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 that:
- 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 days).
- 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.