Bill 142 – Public Private Partnerships

This is the next post in our series about Bill 142, the Construction Lien Amendment Act, 2017, which proposes certain amendments relating to the treatment of public-private partnerships. Our earlier discussion includes the prompt payment regime and mandatory adjudication.

The use of public-private partnerships in the construction industry, or “alternative financing and procurement,” has been growing significantly. The current Construction Lien Act is over 30 years old, and it does not contemplate the unique circumstances inherent in public-private construction projects, nor the relevant structures and contractual relationships. Many of these proposed changes codify existing industry practice, and provide welcome clarification.

Project company will be considered an owner in certain circumstances

For the purposes of certain sections of the new Act, including those pertaining to prompt payment and mandatory adjudication, the definition of “owner” has been expanded. It will now include the company established to run a public-private project on behalf of the public entity. In other sections, however, the public sector organization would be considered the owner of the premises. Similarly, the definition of “contract” in those sections is expanded to encompass the agreement between the contractor and said company.

Holdback payments for large-scale or multi-site public projects

Some public-private partnerships are formed to undertake large-scale projects that comprise multiple phases or geographical locations. In many cases, this is a cost saving measure to benefit from an economy of scale. However, it can also cause headaches for parties relating to holdback payments due to the scope. The new provisions will permit release of holdback on a phased or site-by-site basis. They will also permit a single contract for a “bundle” of sites or locations to be individual separate contracts for each site, simplifying release of holdback.

Surety bonds to be required for public-private partnership contractors

In any construction contract with the province of Ontario, a municipality, or a publicly funded organization with a price over a designated value, contractors will be required to post surety bonds for labour and material and for performance. If the general contractor defaults, these bonds ensure that their subcontractors have a right of action to recover the amount of their claim. The value at which this requirement is triggered is to be set by regulation.

Waterloo-area construction lawyers advising contractors and subcontractors

The construction law team at Duncan, Linton LLP regularly advises contractors and subcontractors regarding their legal obligations, and represents construction industry clients in disputes. We have been closely following the developments as Bill 142 moves towards becoming law, and can help any new or existing construction industry clients understand how the proposed amendments will impact their business. To discuss how these upcoming changes could impact your business, contact us online or call 519-886-3340.