Construction Lien Act

  • Martin Benson posted an article
    COCA proud of its lien act reform work see more

    Daily Commercial News - One of the Council of Ontario Construction Associations’ (COCA) most important accomplishments over the past year is its participation in the Construction Lien Act review process and prompt payment legislation, says its chair.

    "It is a truly significant story of the active and effective participation of so many COCA volunteers collaborating to influence the shape of public policy in Ontario for the betterment of our industry," said COCA chair Gary van Bolderen, at the association's recent 2017 annual general meeting (AGM) and awards luncheon.

    A review of the 33-year-old act by construction law experts Bruce Reynolds and Sharon Vogel of Borden Ladner Gervais LLP entitled Striking the Balance: Expert Review of Ontario's Construction Lien Act, was released at the end of September. It incoporates the views of COCA and many other industry stakeholders.

    "COCA's Construction Lien Act Reform Task Force continued to provide advice to Bruce Reynolds and Sharon Vogel and had a strong influence on the shape of their report," stated COCA president Ian Cunningham during his president's report at the AGM.

    "Many long-held COCA positions found their way into Reynolds' and Vogel's list of recommendations. Working in concert with Prompt Payment Ontario, we pushed for fair and timely payment terms for work completed without dispute which Reynolds and Vogel addressed in their report."

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  • Martin Benson posted an article
    Publication of Substantial Performance - Cost vs Convenience and Certainty see more

    There is a debate currently ongoing in the construction industry regarding the publication of substantial performance required by regulation under the Construction Act.  Here’s what the regulation says,

    “Certificate, declaration of substantial performance

    9. A certificate of substantial performance (Form 9) or declaration of substantial performance under section 32 of the Act shall be published in a construction trade newspaper.”

    The Act defines a construction trade newspaper as follows,

    “Definition

    1. In this Regulation,

    “construction trade newspaper” means a newspaper,

    (a) that is published either in paper format with circulation generally throughout Ontario or in electronic format in Ontario,

    (b) that is published at least daily on all days other than Saturdays and holidays,

    (c) in which calls for tender on construction contracts are customarily published, and

    (d) that is primarily devoted to the publication of matters of concern to the construction industry.”

    Many believe that there should be multiple construction trade newspapers in which substantial performance can be officially published in order to get competitive pricing.

    Others argue that contractors should not have to check 10, 15 or even more publications or websites in order to make sure substantial performance has been declared.  They like the convenience and certainty of having only one place where this information resides.  They fear that fringe publishers will see the publication of substantial performance as a cash cow and adjust their publishing schedules and content to match, at least to a scant minimum, the criteria to qualify as a construction trade newspaper.

    It’s an argument that has cost on one side and convenience and certainty on the other.  If the marketplace becomes populated with fringe publishers that contractors would never think to check with, then a regulation change is in order.

  • Martin Benson posted an article
    COCA Finds Flaw in Federal Prompt Payment Act see more

    Bill C97 is the federal government’s budget Bill.  Like the Ontario government’s budget Bill, Bill 100, C97 is a large omnibus Bill that amends many statutes and introduces a number of new ones.  Division 26 of Bill C97 introduces the Federal Prompt Payment for Construction Work Act.  Careful review of Division 26 by COCA’s Prompt Payment Task Force Chair, Ted Dreyer, exposed a flaw.  COCA stated the following in its submission to the Standing Committee on Finance, which is reviewing C97:

    “COCA supports the pay when paid principle.  The problem with the contractual pay when paid clauses that are now commonplace is that they tend to delay the resolution of the disputes that disrupt the flow of funds.  Since a contractor with a pay when paid clause in its subcontract has no obligation to pay its subcontractors, the contractor is not particularly motivated to resolve its underlying dispute with the owner that is delaying payment.  Since the subcontractor does not have privity of contract with the owner, it is powerless to bring the dispute between the contractor and owner that is delaying payment to a head.  Contractual pay when paid clauses are one of the main reasons for the industry wide trend of slow payment. 

