On September 26, 2016 the Ontario Government released a report
on Ontario's Construction Lien Act entitled
"Striking the Balance: Expert Review of Ontario's
Construction Lien Act" (the "Report"). The
Report was prepared after consultation with various stakeholders
and includes 100 recommendations regarding suggested amendments to
the Act. Some recommendations relate to and, if implemented, will
impact owners that undertake construction projects, including
healthcare institutions. The Ministry has indicated that it intends
to introduce amending legislation in the Spring of 2017.
The Report includes several recommendations that could have
notable implications for such owners. These include recommendations
The definition of "price"
be amended to include direct out-of-pocket costs incurred by
contractors as a result of extended duration, but excluding damages
for delay. This would allow contractors who incur costs due to
delays to register liens for those costs.
The time period for preserving
(registering) liens be extended to 60 days (from the current 45
Owners be required to publish a
notice of non-payment / set-off where the owner intends to assert a
right of set-off in relation to a contract.
A "prompt payment regime"
be legislated under which owners would pay a general contractor
within 28 days of receiving a "proper" invoice. General
contractors would then have 7 days from receipt of payment from the
owner to pay subcontractors.
When an owner disputes an invoice,
the owner be required to deliver a notice of intention to withhold
payment within 7 days of receiving the invoice. The owner's
notice of intention must set out the amount to be withheld and
particulars as to why the amount is being held back.
A party to a contract not be entitled
to set-off amounts owed on other contracts.
If implemented, the recommendations made in the Report will
impact the administration of construction projects and the
parties' lien rights and liabilities.
Miller Thomson's Health Industry lawyers have extensive
experience advising health industry clients on construction lien
and related matters. We will continue to monitor the status of the
recommendations and any proposed amending legislation.
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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