The Ontario Construction Report – February 2010 – PAGE OCR 9
Construction Lien Act reforms:
Can bonded trustees protect lien rights?
“But we all know subs like (general
STAFF WRITER
contractors) are loath to push too hard and
– The OCR Construction Report
risk losing a client, hence few ever protect
themselves by using the Lien Act,” urston
Can a system of bonded trustees ensure says. “Most astute subs and GCs in the
sub trades are fairly paid and their lien business can see the signs that an owner or
rights are protected? At least one Ontario GC or sub is in trouble and should take
sub trade company president thinks this so- steps to protect htemselves but few do fore
lution will resolve payment issues, but the the reason I mentioned or because they
president of the Ontario General Contrac- have one of those ‘specia’ relationships and
tors’ Association (OGCA) doubts the an- assume they won’t end up on the short
swer will be effective. end.”
Joe Fiorini, president of Demand Air In a further email, Thurston noted that
Systems in Woodbridge, ON, wrote the fol- the system of individual accounts would be
lowing letter to The Ontario Construction an administrative and co-ordination night-
Report: mare, with hundreds of jobs going on at
any time.
“To whom it may concern: “The real question is just how often
“Further to your article on the Con- does the extreme case occur?”
struction Lien Act (December 2009) issue Thurston says the industry is working
. . . I would like to make a recommenda- with Government to update the Lien Act,
tion on how payment is made and monies great deal more invested in the projects across Canada. As a contractor I but the government hasn’t responded yet.
are distributed to the Trades. than the General Contractors. would feel much more secure if pay- “Don’t just blame the GC,” Thurston
“Our company has recently been in- “We are at the mercy of the General ments were to be made by a Bonded said. “Owners often use the holdback as a
volved on a job where the General Con- Contractors who may not be very good Trustee rather than a General Contrac- stick and refuse to release it, trying to apply
tractor has filed for Bankruptcy. This business person, who may not be aggres- tor.” it to other things such as deficiencies which
General Contractor had received progress sive in collecting monies owing to them, also is contrary to the rules. Subs are no
payments from the owner but failed to pay which in turn creates problems for us the However, Clive Thurston, president of different. They can go bust or walk away,
the Trades on this particular job, but chose TRADES. the General Contractors Association of On- and the GC ends up picking up the costs.
to pay the Trades on other projects, putting tario, said the idea simply isn’t practical. But again, just how bad is it.?”
his company and himself in Breach of “My recommendation is this: “This was proposed several years ago – A general contractor, who declined to
Trust. • “Monies would be distributed from the basically setting up individual accounts for be identified, also observed that sub trades
“Why is it an accepted practice to have Owner/Bank/Financeee company to a each project administered by the owner,” on many publicly funded projects have a
the General Contractor be the one respon- “Bonded Trustee” who is entrusted to Thurston says degree of protection through the bonding
sible to distribute monies to the Trades? distribute moniebasedd on the Archi- “(It) didn’t fly after long discussions. system, which means, even if the GC fails
The General Contractor is just another tect or consultant’s approval of the pr- While situations like this (where) a con- to complete the work and goes bankrupt,
trade on the job and one who has the least centage of work completed to the tractor (goes) bust happen, they are rare, they will have some ultimate recourse to
amount to lose because they may have only trades. and the same happens to owners and sub obtain their funds.
a site super and a labourer on the job, • “If my proposal was put into practice trades. It has nothing to do with any of us
whereas the other trades have labour, ma- a new industry would be created which not aggressively chasing our money be-
terials, and equipment invested. We have a would employ thousands of people cause we do.
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