Will New Brunswick be the Next Province to Modify Its Mechanic’s Lien Act?
Earlier this year, Ontario rolled out its first wave of changes to its Construction Lien Act. Now, New Brunswick is getting in on the mechanic’s lien re-vamp action with proposed changes to its prompt payment statute and dispute resolution options.
First, Lien & Claim Rights in New Brunswick
For those furnishing to private projects in New Brunswick, there isn’t a preliminary notice requirement, however serving a non-statutory notice may be beneficial. The lien should be filed within 60 days from last furnishing materials or materials and services. If you are providing services only, the lien should be filed within 30 days from last providing services. Suit to enforce the lien should be filed within 90 days from filing the lien or within 90 days from the expiry of the credit period mentioned in the lien.
Furnishing to a public project? Rights are likely dictated by the terms of the bond, if a bond was required. On Crown Construction contracts of $500,000.00 or more, a bid bond and a payment bond will be required. On Crown Construction contracts less than $500,000.00, a bid bond and a payment bond may be required.
Serve a bond claim in accordance with the terms of the payment bond. Frequently, a bond claim notice is required within 120 days from last furnishing materials or services. The deadline for filing suit is also dictated by the terms of the bond but is frequently required within 1 year from last furnishing materials or services.
Adding Prompt Pay & Dispute Resolution
A recent article by Edward W. Keyes and David J. Shore (authors), suggests that New Brunswick’s legislature will likely model its changes after Ontario’s statute, targeting the addition of prompt pay and dispute resolution.
“The New Brunswick Legislative Services Branch is interested in implementing a similar prompt payment scheme to the one adopted in Ontario. The Ontario prompt payment scheme includes the following provisions:
- Payment by an owner is triggered upon delivery of a “proper invoice” by a contractor.
- After receiving an invoice, an owner is required to pay the contractor within twenty-eight days.
- An owner who disputes an invoice may issue a notice of non-payment within fourteen days of receiving a proper invoice.
- If an owner does not issue a notice of non-payment to a contractor, the contractor is required to pay all relevant subcontractors within seven days of receiving payment from the owner.
- If an owner issues a notice of non-payment to a contractor, the contractor is still required to pay all relevant subcontractors within thirty-five days of delivering the proper invoice to the owner.
- A contractor who is not paid by the owner can issue a notice of non-payment to its subcontractors. The contractor must then refer the dispute with the owner to adjudication within 21 days of giving the notice to their subcontractors.
- A subcontractor is required to pay all relevant sub-subcontractors within seven days of receiving payment from a contractor.”
Authors go on to say that although New Brunswick seems to be onboard with mirroring Ontario’s prompt pay provisions, it may be a little leery of dispute resolution. Why? New Brunswick may not have enough adjudicators.
“The Legislative Services Branch has expressed some concern that Ontario’s scheme might not function well in New Brunswick, as there may not be a large pool of adjudicators to draw from. Manitoba has considered a similar problem, and has thought about expanding its Small Claims Court system to address this issue. However, the NB Legislative Services Branch is not convinced that sending construction disputes to Small Claims Court would lead to time-efficient results. Therefore, the NB Legislative Services Branch is currently awaiting further feedback on this issue.”
In an earlier post we discussed Ontario’s adjudication process and who can be an adjudicator. According to Ontario’s Lien Act, an adjudicator must meet the following requirements:
- The individual has, in the Authority’s view, at least 10 years of relevant working experience in the construction industry.
- The individual has successfully completed the training programs provided under clause 8 (a), subject to subsection (4) of this section.
- The individual is not an undischarged bankrupt.
- The individual has not been convicted of an indictable offence in Canada or of a comparable offence outside Canada.
- The individual pays to the Authority any applicable fees for training and qualification as an adjudicator listed in the schedule of fees under section 9.
- The individual agrees in writing to abide by the requirements for holders of certificates set out in section 4.
Will they? Won’t they? New Brunswick’s law reform notes were open for commentary/suggestions through mid-July. Stay tuned!
How much money makes a mechanic’s lien claim excessive or frivolous? According to one Nevada court, $1,371,187.44. In this case, the subcontractor filed a lien for $2,117,602.78, which was contested by the general contractor. The court deemed the subcontractor’s mechanic’s lien excessive and ordered the claim to be reduced to $746,415.34. Let’s review mechanic’s lien rights in Nevada and the case at hand.
NCS Webinars & Events
Here’s a glance at our upcoming webinars!
- An Advanced Look at the UCC Process (11/06 @ 1:00 pm)
- An Advanced Look at the Lien and Bond Claim Process (11/13 @ 1:00 pm)
- Implementing a UCC Program: Overcoming Obstacles (11/27 @ 1:00 pm)
- Implementing a Lien/Bond Claim Program: Overcoming Obstacles (12/4 @ 1:00 pm)
- Due Diligence When Selling to Minority Contractors (12/11 @ 1:00 pm)
Check out our Events Page for more