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Prompt Payment Legislation in Canada

Last October, Ontario reformed the Construction Act (formerly the Construction Lien Act) by introducing a new prompt payment and adjudication regime in the province. These changes were the final step in a three-year legislative process, the culmination of an effort to reduce payment delays in the construction industry.

Alberta is enacting similar measures – that province’s proposed legislation will transform their Builders’ Lien Act into the Prompt Payment and Construction Lien Act, and similar to Ontario, will require payment within 28 days, an extension of lien filing deadlines, and various other measures meant to provide a more even playing field for all interested parties in the construction industry.

However, it is not just Ontario and Alberta shaking up their legislative frameworks. Across Canada, several jurisdictions are enacting similar measures, including the federal government. Below, we provide a brief synopsis of what’s going on across the country:

  • British Columbia: The British Columbia Law Institute, a legal think tank in that province, released a consultation paper on the Builders Lien Act with various recommendations that construction industry stakeholders can comment on until January 15, 2020. The paper does not explicitly address prompt payment or adjudication and is strictly concerned with security of payments.
  • Saskatchewan: The Builders’ Lien (Prompt Payment) Amendment Act, 2019 received royal assent on May 15, 2019, but has not yet come into force. The Amendment Act introduces a prompt payment and adjudication regime like Ontario and includes transition provisions pursuant to which certain contracts will be “grandfathered” and subject to the lien legislation as it read prior to the amendments taking effect.
  • Manitoba: The Manitoba Law Reform Commission, an independent agency, made recommendations in 2018 to the Manitoba Government to significantly reform their existing lien legislation, including by introducing prompt payment and adjudication provisions.  These recommendations have not yet been implemented by legislation.
  • Quebec: Quebec’s Bill 108 amended the Act respecting contracting by public bodies and allowed the “Conseil du tresor” to facilitate payments to enterprises which are parties to certain public contracts and subcontracts. A pilot project launched in 2018 also introduced dispute settlement by adjudicators.
  • New Brunswick: The New Brunswick Office of the Attorney General recommended in both 2019 and 2020 that the province’s Mechanics’ Lien Act be reformed by introducing prompt payment and adjudication – however, stakeholders in the province were concerned that due to New Brunswick’s size, adjudicators may be tough to find. So, the province is considering the possibility of cooperation with other jurisdictions and the option of referring claims under $20,000 to Small Claims Court.
  • Nova Scotia: In Nova Scotia, the Builders’ Lien Act was amended by Bill 119, which received royal assent on April 12, 2019. The act was renamed Builders’ Lien and Prompt Payment Act. The bill uses similar concepts from Ontario’s new prompt payment regime but takes a narrower approach with regard to the availability of adjudication. The amendment limits availability of adjudication to disputes that are the “subject of a notice of non-payment.” Unless exempted by the regulations, the amendments are applicable to contracts and subcontracts made after the date of enactment.
  • Canada (federal): The federal government has passed its own legislation, the Federal Prompt Payment for Construction Work Act, as of June 21, 2019. However, it is not yet in effect. The legislation, similar to many of the provinces, seeks to remedy non-payment of contractors and subcontractors working on federal construction projects.

Many legislative changes are being enacted across the Canadian construction sector – please reach out if you’d like more information or advice for your construction business.

Written by Jeremy Power, a lawyer in Cotney Construction Law’s Toronto office. To contact Jeremy, please email jpower@cotneycl.com.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.