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Finish line in sight for lien act reform

Don Wall
Finish line in sight for lien act reform
DON WALL — Provincial government lien act advisor Bruce Reynolds (right) discussed lien act reforms at a Construct Canada panel session co-moderated by Glenn Ackerley (left), partner with WeirFoulds LLP, on Nov. 30 in Toronto.

Long-awaited reforms to Ontario’s Construction Lien Act are an important step closer to enactment, construction stakeholders learned at the CEO Breakfast panel event held as part of the Construct Canada show that took place in Toronto recently.

Delegates were told a government standing committee has completed hearings on Bill 142 following second-reading approval, with 53 amendments approved, and that third reading in the Ontario legislature can now proceed.

With a Liberal majority in the legislature and all-party support pledged for the reforms, the stage is now set for possible approval of the new Construction Act before the end of the year, government advisor Bruce Reynolds suggested.

The panel session, held Nov. 30, was billed as focusing on dispute adjudication, the third tier of lien act reform, which panel moderator John Mollenhauer, president of the Toronto Construction Association, said was the least understood component of the reform package among his members.

But first, construction lawyers Reynolds and Sharon Vogel, authors of the report Striking the Balance: Expert Review of Ontario’s Construction Lien Act, which formed the basis for much of the Bill 142 reforms, were asked to offer an update on the progress of the legislation.

Reynolds said the construction lien advisory group led by himself and Vogel had been called upon to undertake further intense consultations with stakeholders, pushed by Attorney General Yasir Naqvi.

“What happened in Ontario, the not-so-secret secret, is it was consultation, consultation, more consultation after that and then more consultation,” he said.

Vogel described the disruption caused by late submissions near the end of the process and praised the contribution of CEO Breakfast panellist Duncan Glaholt, a lawyer who was also a member of the advisory group, for his work at this stage.

“We had some additional stakeholders who came at the 11th hour and 59th minute and we had to create a separate task force in the advisory group process to deal with the AFP (Alternative Financing and Procurement) issues, and Duncan was part of that subgroup task force. We had to pull that group together very, very quickly,” she told the delegates.

Vogel said there were “multiple meetings that went on hour after hour after hour, where we had to grapple with new issues.

“But we got there, 53 amending motions.”

Commented Reynolds in an interview after the session, “The number 53 sounds large but I would say the majority of the 53 amending motions are modest in terms of the changes they are introducing, but some of them are significant like the AFP amendments.”

The other two components of reform are modernization of construction lien and holdback rules and the introduction of a prompt payment regime for construction projects. Once they receive an invoice, owners would be required to pay general contractors within 28 days.

Bill 142 was introduced in May. Second reading approval came in October. The standing committee approved the bill as amended on Nov. 22, sending it back to the legislature for third reading.

Reynolds said if third reading and royal assent are accomplished in December, the work to create regulations under the new law could begin in the new year.

He said the ministry and the advisory group would be “looking to have the same sort of consensus with the regulations that we had with the bill itself.”

Reynolds said Naqvi has stressed there would be significant time for assimilation and education within the industry. Reynolds said the modernization component of the legislation would come into force six months after cabinet issues an order in council and the prompt payment and adjudication sections would come into force a year after the order in council.

Duncan, acknowledged as a leading Canadian expert on adjudication, said the process is derived from a U.K. system that has been in place for over 20 years.

“It will be different than you imagine it,” he said, in that it won’t be parties fighting in court, rather it will be adjudicators appointed by an authorized nominating authority undertaking an “inquisitorial” function and relying primarily on contract documents to make quick decisions — within 44 days of the delivery of a dispute notice.

In the U.K., he said, statistics show parties in a dispute end up adopting the interim solution once the build is complete around 98 per cent of the time.

The new Construction Act will retain Ontario’s lien options, said Duncan, along with other options for remediation such as going to court in the event a party decides not to accept the decision of an adjudicator.

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