Skip to content

Client Update: Mechanics’ Lien Act reform

The Legislative Services Branch of the Province of New Brunswick has announced in issue 40 of the Law Reform Note, available online, its intention to reform the Mechanics’ Lien Act. The Note draws on similar legislative amendments that have been undertaken by other provinces, including most recently Ontario’s overhaul of its Construction Lien Act, which passed through the Legislative Assembly of Ontario late last year but will come into force on a date yet to be named.

Major changes to core elements of the Act are not planned; however, there are some significant proposed changes that are similar in scope to those implemented in Ontario and elsewhere. The Note primarily focuses on modernizing the Act to reflect changes in similar legislation across the country. A second note is expected to be released later this year which will deal with proposed amendments pertaining to prompt payment and dispute resolution.

Modernization of the Act

Modernization of the Act involves a number of amendments relating to liens, holdbacks, trusts, and surety bonding. The following changes are being considered:

  • Amending the definition of “improvement” to include “fixtures”.
  • Amending the definition of “owner” to reflect the commercial realities of the public-private-partnership model, where the owner may not clearly fall within the current definition.
  • The Act currently provides that the time within which a lien may be preserved is different for some parties (i.e. suppliers, equipment rentals or contractors). It has been recommended that the period be 60 days for all lien holders.
  • Adding “termination” as a triggering event for the time within which a lien holder must preserve its claim for lien.
  • Amending the rules and requirements for vacating claims for lien.
  • Prescribing how lien claims are to be filed against subdivisions, condominiums, and leaseholders.
  • Adding a requirement for suppliers to construction sites to provide actual notice to the owner of an intent to assert a lien. It is unclear whether this requirement would be limited to residential construction or would extend to all construction projects.
  • Reducing the statutory holdback from 15% to 10%, which is in line with the holdback provisions of almost all other provincial lien legislation.
  • Amendments to more clearly define the terms completion and substantial completion for the purposes of the time limits imposed by the Act. This reflects changes most recently made to Nova Scotia’s lien legislation.
  • Adding new provisions dealing with release of holdback mechanisms including early, phased, and segmented release of holdback. It is also suggested that the release of holdback be made mandatory rather than permissive, as is now the case.
  • Strengthening the trust provisions, including extending the provisions to include owners’ and vendors’ trusts.
  • Two options are discussed for protection of trust funds, particularly in the event of insolvency: (1) segregating holdback funds; or (2) enhanced record-keeping requirements. A third option, project bank accounts, is mentioned but not discussed at length. It is acknowledged that any of the options would create a more significant administrative burden on payors.
  • Expanding the right to information under section 32 of the Act.
  • Contracting parties may be permitted to opt out of the holdback and lien scheme where labour and material payment bonds are in place. If this is adopted, New Brunswick would be the first Canadian jurisdiction to have such a scheme in place.
  • Further penalties or an enforcement mechanism might be added to the Act to discourage non-compliance.

Prompt payment and dispute resolution

Prompt payment and changes to dispute resolution under the Act are briefly touched on in the Note; however, a second note from the Legislative Services Branch will set out more detail on these topics later this year.

Prompt payment legislation is in place in several other common law countries and is likely to be introduced in other jurisdictions in Canada now that Ontario has set out the prototype. Importantly, the Federal government is likely to introduce its own form of prompt payment legislation respecting construction contracts.

Ontario’s legislation includes some technical changes to its dispute resolution provisions, the most significant of which is the introduction of an adjudication model described as “pay now, argue later”. Adjudicators are nominated through a central Authorized Nominating Authority, which is responsible for development and overseeing training programs for adjudicators. Parties to a dispute would be empowered to refer it to adjudication respecting any of the following matters:

  1. The valuation of services or materials provided under the contract.
  2. Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order.
  3. Disputes that are the subject of a notice of non-payment.
  4. Amounts retained as set-offs.
  5. Payment of a holdback.
  6. Non-payment of holdback.
  7. Any other matter that the parties to the adjudication agree to.

The goal of adjudication is to fast-track disputes with interim decisions from an adjudicator within 39-60 days with a view to keeping a project moving. Parties are free to re-visit disputes at the conclusion of the project.

