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You Bet Your Glass – Prompt payment devil will be in details

I’m not happy and am somewhat crestfallen.

If you are a regular reader of You Bet Your Glass, you’re well aware of OGMA’s involvement with Prompt Payment Ontario and our long running battle to get legislated fair payment terms for the glazing contractor trade.

I had great hope that the Review of the Ontario Construction Lien Act would make recommendations that would improve the fairness of the laws governing construction in our province and once and for all put into law that trades must be paid in a timely manner. The review document called Striking the Balance: Expert Review of Ontario’s Construction Lien Act was made public by the Ministry of the Attorney General at the end of September. The ministry has committed to completing the draft legislation by the end of May.  

Here are some of the highlights from the review:

“We recommend that a prompt payment regime be legislated in Ontario and that it be applied to both the public and private sectors.  Prompt payment should be implemented by creating a statutory scheme to be implied into all construction contracts that do not contain equivalent terms…

“We recommend that the trigger for payment should be the delivery of a proper invoice; provided that certification for payment (if there is certification for payment provided in the contract) must follow submission….

“As between owner and general contractor a 28 day payment period be applied, that is triggered by the submission of a proper invoice.  As between general contractor and subcontractor, a further 7 days from receipt of payment from the owner would be required, and so on down the contractual chain….

”The time period for preservation of a lien should be extended to 60 calendar days…

“We recommend that adjudication be implemented as a targeted interim binding dispute resolution method available as a right to parties to construction contracts and subcontractors in both the public and private sectors in Ontario [and] that the decision of an adjudicator should be binding on the parties and they should comply with the decision until either: a) the dispute is finally determined by legal proceedings or arbitration; or b)by agreement by the parties that the decision of the adjudicator is finally binding…

“The Act should be amended to provide for the mandatory release of holdback, but not the mandatory early release of holdback…”

“We recommend that the Act should be amended to permit partial release of holdback on either a phased or annual basis, if provided for in the construction contract entered into by the parties, subject to a significant monetary and time-based threshold in the case of annual release…

“We recommend that the current scheme should be supplemented by allowing the replacement of cash holdback with a Letter of Credit or a demand-worded Holdback Repayment Bond…

“The Act should be amended to require broad form surety bonds to be issued for all public sector projects…

“The Act should be amended to require sureties to pay all undisputed amounts within a reasonable time from the receipt of a payment bond claim.”

Now, you’re probably wondering what kind of Electric Kool Aid Fulton’s been drinking and what can he possibly be unhappy about.  All of these recommendations look like a big win for our trades!  Unfortunately, for all these good points being recommended there are a whole pile of takeaways.  We’re still trying to negotiate these points but probably won’t know how successful we’ve been until the draft legislation is released. The devil will be in the detail. I’ll tell you about the source of my angst in the next edition.