    Prompt payment as it appears in Ontario's Construction Act adopts the pay when paid principle but makes it conditional upon the prompt resolution of disputes.  The key to prompt payment in the Construction Act is section 6.5(5)(a)(iii) which requires a general contractor serving a notice of non-payment upon a subcontractor to give an undertaking to refer its dispute with the owner to adjudication within 21 days.  Subsection 6.6(6)(a)(iii) imposes the same obligation upon subcontractors who deliver notices of non-payment to their sub-subcontractors.  The Construction Act effectively combines the pay when paid principle with a mechanism to ensure that disputes that disrupt the flow of funds are promptly resolved. 

    The flaw in the proposed Act is that it adopts the pay when paid principle without making it conditional upon the timely resolution of disputes.  There is no equivalent to subsections 6.5(5)(a)(iii) and 6.6(6)(a)(iii) in the proposed Act.  A general contractor who serves a notice of non-payment to its subcontractor has no obligation to refer its dispute with the Federal government to adjudication.  Although the subcontractor has the right to refer its dispute with the general contractor to adjudication, it is hard to see what good it will do them.  A general contractor served with a notice of adjudication by a subcontractor will simply point to subsection 10(3) and say that it has no obligation to pay the subcontractor because it was not paid by the government and it delivered a notice of non-payment as required by section 10(3).  Unlike the Construction Act, the proposed Act does not make pay when paid conditional upon prompt resolution of disputes that disrupt the flow of funds.  Instead, the proposed Act leaves subcontractors and sub-subcontractors twisting in the wind.

     Prompt payment legislation is needed to make sure that contractors and subcontractors are paid on time for their work.  So we applaud the Federal government to taking up the issue.  However, unless the proposed Act is amended, it will make the problem that the government is trying to solve even worse.”

  • Martin Benson posted an article
    Lien Act Modernization, Dispute Resolution & Prompt Payment Moving Ahead see more

    Bill 142, Construction Lien Amendment Act, 2017, received Royal Assent on December 12, 2017, but most of the amendments are not yet in force.

    Officials at the Ministry of the Attorney General are working with Bruce Reynolds, Sharon Vogel and their Advisory Group on the drafting of regulations to support Bill 142.  It is the government’s intention to post the proposed regulations on Ontario’s Regulatory Registry in February 2018. The draft regulations will be posted for a period of 30 days.  During this time, stakeholders will have an opportunity to provide feedback online, using the Regulatory Registry website. The Ministry of the Attorney General will review the feedback during the posting period and will make revisions to the proposed regulations, as necessary, on an ongoing basis. Following the 30-day posting period, the proposed regulations will be finalized, submitted for approval and filed.

    The Ministry anticipates the regulations that support the modernization of the Construction Lien Act will become effective in the summer of 2018 and that the amendments related to prompt payment, adjudication and liens against municipalities will take effect late in 2019.

  • Martin Benson posted an article
    Construction Lien Amendment Act Passes Second Reading; Prompt Payment Ontario Applauds Swift Action see more

    Newswire.ca - Today (October4, 2017), Bill 142, the Construction Lien Amendment Act, passed second reading, with a unanimous vote, at Queen's Park and it moves to the committee stage for consideration.

    Bill 142 was introduced this past spring and worked on over the summer months to ensure the bill would be at the top of the legislative agenda this fall. Representatives of Prompt Payment Ontario (PPO) expect that Bill 142 will remain a high priority over the next few months, ultimately attaining royal assent before the legislature adjourns in December. With an upcoming provincial election in the spring, staying focused and committed to making prompt payment legislation a reality in Ontario will be essential.

    "We are looking for support from all parties in making sure this bill passes into law," said Ron Johnson, a Director of PPO. "Over 400,000 workers in Ontario's construction sector will benefit from this bill being passed and Minister Naqvi has shown he supports the sector by ensuring it moves forward quickly," Johnson added.

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  • Martin Benson posted an article
    COCA members anxious over lien reform timeline see more

    Daily Commercial News - Construction Lien Act reform in Ontario is not yet home-free said members of the Council of Ontario Construction Associations (COCA) attending the association’s Queen’s Park lobbying day Sept. 25.

    And so, they said, there must be vigilance to ensure Bill 142, enacting long-sought reforms, achieves royal assent safely before the next provincial election.

    Members attending a reception at Queen's Park — following a day of meetings arranged between some 40 COCA members and members of the legislature from all parties — recalled two previous aborted attempts from private members to get prompt payment legislation approved, in 2011 and 2014. They expressed concern that Bill 142, introduced in May after two years of extensive consultation with stakeholders, may suffer the same fate.

