The Power of Perspectives

The Canadian Bar Association

Kim Covert

Prompt payment legislation: Focus on harmonization

May 31 2018 31 May 2018

 

When the Senate passed its Bill S-224, Canada Prompt Payments Act, last fall, the CBA’s Construction and Infrastructure Law Section expressed its concern with many aspects of the bill and suggested that the government not move forward with it before doing extensive consultations with the construction industry.

So the Section was very happy to respond to the expert review carried out by the same construction lawyers who’d done similar work for the province of Ontario, which has recently passed its new construction legislation.

“Prompt payment legislation will have significant and direct impacts on commercial arrangements throughout the country and the CBA Section applauds this expert review and its consultation process,” the Section says in its latest submission. “Further, we recommend that the mandate and timelines of the expert review be extended through the legislative drafting stage, and that stakeholders be afforded an opportunity to comment on the expert review report.”

The Section supports the effort to ensure prompt payments in the construction industry, but notes that putting a federal prompt payments scheme in place will be challenging in a national system, where every province and territory has its own set of rules.

“The CBA Section is concerned with the challenges stemming from a lack of uniformity in legislation across Canada and that this may be exacerbated if another unique legislative scheme is implemented at the federal level,” it says.

“When weighing options for reform, the expert review, and other provinces and territories across the country, would be well served by promoting values of harmonization and clarity as much as possible in the circumstances. Flexibility should also be encouraged as much as possible to avoid stifling innovation in complex federal projects.”

Since Ontario has recently done an overhaul of its regime, and since many of the jurisdictions considering their own changes are looking to Ontario’s approach as a model, the federal government might be well-served to “run lock-step” with Ontario to lessen these jurisdictional differences, the Section suggests.

The government should consider the broad impact of prompt payment on the many stakeholders in the construction industry; be careful that the application of the legislation is clear, and perhaps list the kinds of projects to which it would apply. The Section makes recommendations about pay periods, payment triggers, disclosure obligations, consequences in the case of non-payment and the possibilities for an adjudication process.

A new approach should bring new legislation, the Section recommends.

 “The CBA Section is also of the view that Bill S-224 … contains significant flaws and that the federal government, should it introduce prompt payment legislation, would be well served by drafting legislation separate and apart from Bill S-224.”

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