Canadian Contractor

John Bleasby   

Manitoba is latest province to move on prompt payment legislation

Canadian Contractor

Nationwide improvements to construction payment rules move at a turtle's pace

A private member’s bill was introduced last week in the Manitoba legislature that would see new prompt payment rules within the province’s construction trade. Brandon West Progressive Conservative MLA says that requests from industry and unions prompted him to act. “It’s become an issue throughout the construction associations in Canada that payment is being delayed,” Helwer was quoted in the Winnipeg Free Press. “It’s delaying construction projects. It’s making them more expensive.”

The usual statements concerning the importance of improved payment
It was further reported that, “Under Helwer’s bill, owners must make periodic payments under a construction contract to their contractors at specified times as the work progresses or when milestones are reached. They also must make final payments promptly upon the completion of work. Similar obligations apply to contractors’ payments to their subcontractors and subcontractors’ payments to other subcontractors. If payment obligations are not met, a contractor or subcontractor may, with notice, suspend work or terminate the contract. An adjudicator may be appointed to resolve any payment disputes.” Helwer claims that the adjudication process would avoid court battles while work to continue on projects.

Prompt payment amendments are moving about this fast across Canada

Which is slower; a turtle or adoption of prompt payment rules?
Manitoba is the latest province to consider such legislation. However, prompt payment improvements are hardly racing quickly across the country. Ontario finally passed its Construction Lien Amendment Act, 2017 late last year after months of protracted discussion with impacted parties.

Other provinces are referencing Ontario’s ACT for possible legislation in their provinces because it addresses several key points consistently brought forward by construction industry interests across the country.
*Provides more time for contractors and subcontractors to resolve their disputes outside of court by extending timelines to file liens and start court actions from 90 days to 150 days
*Ensures contractors and subcontractors know when to expect full payment by requiring holdback funds to be paid as soon as the deadline to file a liens passes
*Protects subcontractors and workers if the general contractor files for bankruptcy by requiring surety bonding on public sector projects above a certain amount
*Refers construction lien claims under $25,000 to small claims court.


Where are the others at? Promises, promises!
British Columbia is considering something similar yet different, with input from the British Columbia Construction Association (BCCA).  According to BC Business, the BCCA is promoting an “automated payment system, powered by blockchain technology that would transfer funds instantly on a project’s completion.”

Legislators’ public support for improving contractor payment rules does not match their actions in getting the job done.

Meanwhile, Quebec is still mulling over legislation promised over a year ago. Lexology reported last April that, “Québec Finance Minister Carlos Leitão confirmed that the province would be introducing new prompt payment rules to apply to public sector projects by the spring of 2017. The impetus of these rules differs from those in Ontario and stems from a recommendation from the Charbonneau Commission investigating corruption in the construction industry in Québec. The lack of prompt payment was seen to create a greater temptation for corruption to occur for several reasons, including disadvantaged cash flow to smaller contractors and abuses of power in holding up progress payments.” Nothing has been tabled in the Quebec Legislative Assembly to date.

Alberta started their legislative considerations in in April 2016 through its Alberta Infrastructure department, but has yet to pass anything either.

Ottawa looks at prompt payment rules for federal projects
The federal government might be jumping in. According to a recent media release, “Steven MacKinnon, Parliamentary Secretary to the Minister of Public Services and Procurement, and the Honourable Judy A. Sgro, Chair of the Standing Committee on Transport, Infrastructure and Communities, on behalf of the Honourable Carla Qualtrough, Minister of Public Services and Procurement, announced today that the government is seeking industry input and recommendations on federal prompt payment legislation.

“Bruce Reynolds and Sharon Vogel, independent experts, have been contracted to seek input from the construction industry to identify the elements required to develop a robust federal prompt payment regime. The federal government will use the proposed recommendations to inform the development of an effective legislative solution that will direct terms of payment and provide for an adjudication process for federal construction contracts.” (Ed. Note: We had to leave the wording as is. You can’t make this gob-billy goop up!)

It seems that everyone feels the need to reinvent the wheel in terms consultation and deliberation before moving forward. One day suitable rules might exist coast-to-coast! As for the other provinces not mentioned above, there are no developments whatsoever to report.

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