Canada’s Construction Law Modernization Movement
Last year, Ontario rolled out the first wave of changes to its construction lien law statute, with the remaining amendments launching this fall. Now that Ontario has successfully modernized its construction law, other provinces are exploring their options to modernize their own construction laws. British Columbia, Nova Scotia, and Saskatchewan have recently introduced or passed varying construction related legislation.
Introduced: Prompt Pay Legislation in British Columbia (BC)
In May, BC introduced Bill M223, which proposed to amend the Builders’ Lien Act to include prompt pay legislation. The law firm of Singleton Reynolds, reviewed the Bill in a recent article, British Columbia Introduces Prompt Payment Legislation, here are some of the highlights:
- The giving of a proper invoice on a monthly basis unless the contract provides otherwise
- A 28-day payment period following the receipt of a proper payment from a contractor subject to a notice of non-payment;
- A 14-day period for an owner to review a proper invoice prior to providing a notice of non-payment and a requirement to pay undisputed amounts;
- A 7-day payment period for a contractor to pay its subcontractors, subject to the giving of a notice of non-payment;
- Payment rules based on specific amounts unpaid and disputes with subcontractor work (i.e. payment on a rateable basis, as applicable) and a requirement to pay undisputed amounts to subcontractors;
- A requirement to undertake to adjudicate if a contractor issues a notice on non-payment on the basis of non-payment by the owner
Keep in mind, these are only highlights, and the Bill has just been introduced. As with many legislative processes, it will likely go through several iterations and take significant time before changes (if any) are made.
Introduced: Prompt Pay and Adjudication Legislation in Nova Scotia (NS)
Keeping up the theme of “let’s do what Ontario did,” NS has introduced its own prompt pay legislation; however, in its initial stages, the legislation doesn’t dictate the number of days in which payment must be made from one party to another. According to Singleton Reynolds, the prompt payment verbiage mimics that of Ontario:
- the “proper invoice” which must be given to an owner within a prescribed period of time or intervals unless the contract provides otherwise;
- the giving of a proper invoice cannot be conditional on prior certification of a payment certifier or on owner’s prior approval;
- upon receipt of a proper invoice, the owner must pay the amount within the prescribed time (which has not yet been prescribed by regulation) unless it chooses to dispute all or any portion of the amount payable by way of notice of non-payment;
- payments to the contractor and subcontractors must be made within prescribed periods of time (which have not yet been prescribed by regulation) and where there are multiple payees, they are to be paid on a proportionate basis; and
- interest will accrue on amounts not paid when due.
Unlike BC, NS has also included that a “party to a contract may refer a dispute that is subject of a notice of non-payment to adjudication pursuant to the procedure set out in the regulations.” Yes, parties may engage in adjudication. You can learn more and read commentary from the Justice Minister responsible for the Builder’s Lien Act in Singleton Reynolds’ article, Nova Scotia to Modernize Its Construction Legislation and Introduce Prompt Payment Adjudication.
Passed: Prompt Pay and Adjudication Legislation in Saskatchewan (SK)
SK introduced its prompt pay and adjudication legislation in late 2018. The legislation passed The Builders’ Lien (Prompt Payment) Amendment Act, 2018 in May 2019.
Much like Ontario’s enacted changes and BC’s proposed changes, the prompt pay statute dictates the owner shall pay invoices within 28 days of receipt from the contractor. Once the contractor receives payment from the owner, the contractor should remit payment to its subs/suppliers within 7 days. The subcontractor will remit payment to its subs/suppliers within 7 days of receipt from the contractor, and so on. If the owner does not pay the invoice in full within the time allotted, the contractor must pay its subs/suppliers within 35 days after giving the owner the invoice, and subcontractors must pay subs/suppliers within 42 days after the invoice was given to the owner.
Like NS, SK included adjudication legislation with its prompt pay legislation. Singleton Reynolds reviewed what disputes may be adjudicated under the new legislation in Saskatchewan Modernizes Its Construction Legislation.
Section 21.21 sets out the matters that may be adjudicated, including (but not limited to):
- the valuation of services or materials provided under the contract;
- payment under the contract, including with respect to a change order, whether approved or not, or a proposed change order;
- failure or refusal to certify substantial performance pursuant to section 41; and
- any other matter that the parties to the adjudication agree to.
Which Province is Next? How About Federal!
There is a bill being read in the House of Commons which proposes the Federal Prompt Payment for Construction Work Act. Now, I’m happy to see this bill is in reading, but I don’t want to get too excited — you may recall that prompt pay legislation has been on and off the table for years! Generally, the proposed federal legislation is also modeled after Ontario.
“The Bill borrows the Ontario prompt payment mechanism which, absent a dispute, requires Her Majesty or the service provider to pay the contractor within 28 days from the date of receiving a proper invoice. The payments must be made down the construction pyramid within the prescribed timelines… The Bill also borrows other concepts from the Ontario legislation such as notice of non-payment, payment timelines and adjudication.” – Prompt Payment and Adjudication for Federal Projects from the Osler law firm
The mystery of a seriously misleading UCC has struck the NCS blog! Check out this week’s post to learn more about the Georgia Bankruptcy Court’s decision to deem one creditor’s security interest as unperfected. Read Can You Solve the Mystery of the Seriously Misleading UCC Filing?
- June 25: Trends in Securitization and Impacts of Natural Disasters, presented by The Credit Research Foundation & NCS
- July 9: Equipment UCC Filings
- July 16: Post 2010 Amendments, Article 9 of the Uniform Commercial Code is Popping Up in Courts
- July 23: Bond Claims and Public Construction
- July 30: Understanding the Mechanic’s Lien Process for States with Notices of Non-Payment
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