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Ontario’s New Construction Act to reform
industry dispute resolution, payment practices
Law expected
to set the new
standard for
the industry
in other
provinces Canadian Design and Construction Report staff writer
Following Royal Assent just before Christmas,
Ontario’s new Construction Act will radically reform
industry practices, including payment terms and dispute
resolution. The new law, enacted after years of lobbying by trade
contractors concerned about slow payment and
expensive dispute resolution processes, could establish
the framework for similar industry legislative reform in
other provinces.
Prompt Payment Ontario (PPO), an alliance of
contractor associations, unions, suppliers and general
contractors who advocate for prompt payment
legislation, has applauded the bill.
“This legislation could not have been introduced at a
better time, as higher interest rates will make delayed
payment unbearable,” said PPO director Ron Johnson.
“We hope that this groundbreaking piece of legislation
will set the stage for change across the country.”
But for the first few months this year, it will be
business as usual because most of the key legislative
provisions still need regulatory implementation and
proclamation, and there are many details yet to be
resolved. The legislation also includes grandfathering
provisions, meaning that existing projects and lien rights
will continue as before for existing and recently
completed projects.
Bill 142, the Construction Lien Amendment Act, 2017
(Ontario), came into force after years of lobbying by trade
contractors seeking prompt payment legislation. After
push-back three years ago when public agencies and
owners stalled a private members’ bill, the provincial
government contracted with lawyers Bruce Reynolds and
Sharon Vogel to conduct a comprehensive legislative
review. Reynolds says almost all of his proposed changes
were incorporated in the revised bill, including its new
name, The Construction Act.
Key changes include:
• Providing more time for contractors and
subcontractors to resolve their disputes outside of
court by extending timelines to file liens and start court
actions from 90 days to 150 days;
• Ensuring contractors and subcontractors know when
to expect full payment by requiring holdback funds to
be paid as soon as the deadline to file liens passes;
• Protecting subcontractors and workers if the general
contractor files for bankruptcy by requiring surety
bonding on public sector projects above a certain
amount; • Allowing condominium unit owners to remove liens
from their unit in relation to common elements (e.g.,
corridors, lobbies, etc.); and
• Referring construction lien claims under $25,000 to
small claims court.
The Canadian Design and Construction Report — Winter 2018 – 5