All eyes are on Ontario as its government carefully considers more than 100 recommendations put forth in a recent review of the province’s Lien Act.
The Ontario government is planning to introduce legislation in spring 2017 that will modernize the province’s construction industry, which accounted for 6.7 percent of the Ontario’s GDP in 2015.
With other jurisdictions looking at ways to improve the lien system and potentially implement prompt payment legislation, any change that occurs in Ontario could have far-reaching implications.
The Ontario government commissioned construction law experts Bruce Reynolds and Sharon Vogel from Borden Ladner Gervais LLP to review the Lien Act and a summary of their recommendations has been published in a report, “Striking the Balance: Expert Review of Ontario’s Construction Lien Act.”
In their report, Reynolds and Vogel addressed a wide variety of issues, such as elongated payment cycles causing a wide ripple effect to industry participants; inefficient dispute resolution resulting in a drain on judicial resources and the provincial construction economy; the disruptive nature of federal insolvency legislation on construction projects in the event of contractor insolvency; and, a variety of technical issues noted by stakeholders to be frustrating the purpose of the Construction Lien Act.
According to Borden Ladner Gervais, the report was produced following extensive research and consultation with over 60 stakeholders from across Ontario’s construction industry, including more than 70 written submissions from industry groups and extensive stakeholder consultations.
In addition, Reynolds, Vogel, and the BLG team consulted with construction law experts from around the world. The recommendations take into account the nature of Ontario’s construction industry and legal landscape, and the recommendations drew upon the foundational knowledge and experience of other countries including the United States, the United Kingdom, Australia, Singapore, Malaysia, and Hong Kong.
An advisory group of subject matter experts was also invited to participate in five meetings for the purpose of obtaining input in respect of the issues and working to achieve consensus on certain fundamental issues.
The proposed legislation would address modernization of the construction lien/holdback regime; promptness of payment; and, modernization of construction dispute resolution including through the use of adjudication.
The results are somewhat encouraging for BC, where the industry has had its eye on what Ontario is up to in discussion around lien reform and prompt payment legislation.
However, it looks as though the landscape may be brand new after the report’s recommendations are considered, and it appears whatever comes of the Lien Act changes, stand-alone prompt payment legislation in Ontario appears out of the question. In fact, one of the key takeaway messages from the report, according to the Canadian Construction Association, is the need for integrated legislation that considered lien action, prompter payment, and dispute resolution mechanisms.
Although the message may be changing, it is still positive because the issue is moving forward. There is still a strong school of thought that says the best payment assurance is common sense—don’t work for people who don’t pay you. And while that might be true, there are many, many instances in which the circumstances simply aren’t so cut and dried, and for those cases, this legislation may be a godsend.
In any case, decision-makers in Ontario can rest assured their actions are on the national stage and any changes or amendments they adopt will surely be catalyst for discussion and most likely change around the country.
To view the report, please visit http://www.attorneygeneral.jus.gov.on.ca/english/about/pubs/cla_report/.
