You Bet Your Glass: June 2014
By FRANK FULTON
A faint hope for fairness
By FRANK FULTON
I’m really getting tired of paying bills and seriously considering just not paying them any more.
I’m really getting tired of paying bills and seriously considering just not paying them any more. I’m sick of paying income taxes and making HST remittances too. The only problem is that if I stop making these annoying payments, I can expect my gas and electricity to be shut off, leaving me in cold darkness, and I have every expectation that our government will charge me substantial interest before they garnish what they claim I owe them directly from my bank account. These remedies are available to my creditors without having to incur the expense of taking me to court. If they don’t get paid, they cut off my services or simply take the money from me. If, on the other hand, I am a glazing contractor who has supplied materials and manpower to a general contractor or building owner who chooses not to pay me, I have no such options. My only viable recourse is to take that party to court where the likelihood of me collecting more money than the cost of the legal proceedings is slim to none. Of course, I could put a construction lien on the building, but that option is so pathetic it seldom, if ever, gets me paid.
The current laws in Ontario’s Construction Lien Act do next to nothing to protect the glass and metal industry and we are forced to take on projects at significant financial risk. If I have a contract that stretches over a year and am not being paid my monthly draws, I am obliged to continue work and pay for materials and labour from my own pocket. If I stop work on the project, I will be found in breach of my contract by our courts and therefore become liable for the expense of delaying the project. According to Angelo Cairo, president of Stouffville Glass, “Lien rights are of absolutely no benefit to the glazing contractor. If you aren’t being paid, your best course of action is to complete the job and sue for payment in court.”
Tony Menecola, president of Applewood Glass and Mirror, states “The lien process is totally useless. I’ve placed three or four liens over the past 35 years and received money from one of them after a long wait. The only ones who benefit from registering a lien are the lawyers.”
There may be some relief and viable remedies to get paid on their way in the form of changes to the current legislation. The Ministry of the Attorney General of Ontario stated in a recent news release that his ministry is reviewing the Construction Lien Act. Bill 69 is a private members bill presented by Steven Del Duca, MPP for Vaughan, and is named the Prompt Payment Act. If the main provisions in the bill eventually make their way into law, financial risk on construction projects will be more equitably shared and the glazing contractor will finally have some recourse to collect money that is due to him or her.
The primary benefit to a sub-contractor would be the right to suspend work or terminate a contract. If a progress invoice is issued, the glazing contractor would be entitled to payment by the latter “10 days after the day a certificate is issued by a payment certifier in respect to the payment, if applicable, or 30 days after the day the payee submits the progress payment application.” The bill goes on to state that “A payee may suspend work or terminate a contract or subcontract if the payee is not paid a progress payment that the payee is entitled to under this Act,” subject to complying with a requirement for the submission of written notices. In addition to this major safeguard for glazing contractors, there are also improvements in the payment terms of holdbacks and the up-front disclosure of financial information by owners and contractors.
There has been huge kickback against this legislation from large contractors, developers, and municipalities. Unfortunately, they have been successful in derailing the bill as the Standing Committee on Regulations and Private Bills of the Ontario Legislative Assembly passed a vote to set aside Bill 69. However, arguments in favour of the proposed changes contained in the bill from many voices in the construction industry were so strong that the Ontario government has begun the process to make changes to the Construction Lien Act. Hopefully we will see meaningful prompt payment clauses added to the Act.
Frank Fulton is president of Fultech Fenestration Consulting. He has been in the industry for 30 years and can be reached via email at firstname.lastname@example.org