Ontario Construction Lien Act legislation clears committee, on track for Royal Assent before year end

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Image from Prompt Payment Ontario (PPO)

Legislation to dramatically reform business rules for Ontario’s construction industry has moved closer to a year end Royal Assent target when Bill 142, The Construction Lien Amendment Act, 2017, cleared committee and moved to third reading in late November.

This is great news for Prompt Payment Ontario (PPO) director Ron Johnson, as it means that years of lobbying for a system to set payment standards for owners, general contractors and sub-trades is in the home stretch to become provincial law.

The new rules give subcontractors the right to stop work on jobs if they aren’t paid – and establishes a “quick and dirty” adjudication process to ensure that construction projects aren’t bogged down in lengthy litigation.

There are also prompt payment provisions in the act, though general and subcontractors can opt out of the mandated deadlines, reducing the risk of a general contractor being caught in the middle between an owner who doesn’t pay, and a subcontractor who insists on being paid. (However, the leader of one association representing subcontractors said the ability to stop work solves one of the biggest problems in the current environment – where they could be required to continue working even if they aren’t paid.)

“There were a couple of changes to the dispute resolution process that we were fine with,” Johnson said, after PPO’s lawyers reviewed legislative amendments made at the committee stage. “The committee found a balance between general contractors and trade contractors and owners. We’re certainly pleased with the outcome.”

The legislation also makes clear that holdbacks must be released promptly when the work is completed, unless the owner can demonstrate that there really are work deficiencies, and in that case, only the portion of the holdback required to cover the deficiency can be retained. And there will be a quick adjudication process so that the funds aren’t tied up in expensive and protracted litigation. (The parties retain the right to engage in full-scale litigation if they aren’t happy with the adjudicator’s ruling, but the funds won’t be tied up while the case goes through the courts.)

Johnson said his only concern is that when the bill passes and is proclaimed, “it is proclaimed in its entirety.”

Clive Thurston, president of the Ontario General Contractors Association (OGCA), said he is also pleased with the legislation and the way it balances the interests of everyone in the industry. He said he thinks the dispute mechanism system with adjudicators will be helpful in preventing payment disputes from getting out of hand. However, he also said there are many details still to be resolved, and the regulations must be carefully reviewed.

Johnson, however, said PPO has received a commitment from Attorney General Yasir Naqvi “that it (Bill142) will be proclaimed in its entirety.”

“It’s got to get passed through third reading before the House rises for its Christmas break,” he said.

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