Ontario’s Construction Act Review consultation paper was released in July and industry associations are now in the process of weighing in on how to improve the act.
The paper is entitled 2024 Independent Review: Updating the Construction Act.
Construction lawyer Duncan Glaholt is leading the review.
“My goal in preparing a consultation paper was to help facilitate a conversation with the province’s construction industry and its stakeholders about potential adjustments,” said Glaholt in an email to the Daily Commercial News.
“A month into this process, I can report that the consultation paper has met that goal…I invited stakeholders to add their own comments and suggestions, and many have taken the opportunity to do so. All of these have been constructive and helpful. People like the Construction Act and are being very thoughtful about ways in which we can make it better.”
In February, the attorney general asked Glaholt to conduct an independent review of the Construction Act.
Formerly the Construction Lien Act, it was significantly reformed in 2017 at which time Bruce Reynolds and Sharon Vogel wrote the influential report entitled, Striking the Balance: Expert Review of Ontario’s Construction Lien Act. The final recommendation of the report was for a further independent review of the act to be conducted in five years.
Stakeholders engaging in consultation process
A website has been set up where stakeholders can provide feedback on the consultation paper.
The deadline for submissions was Friday (Aug. 9). The final report is expected to be made publicly available this fall.
“Stakeholders are using the consultation paper to organize and focus their submissions,” said Glaholt. “This will make it possible for me to get my report out in the short time I have available.”
A year ago, after consulting with different groups in the construction industry, Glenn Ackerley of WeirFoulds LLP, made 86 recommendations to fix elements in the Construction Act that are not working as intended, many of them focused on adding definitions of certain terms and fixing the language in sections.
Among the suggestions were the extension of lien periods for adjudication; annual and phased release of holdback; construction trusts; promptness of payment; surety bonds; liens and landlords; and notice of termination. The document was submitted to Glaholt.
“We generally support the recommendations made by Glenn Ackerley in his extensive report that was submitted to the attorney general in July 2023 that really got the ball rolling on Construction Act reform and which I believe has been central to Duncan Glaholt’s review,” said Council of Ontario Construction Association’s president Ian Cunningham in an email to the Daily Commercial News.
‘Fair access to adjudication without fear of intimidation’
The Ontario Road Builders’ Association (ORBA) recently made its submission and will be meeting with Glaholt in the next few weeks.
One of ORBA’s recommendations deals with the dispute resolution mechanism of adjudication.
“We’re seeing a growing trend of utilization of this tool,” said Steven Crombie, senior director, public affairs at ORBA. “We learned in April of 2024 an owner cited a purchasing policy that claimed adjudication was a form of legal action and therefore (the contractor) would be barred from bidding on future work for that municipality.”
ORBA is recommending an amendment to the act that would prohibit adjudication exclusion clauses.
“We propose prohibiting the inclusion of adjudication exclusion clauses in contracts or purchasing policies which undermine the intent of the Construction Act by allowing parties to opt out or discourage this essential dispute resolution process,” said Crombie. “We just want to ensure that contractors and subcontractors have fair access to adjudication without fear of intimidation or disbarment from bidding in a market.”
Another recommendation centres around mandating the phased or progressive release of holdbacks which would ensure more consistent application across the industry and improve cash flow for contractors and subcontractors, especially on large projects.
“What we’re finding, particularly with subcontractors that engage in phased work early on in the projects, i.e. earthworks or your foundational subcontractors, they are waiting for the entire lifecycle of the completion of that project before they get their 10 per cent holdback,” explained Crombie, adding sometimes the delivery of a highway or major transit projects can take many years which can be costly, burdensome and risky for the contractor. “While their portion of their work is done sometimes years previous, their money, their 10 per cent, which in construction can sometimes represent your margins, are being held up for years.”
For the Ontario General Contractors Association (OGCA), the priority is to clarify the ambiguity that exists in the act.
“It’s all about clarity, removing ambiguity, making it so that everyone understands how the act works so that all parties are on the same page as opposed to saying, ‘that’s the owner’s role’ or ‘that’s the contractors role,’” said OGCA president Giovanni Cautillo.
Over the next few weeks Glaholt will be meeting with industry associations to discuss submissions.
“Stakeholders all over the province are using the site to register submissions and set up their own appointments for virtual consultations,” said Glaholt. “I have conducted several consultations booked through this system already and am told that I have over 30 individual and institutional virtual consultations booked over the next three weeks.”
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