According to the Ontario Ministry of the Attorney General, as of December 5, 2017: “Ontario passed legislation to improve the efficiency and competitiveness of the construction sector. The Construction Lien Amendment Act, 2017 includes new prompt payment rules to ensure Ontario construction businesses and workers get paid on time for the work they do. The changes will also modernize the lien and holdback process, help protect creditors and set out a new adjudication process to resolve payment disputes faster.
“Key changes include:
- Providing more time for contractors and subcontractors to resolve their disputes outside of court by extending timelines to file liens and start court actions from 90 days to 150 days
- Ensuring contractors and subcontractors know when to expect full payment by requiring holdback funds to be paid as soon as the deadline to file a liens passes
- Protecting subcontractors and workers if the general contractor files for bankruptcy by requiring surety bonding on public sector projects above a certain amount
- Allowing condominium unit owners to remove liens from their unit in relation to common elements (corridors, lobbies, etc.)
- Referring construction lien claims under $25,000 to small claims court.”
Bruce Reynolds and Sharon Vogel, now of Singleton Urquhart Reynolds Vogel LLP, worked extensively with government and industry groups on the Report that led to Bill 142. “In particular Bill 142 reflects the three key objectives identified in the Report: 1) modernization of the construction lien, holdback and trust rules; 2) introduction of a prompt payment regime; and 3) introduction of an adjudication regime for the expedient resolution of construction disputes.”
As Richard Wong and Roger Gillott of Osler, Hoskin & Harcourt LLP wrote: “However, Ontario isn’t the only jurisdiction undergoing construction law reform; other Canadian jurisdictions are considering prompt payment regimes as well” and are potentially considering aspects of the Bill in the context of their own jurisdictions:
- “In Québec, finance minister Carlos Leitão confirmed that the province would be introducing new prompt payment rules to apply to public sector projects by the spring of 2017. The impetus of these rules differs from those in Ontario and stems from a recommendation from the Charbonneau Commission investigating corruption in the construction industry in Québec. The lack of prompt payment was seen to create a greater temptation for corruption to occur for several reasons, including disadvantaged cash flow to smaller contractors and abuses of power in holding up progress payments.
- In Alberta, starting in April of 2016, Alberta Infrastructure began implementing prompt payment clauses in its various contracts.
- In British Columbia, the BC Law Institute is currently undertaking a review of the Builders Lien Act to generate a report containing balanced recommendations for reform.
- “Finally, at the federal level, there are several initiatives.”