Prompt payment legislative updates in Canada
Several provinces across Canada have enacted legislation in recent years to streamline and expedite the determination of construction payment disputes. The Province of British Columbia was one of the last remaining provinces without prompt payment legislation. British Columbia recently introduced its own proposed legislation. Ontario, which was among the first provinces to introduce prompt payment legislation, has also introduced proposed amendments including significant changes to its own legislation.
British Columbia Bill 20 - Construction Prompt Payment Act
The Province of British Columbia has now introduced Bill 20, the Construction Prompt Payment Act. The proposed legislation aims to simplify and expedite the adjudication of payment disputes in the construction sector to prevent project delays and time-consuming litigation. The central feature of the proposed legislation is an arbitral framework that will avoid the need for many payment disputes to be resolved in the Courts.
Under the new legislation, owners will be required to pay invoices within 28 days of receipt or formally issue a notice of objection which will be subject to a summary adjudication process. Additionally, contractors must pay subcontractors within 7 days of receipt of payment or within the time calculated based on their position in the contractual chain. The new deadlines are designed to promote fairness and provide clear expectations amongst all parties regarding payment timelines.
When a payment dispute arises, either party may refer the matter to adjudication. Some of the key features of the proposed legislation include that contractors may withhold payment if unpaid by the owner and invoices are to be issued monthly in most cases. The legislation also creates limited opportunities for judicial review or appeal of an adjudicator's decision.
Along with proposed amendments to the British Columbia Builders Lien Act, the new prompt payment legislation is intended to eliminate certain types of construction liens. These legislative changes will streamline the available types of construction liens and simplify the remedies available to parties holding potential lien interests.
We continue to monitor the proposed legislative changes as further details continue to be released. Key ongoing considerations include what qualifications will be required for independent adjudicators and whether parties will be able to secure suitable adjudicators in a timely manner.
Ontario legislative updates
Ontario was the first major province to introduce prompt payment legislation several years ago. The Province of Ontario recently introduced proposed amendments to its prompt payment framework in efforts to improve some elements of the prompt payment system.
One of the key limitations of Ontario’s prompt payment framework has been a lack of qualified adjudicators to allow timely hearing of payment disputes. The proposed legislative amendments will permit parties to mutually agree to utilise adjudicators outside the official roster of accredited adjudicators. This creates opportunities for parties to obtain the services of adjudicators with specific subject matter expertise relating to their dispute. It may also enable parties to expedite adjudication by paying additional amounts to use adjudicators with better availability.
Key takeaways
Prompt payment frameworks continue to develop across Canada and are now in force in most provinces. Provinces are also now taking steps to address issues with prompt payment schemes, most notably the difficulty in securing the services of qualified adjudicators in a timely manner due to limitations regarding adjudicator availability. We anticipate provinces will follow Ontario’s proposed legislation and permit parties greater flexibility in selecting adjudicators outside the formal roster of accredited adjudicators.
If you would like to discuss this article further, please contact Associate Lawyer Gordon Becher from our Calgary office in Canada. Thank you to Jasman Mangat (articling student) for their contribution to the above article.
