6.2 - Construction Liens

In October 1992, the then Attorney General, Howard Hampton, formed an Advisory Committee on the Alternative Resolution of Construction Disputes. The Committee, which consisted of representatives from all major sectors of the construction industry, was asked to explore ways of preventing construction disputes and to consider alternative methods of dispute resolution.

In June of 1994, the Committee released a discussion paper entitled To many disputes! Too much Litigation! Dispute Resolution Opportunities for the Construction Industry. ^[1] Members of the Committee distributed the paper to their respective sectors, along with a questionnaire seeking input on the proposed recommendations. In view of the general support for the recommendations, no final report was issued.

While we do not propose to review all of the recommendations discussed in the paper, we would like to highlight the following which focus on alternatives to the court process and are of particular relevance to this Report. The Committee recommended:

• that the industry and construction lawyers should become familiar with alternatives to the court process, including mediation and arbitration;
• that alternative methods of dispute resolution be included in construction contracts;
• that the construction industry establish dispute resolution centres to inform and advise the industry about alternative dispute resolution and administer the resolution of disputes;
• that construction litigants should be required (by either legislation, rules of practice or Practice Direction) to participate in private mediation as early in the litigation process as practical;
• that the Law Society of Upper Canada establish a specialist designation in construction law so that those in the construction industry can easily identify lawyers with expertise.

Further to the recommendations in our First Report, ^[2] a Working Group consisting of representatives of the Judiciary, the Masters, the Ministry, the Construction Bar and the construction industry met in December 1995 to review these recommendations and other matters related to construction litigation. While the Group generally supported the recommendations in the Discussion Paper, particularly those relating to ADR, it was felt that it would take time before ADR is used widely in the construction industry. The Group pointed to the need on the part of the various construction associations to educate their members about the ADR process. We were also apprised of concerns that there is an insufficient supply of qualified mediators and arbitrators in some parts of the province, particularly outside the larger urban centres. As well, it was noted that there is a sense that ADR is being used primarily for matters relating to contract interpretation, structural flaws and other technical items, with parties resorting to the court system for the resolution of lien matters. The Group pointed out that the case management process utilized by the Toronto Masters has proven to be very effective in resolving lien matters.

Since our First Report, the Review has also received a further submission from the Construction Law Section of the Canadian Bar Association - Ontario. ^[3] The submission recommends, among other things, the establishment of a specialized construction circuit court, with Masters or equivalent judicial officials resolving these disputes.

Based on this additional input, the following observations can be made:

• construction lien matters are factually and legally complex requiring specialized knowledge on the part of both adjudicators and members of the bar;
• construction lien cases involve Ontario's second largest industry ^[4] , and the expeditious resolution of these disputes is not only in the interest of the parties but of value to the provincial economy as well;
• the construction industry is making increased use of ADR to avoid and resolve disputes; nonetheless, many disputes by their nature will continue to require recourse to the courts;
• construction lien cases typically involve multiple parties and documents and lend themselves well to case management; section 60 of the Construction Lien Act ^[5] , allows for settlement meetings which closely mirror our recommendations relating to settlement conferences for civil cases.

Having regard to the above, the Task Force makes the following recommendations.

RECOMMENDATION

We recommend that:

• construction lien cases should be case managed;
• the timeframes contained in the Construction Lien Act and in the proposed civil case management rules should be aligned as far as possible to ensure compatibility;
• in this regard, we suggest that the Construction Law Section of the Canadian Bar Association - Ontario be asked to consider this matter and report to the Ministry of the Attorney General with an appropriate proposal;
• construction lien cases, like other civil cases, should be subject to mandatory referral to mediation after a defence has been filed;
• there should be a specialized list for construction lien cases to ensure that they are dealt with quickly by knowledgeable people;
• it should be left to the discretion of the Chief Justice who should be assigned to hear these matters (i.e. whether Judges, Masters, or Case Management Masters) and the practice may differ from place to place.

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Footnotes:

^[1] Advisory Committee on the Alternative Resolution of Construction Disputes, Too many disputes! Too much Litigation! Dispute Resolution Opportunities for the Construction Industry (Province of Ontario, Ministry of the Attorney General: June 1994), at pp. 31 - 39.
^[2] First Report of the Civil Justice Review (Toronto: Ontario Civil Justice Review, March 1995), at p.306.
^[3] Final Submission to the Civil Justice Review: Canadian Bar Association - Ontario, Construction Law Section (November 24, 1995).
^[4] See Submission to the Civil Justice Review: Canadian Bar Association - Ontario, Construction Law Section (July 20, 1994), at p.3.
^[5] Construction Lien Act, R.S.O. 1990, c.C.30.

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