RC104 JanFeb2023 - Magazine - Page 32
LEGAL
GETTING PAID
The migration of prompt payment and adjudication across Canada
by James K. Little and Natasha R. Rodrigues
ARGETED AT IMPROVING SYSTEMIC late payment and dispute
resolution problems in the construction industry,
security of payment legislation (focused on prompt
payment and adjudication) has been either tabled
or enacted in various provinces across Canada
following its introduction in Ontario in 2016. Below
we provide a brief status update of the development of
prompt payment and adjudication legislation in various
Canadian provinces.
T
ONTARIO
James K. Little
is a Partner in the
Construction and
Infrastructure Practice
Group at Singleton
Urquhart Reynolds
Vogel LLP.
Natasha R. Rodrigues
is an Associate in
the Construction and
Infrastructure Practice
Group at Singleton
Urquhart Reynolds
Vogel LLP.
Ontario was the first province to enact
prompt payment and adjudication
legislation, which came into force on
October 1, 2019. The amendments to the
former Construction Lien Act “modernize the construction
lien and holdback rules; help make sure that workers and
businesses get paid on time for their work; [and] help
make sure payment disputes are addressed quickly and
painlessly.” This legislation was built upon foundations
from the security for payment legislative movement that
has blossomed across the world in countries such as the
United Kingdom, Australia, New Zealand, Singapore,
Malaysia and others.
Ontario’s legislation introduces adjudication and
prompt payment in conjunction with construction lienbased security—a novel approach as compared to other
jurisdictions. Ontario set the tone for prompt payment
by requiring payment within 28 calendar days of receipt
of a “proper invoice.” The legislation also has flow down
payment requirements (e.g., within seven calendar days)
as well as statutory requirements for delivering a notice of
non-payment prior to set off. It includes detailed adjudication provisions that work in conjunction with prompt
payment in an effort to streamline resolution of construction disputes of all sizes.
While in place in since October 2019, it is still in a
nascent stage. Time will tell how adjudications develop
and whether they become more prominent in Ontario.
We can expect more details on this development from the
Ontario Dispute Adjudication for Construction Contracts
(ODACC).
32 RENEW CANADA — JANUARY/FEBRUARY 2023
MANITOBA
Manitoba developed Bill 28: The Prompt
Payment for Construction Act, which
received its first reading on March 16,
2022. This bill adopts a number of
provisions from Ontario’s Construction Act.
Bill 28 introduces prompt payment and adjudication
provisions requiring an owner to pay a contractor no later
than 20 days after a contractor’s proper invoice is approved. A contractor would then subsequently be required
to pay its subcontractors and suppliers within seven days
of receiving payment from the owner or 27 days after the
subcontractor’s proper invoice is approved. If an owner or
general contractor defaults on a payment by the prescribed
deadline, the party who is owed the money (the contractor
or subcontractor) may suspend the work 10 days after it
has provided written notice. Bill 28 in its current form also
includes an interim adjudication regime in accordance with
regulations. As currently drafted, Bill 28 contains one of the
most aggressive timelines for payment across Canada.
SASKATCHEWAN
On March 1, 2022, The Builders’ Lien
(Prompt Payment) Amendment Act, 2019 in
the province of Saskatchewan came into
force, introducing prompt payment and
adjudication regimes which, like Ontario, coexist with the
province’s lien regime.
There, the trigger for payment is the submission of a
“proper invoice” to the owner, which requires an owner to
pay a contractor within 28 days unless the owner submits
a notice of non-payment in the prescribed form within 14
days. Once a contractor receives payment, the contractor
must then provide payment to its subcontractors within
seven days of receiving payment.
The Builders’ Lien (Prompt Payment) Amendment Act, 2019
also introduces an adjudication regime overseen by the
Saskatchewan Construction Dispute Resolution Office.
The new legislation sets out the matters that may be adjudicated, including: the valuation of services or materials
provided under the contract; payment under the contract,
including in relation to a change order; failure or refusal to
certify substantial performance; and any other matters that
the parties agree to.
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