CLA Review: Reynolds asks for deadline extension to March 31

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Bruce Reynolds

Bruce Reynolds, who is leading an expert review panel on revising the Construction Lien Act, has asked for an extension of the original deadline for his report to the government from Dec. 31 2015 to March 31, 2016.

Reynolds, a senior partner at Bordon Ladner Gervais (BLG) LLP, said the review is considering the views of about 60 stakeholders, and has 30 deputations and “we’re just finalizing the dates”

“Some of the interested parties have asked for more time to complete some internal reviews to better present data to us,” he said in a published interview. “We have asked the client (the province of Ontario) for an extension past the original deadline which is Dec. 31 to March 31.”

Reynolds, with Sharon Vogel, a colleague and partner in BLG’s Construction Law Group, expect to wrap up hearing the delegations and presentations by mid-December. They started hearing the diverse stakeholders’ observations in mid-October, based on his interim observations in an information package describing some of the issues and challenges relating to construction industry payment reform in Ontario.

“There’s a broad array of issues in the information package and I think we’ll hear from someone on each of those points,” he was quoted as saying.

The review’s mandate is to look at how the industry has evolved since the CLA’s introduction in 1983. It results from a concerted lobbying effort by several associations representing subtrades and other interested stakeholders under the Prompt Payment Ontario (PPO) umbrella, and its initiative to push through a private members’ bill to mandate prompt payment legislation. Some owners an industry groups objected to the proposed legislation, saying it would have unintended negative consequences.

Reynolds’ information suggests topics for review include issues elated to

  • Widespread adoption by contractors and major subcontractors of “pay when paid” and “pay if paid” provisions in their standard form subcontracts;
  • The evolution of “prompt payment” or fairness of payment legislation in other common law jurisdictions, and the corresponding desire on the part of suppliers for similar rights to be adopted in Ontario; and
  • The development and evolution of statutory adjudication and dispute review boards as a means of promptly resolving construction disputes internationally.

PPO says “every other jurisdiction on the planet has prompt payment legislation and we’re not looking for just some tinkering within the Lien Act, we want prompt payment legislation that spells it out. Canada is way behind in this. No province has prompt payment legislation.”

The Carpenters’ District Council of Ontario (CDCO), representing 22,000 members supports the idea of prompt payment legislation, saying  the withholding of payments had become far too common while owners representing municipalities, universities, schools and hospitals strongly opposed the proposed legislation.

Ron Johnson, deputy director of the Interior Systems Contractors Association (ISCA) and a PPO spokesperson, said the group has received more than 500 responses to a questionnaire sent to contractors across Ontario, which the group presented to Reynolds in late October.

“We’ve been working hard at putting forward the best case possible, the critical issue is to ensure contractors are paid within 30 days of the work being signed off as complete,” he was quoted as saying. “Right now the average payment time our contractors are saying is somewhere between 70 and 80 days. That lag in payment is significant and has a negative impact across the construction industry chain.”

The Ontario General Contractors Association (OGCA) has also made a presentation to the review panel.

The issues are complex, and Reynolds has made it clear that there are many perspectives on the best approaches to take. Issues to consider include:

  • Procurement policies allowing government or municipal entities to exclude potential bidders solely on the basis that the potential bidder has previously brought legal proceedings against them;
  • The impact of Ontario’s planned $30 billion major infrastructure renewal program across transportation, including roadbuilding, and regional and municipal mass rail, LRT and subway transit;
  • Where and how public-private partnerships fit in with any revamp of the CLA;
  • The effect of current low interest rates which has cut bankruptcies in the construction sector and diminished the importance of a 10 per cent holdback; and
  • The impact of electronic record keeping and communications on construction projects, with large numbers of documents which have to be “managed” within a significant construction lien litigation.

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