LEXPERT MAGAZINE
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JANUARY/FEBRUARY 2017 13
period. Reynolds and Vogel received more
than 70 written submissions from industry
groups and consulted with construction
law experts around the world.
"e recommendations take into ac-
count the nature of Ontario's construction
industry and legal landscape and drew
upon the foundational knowledge and
experience of other countries, including
the United States, the United Kingdom,
Australia, Singapore, Malaysia and Hong
Kong," Reynolds says.
e report's two primary concerns,
prompt payment and dispute resolution,
are inextricably intertwined. "When dis-
putes happen in the current system, the
chain of payments goes into gridlock,"
Vogel says. As she and Reynolds see it, ad-
judication – in place in the UK for almost
two decades and in many other jurisdic-
tions as well – is the tie that binds.
"Adjudication ... provides for interim
binding dispute resolution within 28 to
42 days and therefore frees up cash flow
and resources," Vogel says. "Parties who are
dissatisfied with the result can proceed to
arbitration at the end of the project, but the
experience in the UK is that these disputes
... are almost never reopened."
Successful adjudication does not require
the parties to agree
to anything.
"For example, if
parties can't agree
on an adjudicator,
there is a mechan-
ism for appointing
one within days,"
Reynolds explains.
"Adjudicators can
be drawn from any-
one with expertise in the area, including
engineers, quantity surveyors and lawyers."
On the other hand, the process is flex-
ible enough to allow the parties to agree
Construction laws due for overhaul
Concerns of the prompt payment movement will inform changes to Ontario's Construction Lien Act BY JULIUS MELNITZER
to most anything. "Parties can devise their
own adjudication procedures as long as they
meet the minimum statutory requirements
found in the regulations," Vogel says.
If payment is not
made following ad-
judication the payee
has the right to sus-
pend work. Under
the current system,
suspending work in
the face of a dispute
amounts to a breach
of contract allowing
for termination.
ere's no question that adjudication
amounts to rough justice. "Courts have rec-
ognized that adjudication is by its nature an
inquisitorial model with broad discretion
in the adjudicator," Reynolds say. "Appeals
are available only on very limited grounds,
confined to whether the adjudicator asked
the wrong question or perpetrated a gross
violation of natural justice."
All indications are that the Ontario
government intends to act on the recom-
mendations with dispatch. "e attorney
general has made a number of public state-
ments saying that he is very pleased with
the report and was quite clear that he in-
tends to act upon it," Reynolds says.
e feedback from stakeholders who
have reviewed the report has also been
positive, according to Vogel. "e attorney
general's office has advised that the gov-
ernment is committed to introducing the
legislation in the spring of 2017," she says.
If the report's recommendations come
to pass, "e construction bar will have to
make fundamental and profound chan-
ges," Reynolds says. "ere will be no more
scheduling at the convenience of counsel,
for example. On the other hand, nobody's
taking up collections for the construction
bar in London."
IF BRUCE REYNOLDS and Sharon
Vogel of Borden Ladner Gervais LLP have
their way, Ontario's construction sector is
on the verge of a major legislative overhaul
that will fundamentally alter the way it
does business.
In late September, the government re-
leased the report that followed on the two
lawyers' mandate to review the Construc-
tion Lien Act. e report, completed in
April, focused on the construction lien/
holdback regime, promptness of payment,
and modernization of construction dispute
resolution including the use of adjudication.
e broad-ranging recommendations –
more than 100 of them – address lienabil-
ity; the preservation, perfection and expiry
of liens; holdback and substantial perform-
ance; summary proceedings; prompt pay-
ment; and adjudication.
e current review can be traced back
to Bill 69, known as the Prompt Payment
Act, 2014. Tabled in December 2013, its
origins can be found in a worldwide move-
ment centred in the United States and the
United Kingdom, and directed at fighting
back against the elongation of the payment
cycle caused by the increased complexity of
modern commerce. But the government
withdrew Bill 69 aer strenuous oppos-
ition from the province's municipalities,
general contractors and other government
ministries, many of whom complained that
they had not been consulted.
e death of Bill 69, however, only fueled
the prompt payment movement further.
"ere was really quite a lot of political
pressure for the province to somehow ac-
cept the principle of prompt payment,"
Reynolds says. "Our review was the gov-
ernment's response."
e current report is the product of
extensive research and consultation with
more than 60 stakeholders in Ontario's
construction industry over a three-month
BRUCE REYNOLDS
>
BORDEN LADNER
GERVAIS LLP
SHARON VOGEL
>
BORDEN LADNER
GERVAIS LLP
INFR ASTRUCTURE SPECIAL
