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Commercial Litigation, Construction

Adjudication process will expedite payments in construction sector

The introduction of an interim adjudication process to resolve payment disputes more efficiently is a welcome update to Ontario’s construction laws, Toronto commercial litigator Jeffrey Silver tells The Lawyer’s Daily.

“This procedure is put in place to address what are often significant delays in getting construction disputes resolved,” says Silver, principal of Jeffrey C. Silver Barrister in Toronto. “So essentially many of the types of issues that usually arise in a construction project such as the value of materials and services will be resolved through an adjudicator.”

As the article explains, the Construction Lien Amendment Act was passed by the Ontario legislature Dec. 5, updating the original legislation from 1983.

Under the new legislation, the adjudicator will have broad powers to request documents, similar to the model being used in Europe, Silver says.

“That’s a major change. Usually the judge or the construction lien master has to stay out of the fray,” he says.

The article notes that late payment is an ongoing issue in the construction industry: between 2002 and 2013, the average collection period increased from 57 days to 71. The new system aims to create consistency in the payment process, ensuring money flows through the “construction pyramid” more efficiently, Silver says.

“The owner wouldn’t have paid the general contractor, the general contractor wouldn’t pay his trades and then the sub-trades wouldn’t be paid,” he says. “That really affects the construction industry which is a large part of the Ontario economy and things would grind to a halt. All these things [in the Act] are to keep the money flowing in the construction pyramid and even when there are disputes to keep things going more smoothly.”

Amendments to modernize the lien and holdback process will be introduced first, followed by the prompt payment rules and the adjudication process, the article notes.

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