Construction Lien Act: Proposed Regulations
Bill or Act:
Construction Lien Amendment Act, 2017
Summary of Proposal:
Bill 142, Construction Lien Amendment Act, 2017, which received Royal Assent on December 12, 2017, amends the Construction Lien Act (the "Act") to:
• Modernize the construction lien and holdback rules in the Act;
• Introduce rules around prompt payment; and
• Establish an adjudication process.
The amendments require supporting regulations relating to:
2. Procedures for Actions under Part VIII;
3. General (e.g. monetary thresholds for surety bonding and holdback and notice requirements); and
4. Adjudications under Part II.1 of the Act.
The forms regulation amends existing forms to update the name of the legislation and prescribes 18 new forms to support the amendments to the Act.
The court procedure regulation contains procedural provisions that were removed from Part VIII of the Act in order to enable greater flexibility for future amendments, if necessary. Provisions that are identical to procedures under the Rules of Civil Procedure have been omitted. Subsection 50(2) of the Act provides that the Courts of Justice Act and the rules of court apply to actions under Part VIII except to the extent that they are inconsistent with the Act and prescribed procedures.
The general regulation sets out the monetary threshold for surety bonds on public sector construction projects and for the annual and phased release of holdbacks. It also prescribes various notice requirements, including notices of non-payment.
The new adjudication process established in the amended Act will be used to resolve payment disputes that could result in project delay. A private body, designated by the Minister to act as "Authorized Nominating Authority" (ANA), will develop and oversee training and certification for adjudicators, maintain a registry of qualified adjudicators, and perform other functions.
The adjudication regulation is necessary to implement the adjudication process established in the Act. Among other things, the regulation prescribes (i) criteria for an entity to be designated by the Minister to act as ANA; (ii) the qualification and training requirements of adjudicators; and (iii) the duties and powers of adjudicators and the ANA, in addition to those set out in the Act. The regulation also proposes various adjudication processes, including procedures related to consolidated adjudications.
Analysis of Regulatory Impact:
The proposal would not create an additional regulatory impact. Instead, it would ensure that the amendments to the Act are successfully implemented by setting out the details and procedures necessary to bring the changes into effect.
The general regulation sets out the monetary threshold for surety bonds on public contracts and the minimum coverage limit for surety bonds on alternative financing and procurement arrangements. The minimum threshold would likely result in additional costs to business and increase the cost of public construction projects. The ministry is currently assessing the estimated cost.
February 9, 2018
Comments Due Date:
March 8, 2018
Ministry of the Attorney General
Corporate Policy Unit
720 Bay Street, 7th Floor
Toronto, ON M7A 2S9