Practical solutions for adopting prompt payment legislation and a peek into some of the potential growing pains were discussed by a panel of lawyers at a webinar recently during the Canadian Institute’s 13th annual national symposium on Managing Risk in Construction Contracts and Projects.
While Ontario is forging ahead with reforms, in force since the fall of 2019, other provinces are not far behind. Legislation has received royal assent in Nova Scotia, Alberta and Saskatchewan.
When the reforms come into force, they are expected to be similar to Ontario’s laws, although there will be nuances in each province’s legislation, said Robby Sohi, western legal counsel with EllisDon.
Sohi advised contractors working in different provinces to update standard contract forms but with “tweaks” for each province as EllisDon has done to meet the requirements of each province.
Sohi said he believes most owners in Ontario have adjusted to the new payment timelines.
He sees challenges to come for the industry, however, particularly in jurisdictions that mandate disputes be referred to adjudication.
“We are going to have to fix our messaging (as in-house counsel) to explain this as the new process,” Sohi pointed out.
He told the webinar audience that “transition provisions” in Ontario are not straightforward to everyone yet. Some owners, for example, debate whether they have prompt payment obligations because an RFQ was made on the project prior to the reforms becoming law.
Leanna Olson, Calgary-based senior legal counsel for Bantrel Co., told viewers contractors need to be aware that each province has different administrative requirements, invoices, for example.
She said it is important for contractors to make information in their documents as clear to all parties to allow for discussion within the “quick timelines” if disputes arise.
In Saskatchewan, prompt payment reforms are expected to “work quite well for subcontractors,” present “additional challenges for owners” and leave contractors “stuck in the middle,” said Chad Eggerman, Saskatoon-based lawyer for MLT Aikins LLP.
He said the prompt payment exemptions for P3 projects in Ontario were probably done for the same reason that a number of large mining projects in Saskatchewan got exemptions: the timelines are too tight to meet for complex projects.
He suggested exemptions for resource-based industries could crop up in Alberta and B.C. as they move closer to reform.
Alberta’s prompt payment legislation is expected to come into force this summer but there are no exemptions currently, Olson said.
She explained under the current draft the Alberta Crown is not bound by the reforms to the Builders’ Lien Act – a distinction from the Ontario legislation where the owner includes the Crown. Alberta’s rationale for exclusion is that Alberta Infrastructure has prompt payment provisions in its contracts.
Eggerman said the “tipping point” for him on prompt payment in Saskatchewan was the allowance of exemptions for large, complex projects.
Word on the street is that the Builders’ Lien amendment regulations for the prompt payment act in Saskatchewan will come into force in April, he added.
In Quebec, a pilot program on public infrastructure projects was implemented in 2018 to facilitate prompt payment by prescribing payment calendars and introducing dispute settlement through adjudication.
The objective from the three-year pilot is to pass prompt payment laws, said panellist Pierre Hamel, director of legal and government affairs, at the Association de la construction du Québec.
About 180 public projects are under the pilot program in Quebec, including hospitals, long-term care homes and schools, he said, noting the pilot will wrap up this summer.
“We are eager to see what the government will do,” said Hamel.
In B.C. a private members bill on prompt payment reform didn’t pass prior to the provincial election last year and there has been no legislation tabled by the NDP government, Sohi said.
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