    The bill, which proposes a new prompt payment regime for payment of bills, modernizing the lien and holdback processes and the introduction of a dispute resolution mechanism in what would become a new Construction Act, was introduced by Attorney General Yasir Naqvi and given first reading approval.

    Second reading debate was launched the week of Sept. 11 with debate taking up some five or six hours on Sept. 13 and 14. That delay, and other potential slowdowns, had COCA members concerned.

    "The purpose of today was to hold the government's feet to the fire to ensure that Bill 142 gets across the finish line before the end of the current session," said Ian Cunningham, COCA president. "There are less than 40 days of sitting left and the bill hasn't passed second reading yet and we've got to go to committee, then there will be public hearings, clause by clause, amendments to be made, then it is reported back for third reading and royal assent, so it still has a long way to go."

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  • Martin Benson posted an article
    The impact of Construction Lien Act amendments on PPP/AFP infrastructure projects see more

    Lexology - Public-private partnership (PPP) infrastructure projects sit uncomfortably alongside provincial construction lien legislation, hopeful that parties do not look too closely at the technical definitions and procedures of statute and compare them to the actual workings of a public infrastructure project. In Ontario, this is changing.

    On May 31, 2017, the Ontario government introduced Bill 142, the Construction Lien Act Amendment Act, 2017. It contains many changes that impact the infrastructure and the PPP or alternative financing procurement (AFP) sector.

    Bill 142 introduces many amendments to the Construction Lien Act, including a renaming of the Act to the Construction Act in order to reflect that the statute deals with more than just lien rights.

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  • Martin Benson posted an article
    Backgrounder: Proposed Updates to the Construction Lien Act see more

    Ministry of the Attorney General - Ontario is introducing legislation that would, if passed, modernize construction lien and holdback rules, introduce a prompt payment system and create a new process to speed up dispute resolution.

    Under the proposed legislation, the Construction Lien Act (CLA) would be amended to establish a prompt payment system with clear payment timelines for all parties involved in a construction project. Disputes that slow down payment could be addressed through a new adjudicative process outside of court.

    If passed, these amendments would 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.

    The Construction Lien Act

    The CLA regulates the way payments are made in the construction industry, and provides reasonable certainty that those who have contributed services or materials to the improvement of real property will be paid for the contribution they made.

    Under the proposed legislation, the CLA would be amended to establish a prompt paymentsystem with clear payment timelines for all parties involved in a construction project. Disputes that slow down payment could be addressed through a new adjudicative process outside of court.

    If passed, these amendments would 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.

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  • Martin Benson posted an article
    Prompt Payment Ontario Congratulates Government on Introduction of Prompt Payment Legislation see more

    Canada News Wire - Today, members of Prompt Payment Ontario (PPO) congratulate the Ontario Government on the introduction of prompt payment legislation in Ontario. The introduction of prompt payment legislation is a ground breaking step in the right direction and will help to protect over 400,000 workers across the province. Ontario is the first province in Canada to introduce prompt payment legislation - leading the way for other provinces across the country and the federal government to do the same.

    Delinquent prompt payment has been an issue in Ontario for too long and has various negative consequences on our entire economy. Rampant delinquent payment drives up the cost of construction as contractors have to factor the risk of delinquent payments into their bids and taxpayers are increasingly burdened by the rising costs for important infrastructure projects that are a key to the province's future economic success. Prompt payment legislation will help our economy thrive and help our ever-growing number of new infrastructure projects move-ahead in a timely and efficient manner.

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  • Martin Benson posted an article
    Naqvi tells COCA delegation lien act bill to be tabled by June see more

    Daily Commercial News - Ontario’s Attorney General Yasir Naqvi didn’t reveal any major announcements about Construction Lien Act reform legislation during the Council of Ontario Construction Associations’ 2017 Welcome to Construction Season Reception, but he did provide a small hint on its progress to attendees.

    "We are still going through some formal approvals on the bill, but the drafting is done," said Naqvi to the crowd in the Legislative Dining Room at Queen's Park in Toronto May 15.

    The reform was prompted by the report Striking the Balance: Expert Review of Ontario's Construction Lien Act, authored by construction law experts Bruce Reynolds and Sharon Vogel from Borden Ladner Gervais LLP. It was released last September and made several recommendations for modernizing the act, including items pertaining to dispute resolution, prompt payment and updating Ontario's construction lien and holdback rules.

