On April 30, 2016, an expert review of Ontario's
Construction Lien Act was submitted to the Ministry of the
Attorney General and the Ministry of Economic Development,
Employment, and Infrastructure. This review, which was just
released to the public, contains recommendations which will be
considered in drafting legislation to be presented in Spring 2017.
If the recommendations are implemented, even in part, it would form
a sea of change in construction law and the most significant reform
to this area of law in 33 years.
While the review recommends a reform to virtually every aspect
of the Construction Lien Act, some of the most remarkable
recommendations are as follows:
A change in the time periods required to preserve and perfect
construction liens from a total of 90 days to a total of 150 days
(60 days to preserve and 90 additional days to perfect the
A far more flexible holdback regime allowing for
'carve-out' holdbacks, a notice of set-off in relation to
the holdback amount, and partial release of holdbacks on
A 'prompt payment' regime (also known as "pay now,
argue later") should be established in order to reduce the
need for potential lien claimants to resort to the courts. This
system would specify that:
a payor must dispute an invoice rendered to it within 28 days
of receiving it from the payee (or 7 additional days if the payor
is not an owner);
in the event of non-payment, a payor must deliver a notice of
intention to withhold payment within 7 days of receipt of the
a payor's claim for set-off can only be made in relation to
the contract the payment is demanded under, and not other contracts
between the parties;
in the event of withheld payment, a mandatory non-waivable
interest should be applied to late payments, and a right of
suspension may arise following adjudication by a payment
The imposition of mandatory case management into all
construction lien claims to better streamline procedural issues and
Elimination of many of the leave requirements, such as leave to
bring motions, conduct discoveries, and commence a Third Party
Permitting trust claims and lien claims to be heard
The stratifying of different "sized" lien claims so
that claims which would otherwise fall into the small claims or
simplified procedure jurisdictions have applicable procedures
proportionate to the relative size of the claim (i.e. A $5,000 lien
should be dealt with via a small claims process, not a process
identical to a $500,000 lien).
These recommendations are just a small sample of some of the
large amendments being proposed to the Act. Of course, the
extent to which these recommendations will be incorporated in any
legislation remains an open question. Nonetheless, it is evident
that the thrust of these reforms is to create a more practical and
efficient means of resolving construction disputes and, if even a
fraction of these changes are incorporated, many of the most
frustrating and impractical aspects of the Construction Lien
Act may soon be a thing of the past.
As this is an area of law that is currently in flux, please do
not hesitate to contact us if you have any questions or concerns
about the possible changes to the Act coming in the near
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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