Modernization of the Construction Lien Act

In 1983, the Ontario Construction Lien Act came into force, and with the exception of a few minor amendments, it had remained unchanged for 35 years.

In 2015, the Ministry of the Attorney General undertook a review of the Construction Lien Act,  which sought input from stakeholders in the industry, and in September 2016 released a report titled Striking the Balance: Expert Review of Ontario’s Construction Lien Act (the “Review”). The Review identified 101 recommendations organized around three key principles:

1. The modernization of the construction lien, holdback and trust rules;
2. The introduction of a prompt payment regime; and
3. The introduction of an adjudication regime for the quick resolution of construction disputes.

The recommendations related to the modernization principle called for amendments that would align the legislation with current industry realities and practices. First, it was necessary to take into account the new forms of complex contractual arrangements (in particular public-private partnerships and joint ventures) and the increasing size and complexity of the projects. Second, many of the existing definitions, monetary thresholds, timelines and procedural steps provided in the legislation were having an effect contrary to that originally desired, with crippling consequences on all stakeholders. Third, the trust provisions in the legislation were not sufficiently focused on the prevention of breaches and on the enforcement of trust obligations, particularly in the context of the bankruptcy of a trustee.