PROMPT PAYMENT

  • Martin Benson posted an article
    COCA Finds Flaw in Federal Prompt Payment Act see more

    Bill C97 is the federal government’s budget Bill.  Like the Ontario government’s budget Bill, Bill 100, C97 is a large omnibus Bill that amends many statutes and introduces a number of new ones.  Division 26 of Bill C97 introduces the Federal Prompt Payment for Construction Work Act.  Careful review of Division 26 by COCA’s Prompt Payment Task Force Chair, Ted Dreyer, exposed a flaw.  COCA stated the following in its submission to the Standing Committee on Finance, which is reviewing C97:

    “COCA supports the pay when paid principle.  The problem with the contractual pay when paid clauses that are now commonplace is that they tend to delay the resolution of the disputes that disrupt the flow of funds.  Since a contractor with a pay when paid clause in its subcontract has no obligation to pay its subcontractors, the contractor is not particularly motivated to resolve its underlying dispute with the owner that is delaying payment.  Since the subcontractor does not have privity of contract with the owner, it is powerless to bring the dispute between the contractor and owner that is delaying payment to a head.  Contractual pay when paid clauses are one of the main reasons for the industry wide trend of slow payment. 

    Prompt payment as it appears in Ontario's Construction Act adopts the pay when paid principle but makes it conditional upon the prompt resolution of disputes.  The key to prompt payment in the Construction Act is section 6.5(5)(a)(iii) which requires a general contractor serving a notice of non-payment upon a subcontractor to give an undertaking to refer its dispute with the owner to adjudication within 21 days.  Subsection 6.6(6)(a)(iii) imposes the same obligation upon subcontractors who deliver notices of non-payment to their sub-subcontractors.  The Construction Act effectively combines the pay when paid principle with a mechanism to ensure that disputes that disrupt the flow of funds are promptly resolved. 

    The flaw in the proposed Act is that it adopts the pay when paid principle without making it conditional upon the timely resolution of disputes.  There is no equivalent to subsections 6.5(5)(a)(iii) and 6.6(6)(a)(iii) in the proposed Act.  A general contractor who serves a notice of non-payment to its subcontractor has no obligation to refer its dispute with the Federal government to adjudication.  Although the subcontractor has the right to refer its dispute with the general contractor to adjudication, it is hard to see what good it will do them.  A general contractor served with a notice of adjudication by a subcontractor will simply point to subsection 10(3) and say that it has no obligation to pay the subcontractor because it was not paid by the government and it delivered a notice of non-payment as required by section 10(3).  Unlike the Construction Act, the proposed Act does not make pay when paid conditional upon prompt resolution of disputes that disrupt the flow of funds.  Instead, the proposed Act leaves subcontractors and sub-subcontractors twisting in the wind.

     Prompt payment legislation is needed to make sure that contractors and subcontractors are paid on time for their work.  So we applaud the Federal government to taking up the issue.  However, unless the proposed Act is amended, it will make the problem that the government is trying to solve even worse.”

  • Martin Benson posted an article
    Federal Prompt Payment Update see more

    Regular readers of the COCA monthly newsletter will know that many months ago construction lawyers Bruce Reynolds and Sharon Vogel were engaged by Public Services and Procurement Canada (PSPC) to conduct an expert review and prepare a report including recommendations, regarding promptness of payment and adjudication in respect of federal government construction projects.  Reynolds and Vogel have completed this work and submitted their report titled “Building a Federal Framework for Prompt Payment and Adjudication” to the federal government. It can be accessed at the following link:

    http://www.tpsgc-pwgsc.gc.ca/biens-property/divulgation-disclosure/psdic-ppci/rapsd-ppes-eng.html

    Sources have informed us that senior officials at PSPC are familiar with the report and supportive.  The questions that remain are:

    1. How committed is the federal government passing into law the legislation required to put the report’s recommendations into action?Is it a high, medium or low priority?
    2. If it is a high priority, is there enough time remaining on the legislative calendar to pass this legislation before the House rises for the next general election which for October 21, 2019?

  • Martin Benson posted an article
    Federal Government Moves on Prompt Payment see more

    On January 30, 2018 the Government of Canada, through representatives of the Minister of Public Services and Procurement, announced it is seeking industry input and recommendations on federal prompt payment legislation. 