    Although he couldn't provide an exact date for the legislation, he did renew the commitment he made last September when COCA held its annual reception at Queen's Park on the same day the report was released.

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  • Martin Benson posted an article
    Canada Prompt Payment Act approved by Senate see more

    Journal of Commerce - Canada’s Senate has unanimously passed Bill S-224, the Canada Prompt Payment Act, regulating payments on federal construction contracts, but a major hurdle remains as the bill now faces the scrutiny of the House of Commons.

    Bill S-224 requires that federal government project owners must make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in a contract.

    The payment requirement is consistent down the contractual chain, notes a media statement from bill sponsor Senator Don Plett. The bill also accounts for milestone payments, when applicable, and permits contractors the right to suspend work, terminate a contract and collect interest on late payment.

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  • Martin Benson posted an article
    Premier talks budget, lien act at OGCA symposium see more

    Daily Commercial News - Premier Kathleen Wynne gave her take on Ontario’s Construction Lien Act and provided a preview of the upcoming budget during the recent Ontario General Contractors Association’s (OGCA) 10th Construction Symposium.

    "We heard about your concerns about Ontario's Construction Lien Act — about issues with payment timelines and dispute resolution and that the law needed to be modernized but that it needed to be done in the right way," said Wynne.

    She spoke on the opening night of the symposium to a packed house at the Village Conference Centre in Blue Mountain, kicking off the event.

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  • Martin Benson posted an article
    Canada Prompt Payment Act undergoes final review at Senate see more

    Daily Commercial  News - The Canada Prompt Payment Act, Bill S-224, will be undergoing a final review by a Senate committee before a vote is taken to send the bill to the House of Commons.
    Canada Prompt Payment Act undergoes final review at Senate
    The bill has been the subject of rigorous review at the Senate Standing Committee on Banking Trade and Commerce since Feb. 2 and is ready to undergo a clause-by-clause review before the vote, explains a release from the National Trade Contractors Coalition of Canada (NTCCC).

    Supporters of the bill have sent thousands of letters to senators and members of parliament to demonstrate the need to address payment delays in Canada's construction sector with enforceable legislation, states the NTCCC, which has appeared before the committee to speak in favour of the bill.

    Over the course of this study, criticisms have arisen from general contractors about the implementation of federal legislation on top of legislation currently being developed in Ontario as a result of the Construction Lien Act Review, which was undertaken by Bruce Reynolds and Sharon Vogel.

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  • Martin Benson posted an article
    Lien act recommendation on construction trust management a key area of uncertainty see more

    Daily Commercial News - Recommendations for changes to Ontario’s Construction Lien Act released in a September report garnered mostly enthusiastic support from the province’s construction industry.

    And that's how Ted Dreyer, a lawyer with Kitchener, Ont. firm Madorin, Snyder LLP, responds to the report produced by construction legal experts Bruce Reynolds and Sharon Vogel at the request of the provincial government.

    "Overall, the recommendations will likely reduce the payment cycle and overall I think they will improve the financial security of contractors and general contractors," Dreyer told delegates at the Canadian Farm Builders Association's annual conference in Stratford in January.

    However, one area of uncertainty, said Dreyer, who is also chair of the Council of Ontario Construction Associations' (COCA) Construction Lien Act task force, is whether recommendations concerning the management of construction trusts will pass the legal litmus test.

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  • Martin Benson posted an article
    Lien act review top provincial newsmaker in 2016 see more

    Daily Commercial News - Another year has come and almost gone, and while most Ontario construction industry stakeholders agree 2016 was a big year, the biggest story by far was the Construction Lien Act review which has many associations looking ahead to see how it plays out in 2017.

    Construction law experts Bruce Reynolds and Sharon Vogel released a review of the 33-year-old act at the end of September entitled Striking the Balance: Expert Review of Ontario's Construction Lien Act. The report includes numerous recommendations, including suggestions for prompt payment reform and effective dispute resolution.

    "We played a very active role in 2016 in the Reynolds/Vogel review of the Construction Lien Act," said Ian Cunningham, president of the Council of Ontario Construction Associations (COCA). "Clearly for us, it's something COCA has been working on for more than 20 years."

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