Government announces Construction Lien Act review following lobbying from owners, major general contractors
GTA Construction Report staff writer
Bill 69, the initiative to enact Canada’s first construction industry prompt payment legislation, will not go forward, following an April 2 decision to adjourn further discussion of the issue.
The Ontario legislature’s Standing on Regulations and Private Bills has ended its consideration of proposed prompt payment legislation, “allowing for the issue to be moved to a government-led review that will permit through debate and understanding of the potential impact of legislation,” a coalition of major general contractors said in a news release.
The committee voted to adjourn further consideration of Bill 69 and move to other committee business, the Fair Payment Reform Ontario (F-PRO) coalition said in a news release. An independent review of the Construction Lien Act was announced on March 28 by the Ministries of the Attorney General and Infrastructure. The review will commence this spring.
“We are pleased that the Ontario legislature’s consideration of Bill 69, the Prompt Payment Act, has now ended, and that the issue will instead be taken up by a government-led review that can include adequate consultation and deliberation, said Chris Gower, PCL Construction’s executive vice-president. “We have said from the beginning that Ontario’s constructors support the principle of prompt payment, but we had serious concerns about how Bill 69 was drafted.
“We are grateful for the support we received from a number of committee members, and in particular would like to highlight the leadership and collaboration of Steven Del Duca, MPP, and Monte McNaughton, MPP, for placing prompt payment on the public agenda in the appropriate manner that will lead to a positive outcome.”
Del Duca, a Liberal MPP, introduced the private member’s bill which received rare unanimous consent on first reading last summer. However, the legislation appeared to stall on the order paper as residential contractors, municipalities and others expressed concern about potentially serious consequences to owners, residential contractors, and municipalities. The bill’s advocates, represented by the National Trade Contractors Coalition of Canada (NTCCC) spent $500,000 on a winter television advertising campaign to move the legislation forward with March committee hearings.
The F-PRO coalition is comprised of construction companies including Eastern Construction, ACS Infrastructure Canada, Carillion Canada, Dragados Canada, EllisDon, PCL Construction, Aecon and Bird Construction.
About 48 hours after the second of two days of legislative committee hearings, the provincial government issued a news release announcing that it would launch an independent review of the Construction Lien Act.
“The government is responding to feedback form public hearings on Bill 69 the Prompt Payment Act, which identified a need to close gaps in Ontario’s construction laws in order to better protect large and small members of the construction sector,” the Ministry of the Attorney General announcement said.
The government said the review will look at “concerns raised by the construction industry” including:
- Reducing the financial risk 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.
“Our government has heard from many int he construction industry that it is time to modernize the law,” said attorney general Madeleine Meilleur. “We agree. My first step will be to reach out to industry members – large and small – to help us find the right process for a thorough review of the act, with a view to introducing legislation before the end of the year, if needed. I look forward to getting the review of this important legislation underway as quickly as possible.”
NTCCC representatives advocating for the legislation told the hearings that they didn’t think Bill 69 needed major amendments to be passed in law. Timelines in the draft legislation are taken from standard construction documents, Eryl Roberts, executive vice-president of the Electrical Contractors Association of Ontario (ECAO), told the committee. “They are pretty standard in the industry and would be applicable to 90 per cent of the work. I don’t see that as too stringent at all.”
Roberts said he didn’t think the bill was unfixable, “as a matter it’s in pretty good shape right now.”
Among concerns at the committee hearings, residential contractors said the proposed prompt payment legislation would put unreasonable burden on homeowners. “Mandating that a homeowner must provide a contractor with their financial background for a deck or basement renovation seems completely unreasonable,” OHBA chief executive officer Joe Vaccaro told the committee.
The NTCCC says it would have been open to changes to exempt homeowners and provide additional implementation time for municipalities, who also expressed concern about the disclosure and other requirements in the legislation.
Several groups representing owners expressed concern about the legislation including the cities of Mississauga and Toronto, Colleges Ontario, Ontario Association of School Business Officials, Ontario Catholic Trustee’s Association, Ontario Public Buyers Association, Ontario Public School Boards’ Association, Ontario Sewer and Watermain Construction Association, the Residential Construction Council of Ontario and the York Catholic District School Board.
In a letter to the three provincial political readers they expressed their “strong reservations concerning Bill 69” and recommended that it not become law.
They wrote that “Bill 69 will not only fail to accomplish its objectives, but will also bring ab out a radical change to many longstanding industry practices that are standard in the Ontario, Canadian and global construction industries with consequences that have not been fully studied.
“The adverse impact on project costs, delays and litigation will, ultimately, be born by Ontario homeowners and buyers, employers and taxpayers,” the group wrote.
The owners’ group said the legislation “was prepared with little, if any, consultation with any owners or with the broader construction industry.
“The failure to consult more broadly with all of the important stakeholders of the industry means the consequences of these changes have not been properly considered,” the group said. “Bill 69 will increase the costs of, and time for, completing construction projects in Ontario. It also has serious conflicts with existing law, most notably the Construction Lien Act. In addition, the consequences of eliminating contractual freedom and flexibility have not been fully considered. While we respect how private member’s bills are organized by individual MPPs, much of this could have been avoided with a broader consultation among all stakeholders.”
In their letter, the owners said that the best solution is for the government to strike working groups representing “a wide spectrum of industry stakeholders.”
“It is our view that this is the best and only way to properly reform the construction industry, while ensuring successful construction projects and the economic health of one of Ontario’s most important job creators and economic engines.”