    Public Services and Procurement Canada has commissioned Singleton Urquhart Reynolds Vogel LLP (Bruce Reynolds and Sharon Vogel) to lead an industry engagement initiative on a potential federal legislation aimed at improving the timeliness of payments for federal construction contracts throughout all tiers of the construction industry and to build off of the recently completed  Bill 142 (the Construction Lien Amendment Act) in Ontario as the basis for discussion.

    The results of this engagement will be presented in a recommendations report for the federal government’s consideration related to the development of an effective legislative solution that will direct terms of payment and provide for an adjudication process for federal construction contracts.

    The Canadian Construction Association, the National Trade Contractors Coalition of Canada and the recently formed General Contractors Alliance of Canada are expected to be the primary construction industry participants in this process. 

  • Martin Benson posted an article
    Lien Act Modernization, Dispute Resolution & Prompt Payment Moving Ahead see more

    Bill 142, Construction Lien Amendment Act, 2017, received Royal Assent on December 12, 2017, but most of the amendments are not yet in force.

    Officials at the Ministry of the Attorney General are working with Bruce Reynolds, Sharon Vogel and their Advisory Group on the drafting of regulations to support Bill 142.  It is the government’s intention to post the proposed regulations on Ontario’s Regulatory Registry in February 2018. The draft regulations will be posted for a period of 30 days.  During this time, stakeholders will have an opportunity to provide feedback online, using the Regulatory Registry website. The Ministry of the Attorney General will review the feedback during the posting period and will make revisions to the proposed regulations, as necessary, on an ongoing basis. Following the 30-day posting period, the proposed regulations will be finalized, submitted for approval and filed.

    The Ministry anticipates the regulations that support the modernization of the Construction Lien Act will become effective in the summer of 2018 and that the amendments related to prompt payment, adjudication and liens against municipalities will take effect late in 2019.

  • Martin Benson posted an article
    Construction Lien Amendment Act Passes Second Reading; Prompt Payment Ontario Applauds Swift Action see more

    Newswire.ca - Today (October4, 2017), Bill 142, the Construction Lien Amendment Act, passed second reading, with a unanimous vote, at Queen's Park and it moves to the committee stage for consideration.

    Bill 142 was introduced this past spring and worked on over the summer months to ensure the bill would be at the top of the legislative agenda this fall. Representatives of Prompt Payment Ontario (PPO) expect that Bill 142 will remain a high priority over the next few months, ultimately attaining royal assent before the legislature adjourns in December. With an upcoming provincial election in the spring, staying focused and committed to making prompt payment legislation a reality in Ontario will be essential.

    "We are looking for support from all parties in making sure this bill passes into law," said Ron Johnson, a Director of PPO. "Over 400,000 workers in Ontario's construction sector will benefit from this bill being passed and Minister Naqvi has shown he supports the sector by ensuring it moves forward quickly," Johnson added.

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  • Martin Benson posted an article
    COCA members anxious over lien reform timeline see more

    Daily Commercial News - Construction Lien Act reform in Ontario is not yet home-free said members of the Council of Ontario Construction Associations (COCA) attending the association’s Queen’s Park lobbying day Sept. 25.

    And so, they said, there must be vigilance to ensure Bill 142, enacting long-sought reforms, achieves royal assent safely before the next provincial election.

    Members attending a reception at Queen's Park — following a day of meetings arranged between some 40 COCA members and members of the legislature from all parties — recalled two previous aborted attempts from private members to get prompt payment legislation approved, in 2011 and 2014. They expressed concern that Bill 142, introduced in May after two years of extensive consultation with stakeholders, may suffer the same fate.

    The bill, which proposes a new prompt payment regime for payment of bills, modernizing the lien and holdback processes and the introduction of a dispute resolution mechanism in what would become a new Construction Act, was introduced by Attorney General Yasir Naqvi and given first reading approval.

    Second reading debate was launched the week of Sept. 11 with debate taking up some five or six hours on Sept. 13 and 14. That delay, and other potential slowdowns, had COCA members concerned.

