a newspaper meeting the specific criteria set out in the regulations qualifies as a “construction trade newspaper”. This means a “construction trade newspaper” first has to be a “newspaper”. Put another way, a “construction trade newspaper” is defined to be a special type of newspaper, but the Construction Act and Regulations don’t define what a newspaper itself is.

The legal opinion relied on by Link2Build makes the argument that a website can be a “newspaper”. It says: “Publishing on the Link2Build website qualifies as an electronic newspaper in this format. Neither the Act nor the Regulations provides a definition for “newspaper” but statutory and common law interpretations support this.”

The opinion then considers the specific definition of “newspaper” contained in Ontario’s Libel and Slander Act and relies on a court decision that interprets that section. That decision dealt with the applicability of statutory notice periods under the Libel and Slander Act to an online version of a Toronto Star newspaper article. Based on this court decision, the opinion reaches the firm legal conclusion that a website is therefore an “electronic newspaper”

In my view, this opinion is flawed. It relies on the specific and unrelated statutory definition of “newspaper” found in the Libel and Slander Act. It doesn’t take into account the fact that another legislative definition for “newspaper” exists, and this other definition applies to the Construction Act.

 

Q: That is an insight most contractors would not have. Can you tell us more about the applicable legislative definition for “newspaper” as it relates to our topic?

Yes, legislation exists which assists in the interpretation of Acts and regulations in Ontario.

The Legislation Act (which used to be called the Interpretation Act) includes definitions of terms that apply across all Acts and regulations in Ontario. Under s.87 of the Legislation Act, the definition of “newspaper” reads:

“newspaper”, in a provision requiring publication, means a document that,

(a) is printed in sheet form, published at regular intervals of a week or less and circulated to the general public, and

(b) consists primarily of news of current events of general interest; (“journal”)

Note that this definition applies when you have a statutory provision requiring publication. That is, of course, exactly the situation here, when the Construction Act calls for certificates of substantial performance and other certificates and notices to be published.

It should be recognized that any definition in the Legislation Act is subject to modification by the particular Act in question. For example, the Libel and Slander Act has its own specific definition of “newspaper” which replaces the definition in the Legislation Act which would otherwise apply.

In my view, there is no inconsistency between the Legislation Act’s definition of “newspaper” and the Construction Act’s definition (in the Regulation) of “construction trade newspaper”. The requirements to render a newspaper a “construction trade newspaper” are simply more specific or narrow.

While the legal opinion relied on by Link2Build does look at the criteria to be considered a “construction trade newspaper” — such as publishing tendering opportunities and articles of interest to the construction industry — it simply doesn’t consider the Legislation Act definition of “newspaper” itself.

 

Q: Based on the definition of “newspaper” and the resulting definition of “construction trade newspaper”, do you believe that the Link2Build website meets the requirements for publishing CSPs?

As a result of this definition, a newspaper must be a “document”, and one that is “printed in sheet form”, and “published at regular intervals”. In my view, that refers to the electronic version of an already existing newspaper. That publication is published daily in a digital format, one that recreates an electronic or digital version of a sheet newspaper.

In my view, a website itself, such as Link2Build’s website, does not meet the requirements of the statutory definition of “newspaper”, once the applicable Legislation Act definition of “newspaper” is taken into account.

The Link2Build website:

  • is not “printed in sheet form”, whether on paper (like a traditional newspaper such as the DCN) or electronically (such as in a multi-sheet PDF format);
  • is not a “document”, because the information is not compiled into editions; and
  • may not meet the requirement of being “published at least daily”. Even if a few construction industry-related articles are posted on the website each day, the website itself is not being “published” daily

If a website is not a “newspaper” under the Legislation Act, then it can’t be a “construction trade newspaper” either. It must get over the first hurdle before being able to qualify as the second.

 

Q: Can you examine what kind of legal risk this poses to the industry, specifically for the contractor publishing the certificate, and the owner of the project?

Whether the publication of a certificate of substantial performance has been made in a “construction trade newspaper” is a very important question. The statutory expiry periods for lien rights on construction projects run from the date of publication and publication must therefore be properly made and effective. Owners rely on that 60-day period having expired before releasing the statutory 10 per cent holdback retained from amounts earned by the contractor during the project.

If an unpaid subcontractor claims a lien for pre-substantial performance work after the 60-day period has passed after publication, the lien will normally be considered out of time.

However, if the lien claimant can persuade a court that because the certificate of substantial performance was only posted on a website, rather than published in a “construction trade newspaper” (as defined by the Regulation and the Legislation Act), it was not a valid and effective publication, then the court may save the lien. In circumstances where the owner has already released holdback to the general contractor, the owner may have to pay out the same monies a second time to the successful lien claimant.

The possibility of having to pay the same money twice should be a very real and significant concern to owners. I doubt any owner would choose to be involved in that first “test case”.

Unfortunately, the reality is that until a court decides whether posting a certificate on a website satisfies the Construction Act’s requirement to publish in a “construction trade newspaper”, there will continue to be risk to anyone relying on that posting.

 

Q: Until such time a court provides clarity to this situation, what is your recommendation?

My recommendation to the industry stakeholders is to educate themselves on all the requirements of the new Construction Act, including all the notice and publication requirements, and in cases where there is lack of clarity, to come together to seek consensus on the best interpretation of the Construction Act which meets the legislative intent of the Act.

The publication process is critical to the holdback release process and other key aspects of the Construction Act and the system only works properly if there is absolute certainty surrounding its integrity. The whole industry, from owners to subcontractors and suppliers, need to have a system everyone can rely on as being legally valid, legitimate and enforceable.

These answers Glenn has provided to me clearly indicate what we have always known to be true — the DCN’s leadership has always kept the best interests of the industry at the forefront of its publication and editorial actions. And this time is no different. Over the past 93 years, we have consistently provided a quality experience to our advertisers and a quality product to the industry.

With respect to CSPs, we have maintained an important focus on complying with required legislated needs since first introduced in 1983 and have stayed true to the informational needs of the industry.

In keeping with our focus on what is in the best interest of this industry, the DCN welcomed the recent legislated changes in the Construction Act, including the opportunity for the industry to be served by additional alternatives.

We look forward to actively participating in a leadership role with other industry advocates. As Glenn so appropriately stated, the industry needs to “seek consensus on the best interpretation of the Construction Act which meets the legislative intent of the Act”.

In the meantime, the DCN will continue to perform its role as a “construction trade newspaper” by ensuring the quality and content sufficiency of certificates and notices submitted to us for publishing, providing the best coverage of tenders across Ontario, and producing original editorial articles of interest to the Canadian construction industry.

We take these responsibilities very seriously and believe the industry has every right to expect this level of commitment to continue.

We have been Ontario’s definitive voice of construction for almost 100 years and whether it is the Construction Act or other important industry issues, we will continue to provide the necessary commentary and perspective to ensure the industry remains healthy and successful.

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