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HRAI08082018P

We all dream of a better day. No more dragging payments as a matter of corporate policy. No more contractors, feeling like you have to bite your tongue and enable unfair behaviour. The hope is that these scenarios will soon become ancient history in the construction industry in Canada.

In Ontario, Bill 142, The Construction Lien Amendment Act was passed in December, and is expected to be fully implemented by late 2019. In addition, several provinces and the Federal government are planning to introduce similar rules.  

Ottawa’s’ bill will likely be based in part on Ontario’s model. The government commissioned a report from Bruce Reynolds and Sharon Vogel, who previously provided more than 100 recommendations for Ontario’s legislation. Almost all of the recommendations were accepted and included in the new Ontario law.

Their report for Canada was released last week, and HRAI’s Scott Papp, Manager, Divisional Programs (Contractors) met with Reynolds and Vogel, to officially review the details. Also in attendance were representatives from the National Trade Contractors Coalition of Canada (NTCCC), the key architects of a decade-long push for prompt payment rules in Canada. The Canadian Construction Association (CCA), General Contractors Alliance of Canada (GCAC), and Public Service and Procurement Canada (PSPC) were also represented at the meeting.

The Prompt Payments in the Construction Industry Act passed second reading in the Manitoba Legislature on April 24 with all-party support. Saskatchewan will introduce changes in the fall, also along the lines of the Ontario model. In December, Québec adopted Bill 108, which requires a pilot study, expected to commence this summer, and this is expected to lead to finalized regulations within 12-24 months.

“Like in Ontario, the report for the Federal rules includes a built-in adjudication process,” says Papp. “This is something the NTCCC has been requesting for 10 years.” 

Generally, the 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. An adjudication period is available to settle disputes. Generals and sub-contractors receive mandatory interest on late payments and can suspend work on a project if not paid.

“In the past, if contractors walked off the job due to non-payment, they were sometimes sued. This new approach flips that around in favour of smaller operators,” says Papp. “ I have heard of cases where big firms might use the threat of ending up in court when overdue payments were demanded, knowing that smaller operators could not afford the time and expense involved. In the future it will be an efficient automatic adjudication process, and I would expect that if a single firm is frequently in front of an adjudicator, being accused of unfairly withholding payment, they might get a reputation, and they might start regularly losing rulings.”