    "The purpose of today was to hold the government's feet to the fire to ensure that Bill 142 gets across the finish line before the end of the current session," said Ian Cunningham, COCA president. "There are less than 40 days of sitting left and the bill hasn't passed second reading yet and we've got to go to committee, then there will be public hearings, clause by clause, amendments to be made, then it is reported back for third reading and royal assent, so it still has a long way to go."

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  • Martin Benson posted an article
    Backgrounder: Proposed Updates to the Construction Lien Act see more

    Ministry of the Attorney General - Ontario is introducing legislation that would, if passed, modernize construction lien and holdback rules, introduce a prompt payment system and create a new process to speed up dispute resolution.

    Under the proposed legislation, the Construction Lien Act (CLA) would be amended to establish a prompt payment system with clear payment timelines for all parties involved in a construction project. Disputes that slow down payment could be addressed through a new adjudicative process outside of court.

    If passed, these amendments would bring Ontario's construction laws up to date to reflect current construction industry practices and support the thousands of workers and businesses in this important sector.

    The Construction Lien Act

    The CLA regulates the way payments are made in the construction industry, and provides reasonable certainty that those who have contributed services or materials to the improvement of real property will be paid for the contribution they made.

    Under the proposed legislation, the CLA would be amended to establish a prompt paymentsystem with clear payment timelines for all parties involved in a construction project. Disputes that slow down payment could be addressed through a new adjudicative process outside of court.

    If passed, these amendments would bring Ontario's construction laws up to date to reflect current construction industry practices and support the thousands of workers and businesses in this important sector.

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  • Martin Benson posted an article
    Canada Prompt Payment Act approved by Senate see more

    Journal of Commerce - Canada’s Senate has unanimously passed Bill S-224, the Canada Prompt Payment Act, regulating payments on federal construction contracts, but a major hurdle remains as the bill now faces the scrutiny of the House of Commons.

    Bill S-224 requires that federal government project owners must make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in a contract.

    The payment requirement is consistent down the contractual chain, notes a media statement from bill sponsor Senator Don Plett. The bill also accounts for milestone payments, when applicable, and permits contractors the right to suspend work, terminate a contract and collect interest on late payment.

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  • Martin Benson posted an article
    Premier talks budget, lien act at OGCA symposium see more

    Daily Commercial News - Premier Kathleen Wynne gave her take on Ontario’s Construction Lien Act and provided a preview of the upcoming budget during the recent Ontario General Contractors Association’s (OGCA) 10th Construction Symposium.

    "We heard about your concerns about Ontario's Construction Lien Act — about issues with payment timelines and dispute resolution and that the law needed to be modernized but that it needed to be done in the right way," said Wynne.

    She spoke on the opening night of the symposium to a packed house at the Village Conference Centre in Blue Mountain, kicking off the event.

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  • Martin Benson posted an article
    Prompt payment: Tales from the trenches see more

    Daily Commercial News - The red chamber of Canada’s Senate on Parliament Hill in Ottawa, decorated in plush red and gold with its ornate thrones, is a far cry from Sue Moore’s grey, utilitarian, second-floor corner office at the Mississauga, Ont. home base of Moore Brothers Transport.

    But this spring, Moore, owner and general manager of Moore Brothers, and the senators are united in their concern with one issue of vital importance to the construction sector — prompt payment.

    Any day now the Senate is expected to debate and give third reading to Bill S-224, a private member's bill that would overhaul payment scheduling and lien provisions on federal contracts. The reforms would then be sent to the House of Commons. Meanwhile, the Ontario government has also indicated it will introduce reforms to the Construction Lien Act this spring for provincially regulated contracts.

    As active members of the Canadian Institute of Steel Construction (CISC), Moore, Tim Houtsma, vice-president of projects and engineering at Marid Industries Ltd. in Halifax, and Paul Seibel, president of ACL Steel of Kitchener, Ont. said in recent interviews they are keenly following the legislative reform efforts.


