On March 28, 2014, the Province of Ontario announced that it will be appointing an independent third party to review the Construction Lien Act. The review is in response to feedback which the province received from interested parties during public hearings on Bill 69, the Prompt Payment Act, 2014, a private member’s bill which received first and second readings in the Ontario legislature in May 2013. The Standing Committee on Regulations and Private Bills ended consideration of Bill 69 on April 2, 2014.
The Bill 69 consultation process “identified a need to close gaps in Ontario’s construction laws in order to better protect large and small members of the construction sector.” Accordingly, the review of the Construction Lien Act, which was enacted in 1983, will focus on the following concerns raised by various members of the construction industry, including:
- reducing the financial risks companies face when they are not paid for services on time
- making sure payment risk is distributed fairly among all industry participants
- finding ways to ensure that companies pay for services and supplies on time
The review, which will begin in spring 2014, will involve a wide range of interested parties in the construction industry, including owners from the private and public sectors, architects, engineers, legal and other building professionals, the financial sector, the National Trade Contractors Coalition of Canada, the Ontario General Contractors Association, large general contractors, the Council of Ontario Construction Associations, the Ontario Road Builders’ Association, Infrastructure Ontario and the provincial building trades.
Among other things, Bill 69 would have entitled contractors and subcontractors to receive progress payments and to suspend work or terminate contracts if payments were not made; required the payment of holdback within one day after the payer was no longer required to retain the holdback under the Construction Lien Act; prohibited holdbacks other than those permitted or required under the Construction Lien Act; and imposed financial disclosure obligations on owners before entering into contracts.