Canadian Consulting Engineer

Ontario set to change construction Lien Act and deal with Prompt Payment

October 4, 2016

Comprehensive expert review of the construction industry commissioned by the Attorney General is expected to result in legislative changes next year. It will affect payment practices and dispute resolution procedures.

Construction at Union Station, Toronto, in 2012. Photo: CCE/BP

Construction project under way  at Union Station, Toronto in 2012. Photo: CCE/BP

A report that was 18 months in the making was released this week by the Ministry of the Attorney General of Ontario. It has 100 recommendations for changes in the construction industry.

The recommendations are said to be “significant” and will inform new legislation that the province plans to introduce this fall.

The authors of “Striking the Balance: Expert Review of Ontario’s Construction Lien Act” were Bruce R. Reynolds and Sharon Vogel of the law firm Borden Ladner Gervais.  The comprehensive review was commissioned by the Ministry and covers three main areas: the lien act, prompt payment issues, and the dispute resolution process.

Reynolds and Vogel conducted extensive research, consulted with over 60 stakeholders,  reviewed 70 written submissions, and consulted different experts in law.  They also took into account experiences and practices around the world: the U.S., U.K., Australia, Singapore, Malaysia and Hong Kong. They say that “other Canadian provinces await these significant developments in Ontario.” A summary of their recommendations are in chapter 13 of the report (see link below).

The province commissioned the expert review in February 2015, following a concerted campaign by an alliance known as “Prompt Payment Ontario” to have the government do something to speed the payment of suppliers and subcontractors in construction. The coalition, consisting of contractors, subcontractors, unions, and suppliers says on its website: “delinquent payment is a growing problem in the construction industry and that legislation is needed to ensure that money flows as it is intended down through the contractor supply chain.”

At one time Prompt Payment legislation was introduced, but it was withdrawn when the government commissioned the expert review.

Attorney General Yasir Naqvi commended Reynolds and Vogel and said the report provides a balanced  perspective on the diverse stakeholder interests. The report was delivered to him in May. He  will be consulting with stakeholders in the construction industry this fall to gather feedback.

To read the expert report, “Striking the Balance,” click here.

To read the Ontario Attorney General’s press release, click here.

To read an article about the Prompt Payment initiative in CCE, click here.

Consulting Engineers of Ontario preparing position on prompt payment


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