Canada: Ministry Of The Attorney General's Review Of Construction Lien Act Remains Ongoing

Last Updated: December 21 2015
Article by Howard Wise

On February 11, 2015, the Ministry of the Attorney General issued a bulletin indicating that the Attorney General's office was launching a review of the Construction Lien Act "...that will include the examination of payment issues within the construction sector." The Ministry bulletin went on to say that the review was commissioned " response to stakeholder concerns related to prompt payment and effective dispute resolution in Ontario's construction industry, such as encouraging timely payment for services and materials, and making sure payment risk is distributed fairly." Bruce Reynolds with the assistance of Sharon Vogel, both of Borden Ladner Gervais LLP, have been tasked with overseeing the review. The review is ongoing with a report memo anticipated for the Spring of 2016.


The last major revision to construction lien legislation was through the implementation of the existing Construction Lien Act in 1983. That overhaul of the construction lien legislation addressed concerns with the Mechanics' Lien Act of Ontario, then in effect. Before the Construction Lien Act was enacted, the Attorney General created an advisory committee to report on proposed amendments. The Report of the Attorney General's Advisory Committee on the draft Construction Lien Act, April, 1982, formed the basis of the Construction Lien Act. Part 1 of the report stated the reason for the reform as follows:

....The need for the types of remedies provided by the Mechanics' Lien Act, and the proposed Construction Lien Act, emanate from the complicated nature of contractual relationships within the construction industry, and the credit-granting practices which are an integral part of that industry. Ordinary contractual remedies are believed to be inadequate in the face of these phenomena.

Every construction project involves numerous tiers of contractual relations. A construction project may be viewed as a pyramid, with the owner standing at the apex of the pyramid. In the most simple form of contract organization, the owner hires a general contractor. This contractor, in turn, engages the services of a number of subcontractors. Each of these may hire further subcontractors, all of whom will be responsible for a specialized aspect of the project. At each step, the base of the pyramid is broadened, as the number of persons supplying services or materials to the improvement increases. While there are many variations of this pattern of organization, each variant contains these general features.

This pyramid results in a complex web of relationships. Each person arranges for the supply of specific services or materials to the improvement, knowing that those services and materials may well be supplied by persons other than the person with whom he deals. Conversely, each supplier looks to those who have employed him for payment, knowing that the money for that payment must come from someone further up the pyramid.

Because defective performance of any part of the contract work may result in a stoppage of payment, and the consequent flow of contract monies down the pyramid, a supplier of services and materials in a construction project may be greatly affected by the behavior of many people with whom he has no contractual relationship. While in theory the proper performance by a supplier of the work which he had agreed to do would entitle him to demand payment from the person to whom the supply was made, in practice the chances of such payment are largely contingent upon the continuous flow of contract monies from the owner down the pyramid.

It was concluded that:

The Act makes it easier for construction to take place, since it assures that credit will be made available. In addition, by providing a uniform regime of rights to all suppliers in the industry, an Act reduces both the costs of negotiating both construction contracts and sub-contracts, and also the uncertainties inherent in any complex system of contractual relationships.

Revisiting the Construction Lien Act

The statements made 32 years ago appear relevant to construction projects today, although the methods of construction delivery and the way contracts are performed has changed significantly. The complexity of contractual and business relationships, and the breadth of project delivery systems, makes it appropriate to revisit these issues again. At the time of the last overhaul of construction lien legislation, alternate finance, private/public partnerships, design/build finance did not form part of the construction landscape.

It is clear that issues with respect to payment, extended periods of credit, set-off issues, and other issues relating to the flow of funds through the construction pyramid are still problematic. As construction projects have become larger and more complex, the legal relationships between the parties have also become more complex, and often contractors and subcontractors are asked or required to extend credit for the labour, service and materials they perform or supply well beyond 30 and 60 days. Furthermore, developments in other areas of law, including bankruptcy and insolvency and the use of the Companies' Creditors Arrangement Act, have had an impact on the ability to deal with issues as they arise in the construction setting.

That is not to say that the existing lien legislation has not been of benefit to the construction industry or that it has not worked. In fact, when one considers the significant project development that has occurred over the past 30 years, it is evident that the construction industry remains robust.

However, on the continuum of change, it is time to revisit the Construction Lien Act in light of the existing challenges, including issues relating to payment and dispute resolution. It is important to recognize that, in balancing the various interests, there will be no perfect solution to the problems that the industry faces, and compromise will be required. However, all constituent members of the construction industry must be afforded the opportunity to provide input into the process. The guidelines for review, which were issued in July, 2015, are intended to ensure that this happens. No doubt, 30 years from now, the review process and consequent recommendations will be revisited with a view to gauging whether or not the stated objectives for reform were met.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.