Seeking Prompt Payment
by Frank Fulton
Originally published in Glass Canada Magazine, June 2015 Issue
A bid for fairness
A full year has now passed since Bill 69 was set aside by the Standing Committee on Regulations and Private Bills of the Ontario Legislative Assembly. You may recall that Bill 69, named the Prompt Payment Act 2014, was a private member’s bill presented by Steven Del Duca, Member of Provincial Parliament for Vaughan. Its main provisions would have seen that the financial risk on construction projects would be more equitably shared and would have provided subcontractors with greater recourse to collect money owed to them.
The negative feedback from a few large contractors, developers and municipalities, intent on keeping the playing field tilted in their favour, was so great that the bill was derailed. At the same time, so strong were the arguments in favour of the proposed changes contained in the bill that the Attorney General of Ontario made a commitment to review and make changes to the existing provincial laws.
The promised action, now just underway a year later, is “the launching of an expert review of the Construction Lien Act that will include the examination of payment issues within the construction sector.” The Ontario Ministry of the Attorney General has appointed Bruce Reynolds as counsel to conduct the review, which will involve extensive consultation with the construction industry followed by a report with recommendations to the province by December 2015. Bruce Reynolds is a senior partner at Borden Ladner Gervais LLP, the chair of BLG’s International Construction Projects Group and an internationally ranked construction practitioner.
The current version of the Construction Lien Act was enacted in 1983 and sets out a complex system of rights and trust provisions to provide financial protection to construction suppliers and landowners while working to balance the interests of the many other parties to a construction project. It does not deal with payment of money owed from one party to another or what to do when payments are late. It is anticipated that the review will focus on reducing the financial risks companies face when they are not paid for services on time; making sure payment risk is distributed fairly among all industry participants; and finding ways to ensure that companies pay for services and supplies on time.
The outcome of this lengthy review process will determine the playing field for our industry well into the future. Its importance to your business cannot be overstated. It may entitle the glazing contractor to payment in a set time frame. It may determine and legalize your right to suspend work or to terminate a contract due to non-payment. It may improve your payment terms of holdbacks and it may set the rules for the upfront disclosure of financial information by owners and contractors.
These improvements to the act will only happen if our glass and architectural metal industry and the construction industry in general can present strong arguments to convince the review commission that the current laws are unfair and that it is in the best interests of the construction community to change them. What is certain is that the opponents to prompt payments, the large contractors, developers, and municipalities, will be well-prepared and unified in their objection to change and will make sure to be heard loud and clear.
On behalf of our industry, the Ontario Glass and Metal Association has made a formal application to the legal firm conducting the review to present our arguments in favour of changes to the act. The strength of our presentation will depend greatly on the support of our industry. To this end we are asking you to provide us with your experiences where the current laws have let you down or caused you financial loss and legal expense. Please contact me directly, and I can assure you that all replies will be held in strict confidence and that no information will be disclosed without your explicit consent.
Frank Fulton is president of Fultech Fenestration Consulting. He has been in the industry for 30 years and can be reached via email at email@example.com.