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Stakeholders weigh in on Construction Lien Act review

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by Angela Gismondi

Ontario's Construction Lien Act review was released Sept. 26 and industry stakeholders are generally supportive of the report and its recommendations, particularly relating to prompt payment and dispute resolution.
Stakeholders weigh in on Construction Lien Act review

Ian Cunningham, president of the Council of Ontario Construction Associations (COCA), said he was encouraged to learn that Construction Lien Act reform legislation is a priority of the current government.

COCA held its annual construction season reception at Queen's Park in Toronto the same day the report was released. Yasir Naqvi, who was appointed Attorney General in June, was in attendance, along with cabinet ministers and MPPs. According to Cunningham, the big news was the inclusion of the modernization of the Construction Lien Act in the attorney general's mandate letter published Sept. 23.

"In Minister Naqvi's mandate letter from Premier Wynne, he is charged with the responsibility of introducing Construction Lien Act reform legislation in the spring 2017," explained Cunningham.

"We knew that going into last night's reception but what was interesting is Minister Naqvi indicated that they will be seeking stakeholder feedback on the report, then they will roll up that feedback and draft a bill and introduce that bill in the spring session."

"He indicated that the legislation should be in a place to be passed into law — if it passes through the legislature — before the end of 2017. That was very encouraging," said Cunningham.

The Province of Ontario commissioned a review of the Construction Lien Act in Feb. 2015 in response to stakeholder concerns related to prompt payment and effective dispute resolution, among many other issues, in the province's construction industry. The act had not been updated for 33 years.

The province retained construction law experts Bruce Reynolds and Sharon Vogel of Borden Ladner Gervais LLP (BLG) to conduct a review of the act. Their findings and recommendations can be found in their report titled Striking the Balance: Expert Review of Ontario's Construction Lien Act.

"I absolutely believe the report strikes the balance he (Reynolds) was seeking," commented Ontario General Contractors Association (OGCA) president Clive Thurston, after watching a web broadcast on the subject Sept. 28.

"It hits pretty much every major topic and reinforces what we have been saying in regards to the analogy of the three-legged stool: prompt payment, lien and adjudication. It's just not going to work without all three legs. I was very happy to hear his recommendation that it shouldn't be cherry-picked, that it must move forward as a whole and I think we can all agree on that."

The report had been submitted by Reynolds and Vogel in April after two postponements.

"He (Naqvi) indicated unequivocally that prompt payment provisions will be included in the bill, he talked about dispute resolution as well, he talked about a modern Construction Lien Act that addresses the construction industry as it exists today and tomorrow," said Cunningham.

The review by Reynolds and Vogel resulted in a 299-page report containing 100 recommendations. As part of the review process, Reynolds and Vogel received 77 written submissions and held 30 stakeholder meetings, involving more than 60 key construction industry groups, a release states.

Reynolds and Vogel also created an advisory group with expertise in different areas of the construction industry. The group met throughout winter and spring 2016 to address the diversity of stakeholder opinions and industry issues and to refine the recommendations that were heard during consultations.

Both Thurston and Cunningham were pleased with the thoroughness of the report, particularly when it came to including input from stakeholders.

"It takes into account the issues and sensitivities of many of the stakeholders and we look forward to working in a collaborative manner with the government in finalizing this as we move forward," said Thurston.

Cunningham was particularly pleased with what is recommended to be included in the reform legislation.

"It will contain not only the modernization of the Construction Lien Act but also real time dispute resolution, which was also included in the report... and should keep projects moving along," he said.

Thurston said the proposed reforms would have a major impact on the industry.

"Adjudication and alternative dispute resolution is something that the OGCA has been a huge supporter of for years," said Thurston.

"We feel there's been far too much litigation and very little emphasis put on alternative dispute resolution where it should be put. Something that becomes mandated in an adjudication process falls into the policies that the OGCA has supported."

He thinks the reform legislation will benefit the industry in other ways.

"I also think it will have an unintended consequence — or maybe intended depending on your point of view — in that it will drive good behaviour," said Thurston, adding he hopes it will promote fair contracts with fair conditions.

"I think a mandated adjudication program will encourage people to resolve their differences quickly, effectively and efficiently at the site level rather than see it escalate. I think it's going to drive new behaviour in the industry, one that has been sorely lacking for a long time."

Thurston is looking forward to participating in the next round of consultations. While he is optimistic, he said the regulations need to be carefully crafted.

"This is a holistic view, an overall integrated submission — it didn't delve down into the nitty gritty of regulations per se, that will come," he noted. "That's where we've got to watch to make sure that these regulations do not negatively impact what has been suggested as a complete solution or a complete proposal."

An OGCA task force is meeting to discuss the report. The OGCA also plans to consult with its members and industry partners to gauge opinions on the matter.

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