John Bleasby
Ontario’s new Construction Liens Act made simple
Canadian ContractorClear prompt payment rules and dispute arbitration guidelines at the heart of legislation
It’s been talked about for months. Finally, amendments to Ontario’s Construction Liens Act have been tabled in the provincial legislature this past week and are ready to be passed by the legislature, perhaps by month’s end.
Prompt payment according to pre-established timelines
For residential builders and renovators, the key elements of the amendments concern payment and dispute resolution, issues that can suck the life out of a hard-working contractor trying to make a living.
Contractors and clients can either design a payment-for-progress schedule of their own choosing, or revert to a default system outlined by the legislation. Under the default plan, contractors “would be required to submit invoices on a monthly basis,” according to the government release. “Once they receive an invoice, owners would be required to pay general contractors within 28 days. After they receive payment, general contractors would have to pay subcontractors within seven days. Subcontractors would be required to pay other subcontractors within seven days of receiving payment.”
Dispute mechanisms for non-payment kicks in quickly
In cases where there are disputes over the quality of work completed or the amount owing, clients would file “a notice of non-payment’ within 14 days of the invoice date.” However, undisputed amounts must be paid within the original 28 day timeframe. “Contractors and subcontractors would receive mandatory interest on late payments,” the government says. “They would also be able to suspend work on a project if the matter is heard by an adjudicator and the payer does not comply with the decision.”
Binding arbitration would reduce project delays
The adjudication system referred to is designed to speed up the payment process and reduce costly and time-consuming court litigation. “Adjudication would provide an interim binding decision in approximately six weeks.” Adjudication hearings are less formal than court proceedings, and while binding and non-appealable, they do not completely eliminate the possibility of “ordinary” court actions. However, they would provide an interim resolution while any court action proceeds, thus allow working to proceed on the project.
The Ontario government feels these measures are long overdue. “If passed, these amendments would bring Ontario’s construction laws up to date to reflect current construction industry practices and support the thousands of workers and businesses in this important sector.”
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Even still, if I complete work on the 1st of the month but my invoices don’t go in until the 30th of the month then I am still not getting paid until the 28th of the following month. That’s still almost 60 days to wait.
What type of work are you doing? Who are the customers?
Greg…There is nothing preventing you and your customer coming to another payment schedule agreement, such as weekly or bi-weekly. The Liens Act simply means that if you don’t have a payment schedule in your contract, the 28 day rules will apply.