Ontario launches review of Construction Lien Act
Review comes in the wake of a skirmish in the construction industry following the introduction of the Prompt Payment Act in 2013.
Ontario is moving ahead with its intention to review the Construction Lien Act and has selected a lawyer to conduct an independent review. Bruce Reynolds, an expert in construction law and a senior partner with Borden Ladner Gervais, will lead the review along with his partner Sharon Vogel.
The review comes in the wake of a skirmish in the industry that occurred after the Prompt Payment Act was introduced as Bill 69 in 2013. If passed as drafted that legislation would have initiated wide ranging new changes in the industry, such as giving contractors the right to suspend work if a progress payment were not made. It also proposed a period limited to only 20 days for the consultant and owner to review an application for a progress payment.
The Prompt Payment Act proposal was supported by contractors, trade organizations and unionized labour who argued that late payments were unfair on a variety of counts. They said the practice is so common it invites abuse, offloads risk down the chain of parties involved in projects to those least able to support the hardships, and tilts the playing field towards large contractors and subcontractors that can bear the added costs.
After Bill 69-2013 received its second reading, building owners, including school boards — as well as general contractors — became concerned, urged caution and campaigned against the proposals. By April of 2014, the provincial government announced that in view of the concerns it would review the Construction Lien Act.
The announcement last week on February 11 now starts the process of the review, which is slated to be completed by December 2015. The government says the review will include an examination of payment issues within the construction sector. It will involve extensive consultation with the construction industry, followed by a report to the province with recommendations for changes, “if necessary.”
The reviewers will first issue an introductory letter to key stakeholders describing the next steps and preliminary plans.
Ontario’s Construction Lien Act was enacted in 1983 and last amended in 2010. It establishes a system of lien and holdback rights, and trust provisions”to provide financial protection to those who supply services or materials to a construction project.”
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