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  • Martin Benson posted an article
    Canada Prompt Payment Act undergoes final review at Senate see more

    Daily Commercial  News - The Canada Prompt Payment Act, Bill S-224, will be undergoing a final review by a Senate committee before a vote is taken to send the bill to the House of Commons.
    Canada Prompt Payment Act undergoes final review at Senate
    The bill has been the subject of rigorous review at the Senate Standing Committee on Banking Trade and Commerce since Feb. 2 and is ready to undergo a clause-by-clause review before the vote, explains a release from the National Trade Contractors Coalition of Canada (NTCCC).

    Supporters of the bill have sent thousands of letters to senators and members of parliament to demonstrate the need to address payment delays in Canada's construction sector with enforceable legislation, states the NTCCC, which has appeared before the committee to speak in favour of the bill.

    Over the course of this study, criticisms have arisen from general contractors about the implementation of federal legislation on top of legislation currently being developed in Ontario as a result of the Construction Lien Act Review, which was undertaken by Bruce Reynolds and Sharon Vogel.

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  • Martin Benson posted an article
    Prompt payment progress highlighted during CCA spring board meeting see more

    Journal of Commerce - 

    The Canadian Construction Association's (CCA) task force on prompt payment updated its members on the issue of prompt payment recently during its spring board meeting in St. John's, N.L.

    Task force chair Ray Bassett reported positive signs from the federal government following several productive discussions.

    Since the last CCA board meeting in March, both Public Services and Procurement Canada (PSPC) and Defence Construction Canada (DCC) have launched their own prompt payment websites.

    Task force chair Ray Bassett reported positive signs from the federal government following several productive discussions.

    Since the last CCA board meeting in March, both Public Services and Procurement Canada (PSPC) and Defence Construction Canada (DCC) have launched their own prompt payment websites.

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  • Martin Benson posted an article
    Lien act review top provincial newsmaker in 2016 see more

    Daily Commercial News - Another year has come and almost gone, and while most Ontario construction industry stakeholders agree 2016 was a big year, the biggest story by far was the Construction Lien Act review which has many associations looking ahead to see how it plays out in 2017.

    Construction law experts Bruce Reynolds and Sharon Vogel released a review of the 33-year-old act at the end of September entitled Striking the Balance: Expert Review of Ontario's Construction Lien Act. The report includes numerous recommendations, including suggestions for prompt payment reform and effective dispute resolution.

    "We played a very active role in 2016 in the Reynolds/Vogel review of the Construction Lien Act," said Ian Cunningham, president of the Council of Ontario Construction Associations (COCA). "Clearly for us, it's something COCA has been working on for more than 20 years."

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  • Martin Benson posted an article
    Reynolds, Vogel warn hard work remains on lien act reform see more

    Daily Commercial News - It’s been a few months since the report Striking the Balance: Expert Review of Ontario’s Construction Lien Act was released and while its authors Bruce Reynolds and Sharon Vogel have been working on the report since 2015, they recognize there is a lot more work ahead.

    Reynolds likened the review process to climbing a mountain.

    "Now that the report's been delivered and we're moving onto the next phase, it turns out that was the foothill but there is a mountain still to climb, which is trying to take the holistic and integrated recommendations of the report and develop that into legislation," said Reynolds.

    "We have to work very hard to try and make sure that the legislation that emerges out of the process that's coming will capture the recommendations in a way that is workable in the industry, in the businesses on a day-to-day basis."

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  • Martin Benson posted an article
    Gowling panel focuses on impacts of lien act reform see more

    Daily Commercial News -  While the proposed changes to the Construction Lien Act (CLA) have been generally applauded by the construction sector, there are industry stakeholders who are concerned the proposed recommendations could mean procedural changes and financial impacts for the public and private sectors.

    As part of its fall construction law program, Gowling WLG held an educational session on proposed changes to the CLA and implications for the industry. The information session, held Nov. 1 at Gowling's downtown Toronto office, included a summary of key changes to different parts of the act, a panel discussion about adjudication and the proposed dispute resolution regime and a panel discussion with industry experts who offered different perspectives on the reforms.

    The panel on different market perspectives included Chris Moran, director of EllisDon Capital, Steve Ness, president of the Surety Association of Canada and Ted Betts, a partner at Gowling.

    Moran said he is worried about how the adjudication process recommended in the review might increase the cost of disputes not only for construction firms, but for the entire industry.

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