On September 26, 2016, an expert review report titled, "Striking the Balance: Expert Review of Ontario's Construction Lien Act" (the Report) released findings on the problems associated with delinquent payments and the cascading impact on the various participants in the construction industry. The Report, which provides an extensive review of Ontario's Construction Lien Act (the Act), was commissioned in response to stakeholder concerns related to prompt payment and the effectiveness of dispute resolution in the construction industry, and follows a thorough and wide-ranging consultation of construction industry participants. The proposed reforms to the Act are anticipated to be released in the spring of 2017.

The review concluded that there was unanimous support for the continuation of the lien/holdback regime as a means for protecting the construction industry. The proposed changes balance freedom of contract and statutory protections, and are meant to address timeliness of payment and effective mechanisms for the enforcing of payment for work performed.1

Given the breadth and scope of the proposed changes, the Expert Panel recommended that a new legislation be created, encompassing rights and remedies that extend considerably beyond construction liens and trusts, with the new name of: “The Construction Act: An Act Respecting Security of Payment and Efficient Dispute Resolution in the Construction Industry”.

The Report recommends implementing the following key changes as part of a prompt payment regime:


  • Prompt payment will apply to both private and public sector projects2 and should be "implemented by creating a statutory scheme to be implied into all construction contracts that do not contain equivalent terms"3; and
  • Prompt payment should apply at the level of the owner-general contractor, general contractor-subcontractor, and downwards, and there be a mechanism for general contractors to notify subcontractors of non-payment by owners, with reasonable particulars, and to undertake to commence or continue proceedings necessary to enforce payment so as to defer their payment obligations.4


  • Mandatory time periods within which payment shall be made following the issuance of a proper invoice:
    • A 28-day time period will apply between owners and general contractors.
    • As between a general contractor and subcontractor, a further seven days from receipt of payment from the owner will apply (with an additional seven days for each level down the construction pyramid);7 and
  • While parties will be able to freely contract respecting payment terms to tailor the timing of payment obligations to specific project requirements (i.e. a requirement that invoices can only be rendered once specific project milestones have been achieved, which are typically seen in the case of EPC and AFP projects), monthly payment obligations (28-days following the issuance of a proper invoice) will be implied otherwise, absent specific contract provisions.8


  • Where issues about contractual performance arise, payers would be allowed to withhold only disputed amounts by delivering a “Notice of Intention to Withhold Payment” within seven days of receiving a proper invoice, setting out the amount of and reasons for the withheld payment. In the event of non-payment, set-off will continue to apply to the specific contract, pursuant to section 17(3) of the legislation, but shall not apply as between unrelated projects;9
  • Two remedies will be available in the event of non-payment: (1) mandatory interest payments; and (2) a right to suspend or terminate work, which should arise only after an adjudication determination has been rendered and a payer has refused or failed to comply with that determination.10

This article was co-authored by Josh Shneer, Student at Law, in Dentons' Toronto office.

References 1 Report at 153. 2 Ibid at 191. 3 Ibid at 192. 4 Ibid at 194. 5 The Report suggests that a "proper invoice" contains the following information: (1) The name and address of the contractor; (2) The invoice date; (3) The contract number, or other authorization for the property delivered or services performed (including the order number and contract line item number); (4) The description, quantity, and the price of the property delivered and/or the services performed; (5) The shipping and payment terms; (6) The name, title, telephone number, and complete mailing address of the responsible official to whom payment is to be sent; (7) The name, title, telephone number, and complete mailing address of the responsible official to be notified in the event that the invoice is defective; and (8) Any other substantiating documentation or information required by the contract. 6 Ibid at 196. 7 Ibid at 197. 8 Ibid. 9 Ibid at 198-99. 10 Ibid at 199-200.