Court Of Appeal Favours Function Over Form For Construction Act Transition Provisions

In Dalren Limited v Loadstar Trailers Inc, 2026 ONCA 500, the Court of Appeal for Ontario addressed the Construction Act’s transition provision for determining which version of the statutory regime applies to a project. The determinant is when a procurement process for “the improvement” was commenced “by the owner of the premises”. Based on a functional reading, the Court of Appeal held that a procurement process may trigger the provision despite the proponent not then owning the premises, and even if the premises for the project is later changed.

Background

Loadstar Trailers Inc. and a subsidiary (together, “Loadstar”) invited Dalren Limited (“Dalren”) to submit a proposal to construct a trailer manufacturing facility. On December 11, 2017, Dalren submitted a preliminary proposal to build the facility at a premises referred to as “Thompson Street”. A drawn-out negotiation process led to the contract being executed three years later. By that time, the project location had changed to a premises referred to as “Dodge Street”.

When a dispute over payment arose, Dalren applied to the Ontario Superior Court for a determination that the dispute was governed by the amended Construction Act rather than the former Construction Lien Act. The newer statutory regime would require payment of Dalren’s invoices before final resolution of the dispute. Dalren argued that the relevant procurement process could not have begun in 2017 because the premises for the construction changed and Loadstar did not acquire the Dodge Street property until 2021.

Court of Appeal decision

The Court of Appeal agreed with the decision of the application judge that the 2017 procurement process relating to the Thompson Street property was part of the same process that culminated in the 2020 Dodge Street project agreement. The Court of Appeal rejected Dalren’s arguments to the contrary based on case law addressing related construction at multiple locations that had found separate improvements tied to individual premises. Considering the transition provision’s purpose of ensuring consistency across the procurement and construction of an improvement, the court found that the improvement as planned, negotiated for, and constructed on Dodge Street remained substantially the same as the proposed Thompson Street project. The court noted:

Dalren has provided no authority to support its argument that the address listed on a request for proposals matters more than the understanding of the parties and the substance of the proposal itself when determining whether the proposal and the contract related to the same “improvement”.

The Court of Appeal also ruled that the meaning of a procurement process commenced by “the owner of the premises” must be interpreted functionally. Procurement may commence before ownership. The protections provided by the statutory lien regime arise when construction starts, as their purpose is to prevent owners of land getting the benefit of improvements without paying for them. That sets the relevant time for considering ownership. Therefore, a party may be considered the “owner” of premises for commencing a procurement process provided it owns the premises before construction begins.

Commentary

The Dalren decision clarifies key terms in the Construction Act’s transitional provisions. Importantly, it affirms the functional approach to determining the “owner” as applied in other contexts under the Construction Act. This accords with the commercial realities of procurement processes that sometimes start before the other pieces in the project puzzle have fully come together. Provided the project remains essentially the same, the applicable statutory regime depends on when the procurement process started even if the final location and ownership of the land remain to be addressed.

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