Ontario to review Construction Lien Act

The government of Ontario has announced that it will launch an independent review of its Construction Lien Act as soon as possible.

The decision is in response to concerns raised by general contractors, owners and others about the proposed Bill 69 Prompt Payment Act, which has already passed its second reading.

Bill 69 was proposed by an independent MPP with strong backing from the construction trade unions and construction materials industries.

However in the past few months other parties affected have rallied round and formed coalitions to voice their opposition to some aspects of the Bill.

In launching its independent review on March 28, the Ontario government said it would look at concerns raised by the construction industry and would launch an independent third party review this spring.

Attorney General Madeleine Meilleur said: “Our government has heard from many in the construction industry that it is time to modernize this law. We agree. My first step will be to reach out to industry members — large and small — to help us find the right process for a thorough review of the act, with a view to introducing legislation before the end of the year, if needed. I look forward to getting the review of this important legislation underway as quickly as possible.”

Large general contractors like PCL, Ellis Don and AECON, for example, together with owners organizations like the Association of Municipalities of Ontario, the Ontario Home Builders Society and the Ontario Association of School Business Officials have raised major concerns about Bill 69. At the public hearings into the bill, Glenn Clarke, P.Eng. and Tim Robins of the OASBO, for example, said it would allow overpayments to contractors, block owners from keeping back funds for deficiencies, increase construction costs and result in delays.

An article on the Ontario General Contractors’ Association posted March 11 on its website said the proposed changes under Bill 69 “would seriously disrupt the way the construction industry operates, impacting everyone from homeowners conducting renovations to the successful and timely completion of major infrastructure projects.”

The article said that while the contractors support the principles of Bill 69 and that “subcontractors should be paid promptly for good work,” they found that the bill’s reforms were “so far reaching” the changes should be considered in a more formal process involving everyone affected by the legislation.

The unions and others that support Bill 69, on the other hand, say that the habitual late payment of subcontractors in the construction industry invites abuse, and that the practice puts an unfair burden on the trades. They say late payments are “[not] only harmful to our industry and the economy, but they have a very real negative impact on workers and their families, by lowering employment and investment in training.”

See “Updating Ontario’s Construction Laws” Ontario Govt. Press Release, March 28, 2014

“Prompt Payment Act will Cause Upheaval in Construction Industry.”

“Ontario contractors call for caution on Prompt Payment Act”

“Contractors and Trades Want Laws to Ensure Prompt Payment”