Ontario’s Construction Act changes are coming to Saskatchewan
More provinces expected to enact prompt payment and adjudication legislation
May 16, 2019 by John Bleasby
Changes to Ontario’s Construction Act (Bill 142) came into effect on July 1, 2018, effecting prompt payment, liens and invoicing. Saskatchewan is following Ontario’s lead with near-exact same legislation (Bill 152) expected to be finalized by that province’s Legislative Assembly later this spring, possibly coming into effect as early as January 2010. However, “The Government of Saskatchewan has said it does not expect the Bill to come into force before an adjudication authority is set up.”
What are some of the key changes contractors can expect?
One of the key changes involves payment and invoicing. As part of their respective legislation, Ontario and Saskatchewan are addressing a defined payment cycle; an adjudication system for resolving disputes; the right to suspend work; and the right to charge interest on any overdue payments.
Prompt payment and adjudication legislation: Coming to a province near you?
Contractors in provinces beyond Ontario and Saskatchewan would do well to note these changes, since they may well form the model for similar changes in their home provinces in the near future. Manitoba introduced a private member’s bill addressing prompt payment in April 2018 which died on the order paper of the 2018 fall session. However, the concept is still under consideration and study for future enactment. Meanwhile B.C. and Quebec are also in the consideration phase.
One size fits all legislation doesn’t work for CHBA-BC
It can’t come soon enough for many in the construction industry, particularly certain trade groups. Yet some housing groups are opposed. According to the CHBA British Columbia, “the measures in Ontario will not work well for residential construction and add new costs for contractors and owners.” The association cites several reasons for their opposition, which they says is shared by CHBA Ontario. “The business terms and contracts are significantly different between what is required to build a custom home or a new development, and a new Pattullo Bridge or convention centre. Treating all forms of construction and all types of projects in the same manner is the wrong approach. In fact, the proposed legislation in Ontario may cause greatest harm to the people it is intended to protect.”
The prompt payment amendments’ key points
According to Jonathan Martin, Troy Barit and Chad Eggerman of Miller Thompson LLP, co-authors of an article posted on mondaq.com, the fundamentals of invoices issued by General Contractors (GC) under the Prompt Payment Amendments are described as follows:
“An invoice is only a ‘Proper Invoice’ if it contains the following information:
1. The contractor’s name and address;
2. The date of the invoice and the period during which the services or materials were supplied;
3. Information identifying the contract or other authority under which the services or materials were supplied
4. A description, including quantity if appropriate, of the services or materials that were supplied;
5. The amount payable for the services or materials that were supplied, and the payment terms;
6. The name, title, telephone number and mailing address of the person to whom payment is to be sent, and
7. Any other prescribed information.
The authors further note that, “Only the GC is required to provide a Proper Invoice. Subcontractors and suppliers have no prescribed form for their invoices but should also provide their invoices on a monthly basis in order for their invoices to be included in the Proper Invoice.”
Key payment and dispute deadlines
There also several important deadlines of which both the client and the contractor must be aware noted by the authors. For example, disputes against the “Proper Invoice” must be made within 14 days. Otherwise, the invoice must be paid within 28 days. In turn, “the GC must pay all its subcontractors and suppliers within 7 days. They must then, in turn, pay their own subcontractors and suppliers within 7 days and so on.”
Dispute adjudication is the favoured model going forward
Although there are various legal mechanisms by which disputes can be lodged, the authors point out that, “The most significant change arising with the Prompt Payment Amendments is the introduction of the adjudication system. Both provinces are currently setting up a process for training and appointing adjudicators who will be authorized to act under the new legislation.”
There are specific issues that can be brought before an adjudicator. “Under the new legislation, parties can refer the following matters to adjudication:
1. The valuation of services or materials provided under the contract;
2. Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order;
3. Disputes that are the subject of a “Notice of Non-Payment”;
4. Amounts retained following set-off by a trustee or a lien set-off;
5. Payment of a basic holdback;
6. Non-payment of the basic holdback; or
7. Any other matter that the parties to the adjudication agree to or that may be prescribed.”
“The legislation provides that adjudication will be very quick,” the article continues. “Once an adjudicator is chosen by the parties (or the Authority if the parties cannot agree), the party referring the dispute to adjudication will have 5 days to submit copies of all relevant documents to the adjudicator. Once the documents are submitted, the adjudicator will have 30 days to make a written determination. If the parties agree, that date may be extended by 14 days at the adjudicator’s request. The parties may also agree to another deadline with the adjudicator’s consent. A determination made by the adjudicator after the prescribed time will be of no force or effect.”
Note: It should be noted that some amendments were passed in late December 2018 that correct and clarify certain transitional matters concerning Ontario’s new Act. Be sure to consult with your legal advisor to learn how the Act might impact your business.
A look at the liens process under Ontario’s new legislation versus current legislation in other provinces across Canada
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