Construction Act amendments on prompt payment, adjudication take effect

MAG, major law firms weigh in on new prompt payment regime

Construction Act amendments on prompt payment, adjudication take effect

The second batch of changes to the Construction Act took effect on Tuesday, Oct. 1.

The changes, according to the Ministry of the Attorney General’s website, modernize the construction lien and holdback rules, help make sure that workers and businesses get paid on time for their work and help make sure payment disputes are addressed quickly and painlessly. The first set of amendments came into effect on July 1, 2018, while the new prompt payment and adjudication processes, and amendments related to liens against municipalities, came into effect on Oct. 1.

On Tuesday, AG Doug Downey issued a statement on the amendments to the law, which he described as “Canada's first-ever prompt payment regime and a new, streamlined dispute resolution process that will cut red tape to support jobs and growth in Ontario's construction industry.”

“Effective today, subject to transition rules, these changes to the Construction Act will help prevent payment disputes from delaying work on construction projects, speed up the payment process and reduce time and money spent on litigation,” Downey continued. “This will ensure workers and businesses are paid on time and disputes are resolved quickly.

“We would like to thank Ontario's construction sector for sharing their expertise and continued support as we work together to grow jobs and the economy in our province.”

Legal sector’s response

To help comply with the Oct. 1 prompt payment change, Osler Hoskin & Harcourt LLP lawyers have created a payment date calculator. According to a blog post by Osler lawyers Richard Wong, Andrew Wong and Jagriti Singh, “all eyes are on Ontario” as it will be the first jurisdiction to have legislation that combines prompt payment and adjudication alongside traditional lien legislation.

“While the construction industry in Ontario will be grappling with the inevitable growing pains of new legislation, a number of other jurisdictions in Canada, including the federal government, have followed Ontario’s lead in introducing a prompt payment and adjudication regime to alleviate delayed payments to contractors and subcontractors down the construction pyramid,” the Osler lawyers wrote earlier this year.

Ted Betts, a lawyer at Gowling WLG in Toronto, wrote earlier this year that Oct. 1 marks “a real culture shift” in how, and how quickly, payments will be made and disputes resolved.

“Cash will flow more quickly out of owner's bank accounts to contractors and then on to subcontractors,” Betts wrote.

Meanwhile, Michael Richards and Howard Wise, lawyers at Goodmans LLP, said on Friday that “all members of the Ontario construction industry need to ensure they are aware of these new timelines.”

“The new prompt payment regime places considerable time constraints on owners, contractors and subcontractors to review invoices quickly and decide whether the invoice will be paid and, if so, by how much. Where a party disputes an invoice, it is no longer acceptable to simply refuse to pay the receiving party and worry later,” Wise and Richards wrote in a blog post.

How to become an adjudicator

Oct. 1 is also when the Ontario Dispute Adjudication for Construction Contracts begins operating, according to Authorized Nominating Authority ADR Chambers. ADR Chambers listed a few key requirements to become certified to be an adjudicator. Candidates who qualify should contact authority@odacc.ca, ADR Chambers said. The ODACC website says there is a training process, offered online and in-person, as well as an additional application package.

To be eligible to hold a Certificate, an adjudicator applicant must meet the following criteria, said ADR Chambers:

  • Declare that he or she is not an undischarged bankrupt and has not been convicted of an indictable offence in Canada or of a comparable offence outside of Canada;
  • Demonstrate to ODACC that the adjudicator applicant has at least 10 years of relevant working experience in the construction industry. Examples of relevant working experience in the construction industry may include experience working in the industry as an accountant, architect, engineer, quantity surveyor, project manager, arbitrator, or lawyer;
  • Declare that he or she will abide by the requirements for holders of the Certificate set out in section 4 of the Regulations, which include:
  • Successful completion of the training programs and continuing training programs offered by ODACC;
  • Compliance with the ODACC Adjudicators’ Code of Conduct;
  • Providing proof of eligibility to hold a Certificate on ODACC’s request;
  • Immediately notifying ODACC if he or she ceases to be eligible to hold a Certificate;
  • Maintaining any records required by ODACC and reporting the information contained in the records to ODACC, on ODACC’s request;
  • Paying ODACC the required fees, costs or charges for training and qualification as an adjudicator; and
  • Declare that he or she will comply with the Act and Regulations, and with any further direction or requirements of ODACC.

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