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Some of our HRAI members may be aware of a court decision this month in the Ontario Court of Appeal, which is seen as a victory for prompt payment in the construction industry.

Although Bill 142 The Construction Lien Amendment Act was passed in Ontario in December, experts are not suggesting a direct link between the new legislation and the outcome in The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9, insofar as the new bill is not expected to be fully implemented until late 2019.

Nevertheless, the prompt payment environment is clearly improving in Ontario and beyond, as several provinces and the Federal government are planning to introduce similar new rules. Ottawa’s bill is expected be based in part on Ontario’s model.

HRAI has been working toward these outcomes, along with the National Trade Contractors Coalition of Canada (NTCCC), The Canadian Construction Association (CCA), the General Contractors Alliance of Canada (GCAC), and Public Service and Procurement Canada (PSPC).

Says Sandra Skivsky, NTCCC Chair, “Under the New Construction Act, with the more stringent trust provisions as part of the Lien legislation, we would expect to see even greater clarity and protection of sub contractors…It is the sub-contractors’ money that goes into statutory trust funds and they clearly must have priority in its dispensation.”

Rob LeForte, Director of Government Relations and Campaigns at Impact Public Affairs has worked with the HRAI, the NTCCC and Prompt Payment Ontario for many years and says, “HRAI has been a strong supporter of efforts to get subcontractors paid on time and this case is an example of more dominoes falling.”

While fairness is the obvious benefit LeForte also notes that improving payment norms, “will increase efficiency across the sector as a whole.  As money flows throughout the construction chain, and the culture follows these changes, we expect to see fewer insolvencies because the entire system will be working better.”

As HRAI reported in August, the Prompt Payments in the Construction Industry Act passed second reading in the Manitoba Legislature on April 24, 2018 with all-party support. Saskatchewan introduced changes in November, and its bill will soon receive Second Reading. In December of 2017, Québec adopted Bill 108, which requires a pilot study, and is expected to lead to finalized regulations.

And, as reported in November, Canada’s Finance Minister, Bill Morneau, included a commitment to pass Prompt Payment Legislation in the Fall Economic Statement, tabled on November 21, 2018. Advocacy efforts are also underway in Nova Scotia, British Columbia and Alberta, to get those governments to move in the same direction. 

New regulations generally include a built-in adjudication process, and new laws will require that once an invoice is received, owners must pay general contractors within 28 (or 30) days. After that, general contractors are required to pay the sub-contractors within seven days. Generals and sub-contractors receive mandatory interest on late payments and can suspend work on a project if not paid.

For more information, contact Scott Papp, 1-800-267-2231 or email spapp@hrai.ca.