On March 28, 2014, the Ontario government announced that it is
launching an independent review of the Construction Lien
Act to address concerns about prompt payment in the
The review has been prompted by reactions to Bill 69, the
Prompt Payment Act, 2013, a private member's bill
which received first and second reading in the Ontario Legislature
in May 2013 and has had public hearings before the Standing
Committee on Regulations and Private Bills.
Based on the comments received on Bill 69 during the public
hearings and the written submissions the committee has received,
the province decided that a broader review of the issues with a
broad consultative process was required. The review of the
Construction Lien Act will "engage with the broad
diversity of participants in the sector, including owners from the
private and public sectors, architects, engineers, legal and other
building professionals, the financial sector, the National Trade
Contractors Coalition of Canada (NTCCC), the Ontario General
Contractors Association (OGCA), large general contractors, the
Council of Ontario Construction Associations (COCA), the Ontario
Road Builders Association (ORBA), Infrastructure Ontario and the
Provincial Building Trades."
The review will be led by an independent third party who has not
yet been appointed, and will begin in spring 2014. It will focus on
particular payment concerns raised by some in the construction
Reducing the financial risks companies face when they are not
paid for services on time;
Making sure payment risk is distributed fairly among all
industry participants; and
Finding ways to ensure that companies pay for services and
supplies on time.
The Construction Lien Act was enacted in 1983, and sets out a
complex system of rights and trust provisions to provide financial
protection to construction suppliers, contractors and landowners,
including construction lien rights.
Bill 69 focuses on 3 primary objectives:
prohibit all holdbacks on a construction project other than
those required under the Construction Lien Act,
impose mandatory payment terms on construction parties, both in
terms of timing and consequences of non-payment,
establish new financial disclosure obligations on construction
However, as noted in our December 2013
Construction Law Newsletter, the Bill is designed to remove the
freedom and flexibility of construction parties to negotiate
specific terms for particular projects and impact the allocation of
project risks, and in doing so, it is not clear that the full
impacts of the proposed law have been fully considered. This is no
doubt why the Ontario government is undertaking an independent
review of the issue with broad consultation.
The Ontario Bar Association has also provided commentary on many technical issues
with Bill 69, as have various other groups and organizations.
Bill 69 is, currently, still scheduled for further hearings by
the Standing Committee on Regulations and Private Bills, with a
review of the bill clause-by-clause and of proposed amendments on
Wednesday, April 2 and Wednesday, April 9. In the ordinary course,
the committee would then recommend it for passage to the
legislature if it chose to.
Gowlings Construction Law Group has been following the course
of Bill 69 and Construction Lien Act reform closely as it will have
a direct and significant impact upon many of our clients and the
industry as a whole.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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