The new Construction Act passed unanimously this month. Introduced in the spring, it has been a high priority for the provincial government and is seen as a step towards a more modern industry for Ontario.
Improving the construction industry through prompt payment and mandatory adjudication
One of the most anticipated changes in the new bill is the prompt payment regime: an owner will need to pay each proper invoice within 28 days, and a contractor will need to pass payment on to subcontractors within 7 days. Payment delays are a persistent problem in the construction industry. These delays reduce productivity and discourage investment across the sector. The delays burden and can bankrupt individual contractors and subtrades, who require regular payment in order to manage payroll and construction expenses (and have a predictable income from their work).
Combined with a new mandatory adjudication process that creates a “quick and dirty” means of resolving disputes over matters like payments, valuation of services and materials, holdback disputes, and set-off claims, these mechanisms aim to allow parties to resolve their disputes with fewer interruptions and delays to construction projects.
Industry stakeholders should prepare for dramatic changes
These legislative changes are going to have enormous implications for every participant in the construction industry, particularly for dispute resolution but also for precedents, procedures, and future contract negotiations. Contracts will need to be carefully amended in order to comply with the Act, and existing procedures should be reviewed to ensure that they are lawful (and competitive) under the new regime. Businesses will also need to navigate the new adjudication regime, which will operate apart from traditional construction litigation.
Timely advice for construction industry stakeholders about Bill 142
These changes are inevitably going to create challenges for industry participants as they work to adjust to a new regime. At Duncan, Linton LLP, our construction law team works closely with businesses and stakeholders of all sizes to meet their unique legal needs.
We advise contractors, subcontractors, owners and other participants about the impact that Bill 142 is going to have on their operations, in order to provide guidance as the industry adapts. To speak with one of our lawyers, contact us online or call 519-886-3340 to make an appointment.