CHANGES TO CONSTRUCTION LIEN ACT
After months of review and consultation, the Ontario Government has introduced legislation – that if passed this Fall – will ensure construction contractors in the province get paid promptly and make dispute resolution a process that will be faster and simpler.
Proposed changes to Ontario’s Construction Lien Act were introduced by Ontario Attorney General earlier this month and are based on recommendations by construction law experts Bruce Reynolds and Sharon Vogel of Borden Ladner Gervais LLP. Reynolds and Vogel penned their report of the Construction Lien Act as part of a two-year review and consultative process with industry stakeholders aimed at modernizing the lien and holdback process including:
- New prompt payment rules providing contractors and subcontractors a timeline as to when they must make and expect payment
- Extending timelines for contractors and subcontractors to file liens from 90 to 150 days to allow for more time to resolve their disputes outside of court
- Requiring holdbacks to be paid once the timeline to file liens has passed, allowing greater certainty as to when holdbacks will be paid
- Speeding up dispute resolution by creating an adjudication process which will help to prevent disputes from interrupting and/or delaying construction projects
- Clarifying the definition of “owner” to better reflect public projects that have multiple owners, and
- Requiring contractors and subcontractors to follow specific bookkeeping requirements to protect subcontractors in the event of bankruptcy.
Ontario’s construction industry is acknowledged to be a driving force of the provincial economy. As a result, modernizing Ontario’s construction laws is part of the Government’s plan to build Ontario up and deliver on its number one priority to grow the economy and create jobs.
Jim Lyons, the Executive Director of the Windsor Construction Association and a member of the Ontario Construction Secretariat’s (OCS) Board of Directors, says the construction industry has long awaited an update to the Lien Act to ensure cash flow from clients to the general contractors, then to subcontractors and their vendors, flows readily.
“Consistent and timely cash flow has been a growing industry concern and the reforms recommended will go a long way to alleviating the hardships currently being experienced by the industry under the current Lien Act provisions.”
Lyons is also pleased to see some other reforms as well.
“The current Acts are not nearly responsive enough to meet industry needs, and any system which reduces these lengthy and costly resolutions is welcome.”
His reaction is echoed on the labour side by John Grimshaw, the Executive Secretary Treasurer of the International Brotherhood of Electrical Workers (IBEW) Construction Council of Ontario (CCO) and also an OCS board member.
Grimshaw says the IBEW CCO is still reviewing all of the proposed legislation, adding that it’s expected the Government will tweak some of its recommendations during the summer. However, he says as long as the Government follows through with its recommendations, the union is cautiously optimistic.
“At first blush, the proposed legislation will go a long way to ensuring unions will receive their remittances in a timely manner.”
The proposed legislation comes at a time when the Province is making an investment of more than $190 billion in infrastructure over a ten-year period from 2014-2024 – the largest in its history, helping to update and build new hospitals, schools, public transit, roads and bridges.
If the amendments are passed, the Government says it will bring Ontario’s construction laws up to date to reflect current construction industry practices and support the thousands of workers and businesses in this important sector. All legislative and regulatory changes would come into effect in 2018.
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FOR MORE INFORMATION, CONTACT:
Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222