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Ontario offers prompt payment lessons

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by Steve Ness

Ontario's effort at enacting legislation to enforce timely payment of monies due on construction work came to an abrupt end earlier this year.
Ontario offers prompt payment lessons
Photo: Steve Ness

On Mar. 28, 2014, Attorney General Madeleine Meilleur announced that the government was withdrawing its support for Bill 69 – Prompt Payment Act and would instead make prompt payment part of a broader objective of updating the province's Construction Lien Act.

When Bill 69 was introduced in May 2013 and received second reading three days later, several influential stakeholders were completely blindsided.

This gave rise to a fierce backlash with would-be supporters now complaining (justifiably) that the measure was being unnecessarily fast tracked without adequate due diligence or consultation.

This was reflected in the bill itself, which was fraught with flawed provisions that if passed, could have created more problems than it solved.

In the end, Bill 69 Prompt Payment Act was shelved for three primary reasons:

There were problems with the bill itself.

There were many serious issues, some of which were "over-arching" (e.g. conflicts with existing legislation such as the Construction Lien Act) which made it impractical to address by repairs and amendments.

There was also polarization among key stakeholders.

Again, much of this could have been prevented by full consultation with all affected parties and a slower, more measured process.

Lastly, electoral politics and timing came into play.

Bill 69 was a private members bill, which was introduced to the house under a minority government that was in survival mode and simply had other more pressing priorities.

The Wynne Liberals were not about to expend scarce political capital on a measure as controversial as this.

What happens next is anyone's guess.

Will the newly re-elected Liberals, armed with a majority, make good on their pre-election commitment to revisit the prompt payment issue as part of a new and improved Construction Lien Act?

Time will tell.

Either way, it's encouraging to learn that other provinces are moving toward enacting their own prompt payment measures.

To the sponsors/supporters of these efforts, I offer this advice that will hopefully help to avoid some of the pitfalls encountered in Ontario: Consult, consult, consult.

Make sure that all affected stakeholders are brought into the process at the outset.

Making everyone happy will be an elusive and likely unattainable goal. Compromise will be inevitable, but only by allowing feedback from all sides you can avoid making powerful enemies that can polarize the debate and seriously impede the passage of effective legislation.

Take the time to get it right.

While the issue is pressing and serious, it doesn't need to be fast-tracked. Make sure all the homework is done and issues are addressed.

An integral part of this effort will be ensuring that any draft legislation is relevant to current conditions. Construction procurement, delivery and contracting practices have undergone monumental changes since the adoption of the most recent prompt payment laws in other jurisdictions.

It's imperative that any new legislation reflects the payment protocols that arise from public-private partnerships, construction management and other innovative procurement/contracting arrangements.

Cultivate champions within the government ranks that will ensure government and ministerial support. Private members bills are legislative longshots even under the best of circumstances.

Without the investment of senior government officials, these measures, no matter how meritorious their objectives, are too easily sacrificed at the altar of political expediency.

In Canada, we lag behind the rest of the industrialized world in providing legislative assurance of timely payment for construction services.  The good news is that we seem poised to close the gap and I submit that legislation to address prompt payment issues will inevitably be enacted in all provinces and territories. It's long overdue.

Steve Ness is the president of the Surety Association of Canada. Direct all comments and questions to editor@journalofcommerce.com.

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