Draft amending legislation is not expected for some time. However, owners, contractors, subcontractors, suppliers, design professionals and others in the construction industry should keep abreast of this initiative and consider how the possible amendments could affect their commercial relationships going forward. Stakeholders have been invited to submit their comments on the Note to the Legislative Services Branch by February 15, 2018. The Legislative Services Branch contact information is:

Legislative Services Branch, Office of the Attorney General
Chancery Place, P.O. Box 6000, Fredericton, N.B., Canada E3B 5H1
Tel: 506.453.2855, Email: lawreform-reformedudroit@gnb.ca

This update is intended for general information only. If you have questions about how the information above may affect you, please contact any member of our construction group.

SHARE

Archive

Search Archive


Search
Generic filters

 
 

The Winds of Change (Part 4): A Review of Rental and Royalty Regimes for Wind Development on Crown Lands: Options for Newfoundland and Labrador’s Economic Wind Policy

August 3, 2022

By: John Samms, Sadira Jan, Paul Kiley, Dave Randell, Alanna Waberski, and Jayna Green As we explained in our July 6, 2022 “Winds of Change” article, the announcement made by Minister Andrew Parsons on April…

Read More

Update on the Economic Mobility Program for Refugees (phase 2): The Economic Mobility Pathways Project (“EMPP”)

August 2, 2022

Included in Beyond the Border – July 2022 By Brittany Trafford; Fredericton   Brief Overview In an attempt to address the Canadian labour market shortages, the Economic Mobility Pathways Pilot (“EMPP”), was introduced in 2018.…

Read More

HR Best Practices When Employing Foreign Workers

July 29, 2022

Included in Beyond the Border – July 2022   By Brendan Sheridan; Halifax Canadian employers are increasingly relying on foreign workers to fill gaps in the labour market and to provide specialized skills. In 2020,…

Read More

Beneficial Ownership Registry Rules Come to New Brunswick

July 28, 2022

By Alanna Waberski, Graham Haynes and Maria Cummings On June 10, 2022, the Government of New Brunswick proclaimed into force Bill 95, which amends the Business Corporations Act (New Brunswick) (the “NBBCA”) to require corporations…

Read More

Recent trends in defined benefits pension plans – a review of public sector plans

July 28, 2022

Included in Discovery: Atlantic Education & the Law – Issue 10 Hannah Brison and Dante Manna Increased financial volatility caused by recent global events has caused public sector defined benefit (“DB”) pension plans to reflect…

Read More

Atlantic Canada offers immigration pathways for workers in Trucking, Health, Construction and Food Service Industries

July 27, 2022

Included in Beyond the Border – July 2022 By Sara Espinal Henao; Halifax It is a well-known fact that Atlantic Canada needs workers. In the aftermath of COVID-19, regional employers in the trucking, health, construction,…

Read More

The winds of change (part 3): Newfoundland and Labrador releases wind energy guidelines

July 27, 2022

By: John Samms, Matthew Craig, Dave Randell,  and Jayna Green On July 26, 2022 the Province of Newfoundland and Labrador (the “Province”) released “Guidelines: Nominating Crown Lands for Wind Energy Projects” (the “Guidelines”). Described as…

Read More

Trends in tenure and promotion for unionized employers

July 25, 2022

Included in Discovery: Atlantic Education & the Law – Issue 10 By Kate Profit    Tenure is a well known and often discussed topic amongst academics. Viewed by unions as a cornerstone of modern universities,…

Read More

Car-Sharing Comes to PEI – Insurance Implications

July 22, 2022

Dalton McGuinty Jr. and Kegan Bradley On May 17th, 2022, Canada’s largest car-sharing company, Turo, brought their platform to Prince Edward Island. The service allows car owners (lessors) to lend out their vehicles to drivers…

Read More

Federal Government announces significant investments in Nova Scotian clean energy initiatives

July 21, 2022

Nancy Rubin & Tiegan Scott On July 21, 2022, the Federal government announced a new investment of up to $255 million for clean energy initiatives in Nova Scotia. The funds will be allocated in two…

Read More

Search Archive


Search
Generic filters

Scroll To Top