Construction Lien Act/Prompt Payment Review
The First meeting of stakeholders in the Construction Lien Act/Prompt Payment Review took place at the Ministry of the Attorney General Offices on April 30th.
Excerpts of the DRAFT TERMS OF REFERENCES FOLLOW:
The Construction Lien Act (the “Act”) was enacted in 1983 following broad consultation with the construction industry by the Advisory Committee on the Draft Construction Lien Act. The object of this Committee was to review the draft legislation and develop recommendations for amendments. The Committee met with diverse groups in the construction industry for a year to consider the legislation and produced a report setting out its recommendations for amendments. The recommendations resulted in the passage of the current Act. This legislation has only been subject to minor adjustments over the last 30 plus years…
…On May 13, 2013, Steven Del Duca, MPP Vaughan, introduced Bill 69, Prompt Payment Act, 2013. The Private Member’s Bill would allow contractors and subcontractors to receive progress payments and to suspend work or terminate a contract if such payments are not made.
The Bill was considered at the Standing Committee on Regulations and Private Bills on March 19 and 26 for public hearings. The Committee heard from a number of construction stakeholders, including large construction companies, builders, contractor and subcontractor associations, the financial sector, municipalities and school boards. While contractors and subcontractors expressed support for Bill 69, a number of stakeholders expressed significant concerns about the potential impact of the proposed legislation.
On April 2, 2014, the Committee voted to set aside further consideration of Bill 69 due to the significant concerns raised by the stakeholders and the need for broad consultation.
On March 28, 2014, the Honourable Madeleine Meilleur, Attorney General, and the Honourable Glen Murray, Minister of Infrastructure, announced that the government will review the Construction Lien Act in response to feedback from public hearings on Bill
69, Prompt Payment Act, 2013, which suggested there was a need to close gaps in Ontario’s construction laws in order to better protect large and small members of the construction sector.
The goal of the Construction Lien Act Review is to receive recommendations on whether the Act should be amended to address concerns raised by construction stakeholders about late payment for services and supplies.
The Attorney General and the Minister of Infrastructure will appoint a panel of construction experts with representatives from each of the key stakeholder groups in the industry: public sector owners, private sector owners, contractors and subcontractors.
The panel will be chaired by a prominent construction lawyer or academic who will lead the consultations.
The panel will review the Act to determine if there are gaps and issues, particularly related to timely payment, 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; and
· Finding ways to ensure that companies pay for services and supplies on time.
The Review will be conducted in two phases. The first phase will be an information gathering process that would involve broad consultations with stakeholders to determine if there are gaps and issues with the CLA, particularly related to timely payment…
… A report of the panel’s findings would be provided to the Attorney General and the Minister of Infrastructure following the first phase. Depending on the panel’s findings, the ministries would determine whether the same or a reconstituted panel should move to the second phase.
The second phase would involve additional consultations with the construction industry, if necessary, and a final report to government with recommendations for legislative change.”
The industry is still trying to learn the fate of this Review as a result of the election call.