Law Times

Page 10 May 7, 2018 • Law TiMes www.lawtimesnews.com Laws to improve prompt payment about to take effect BY SHANNON KARI For Law Times M ore than seven years since the province first proposed leg- islative changes to improve prompt payment in the construction industry, amend- ments to address this issue are finally about to take effect. Stage one of the newly en- titled Construction Act comes into force on July 1. In the fall of 2019, the second stage, aimed at reducing costly payment disputes through man- datory interim adjudication, will also become law. The legislation and the regu- lations to implement the chang- es are the first major overhaul of the construction payment framework in more than three decades in Ontario. Even though they are being implemented a little more than two years after the province received an expert report that was widely praised, lawyers in the field say there is still a lot of preparation needed to comply with the new requirements. "The economy in Ontario is doing very well. There is a lot of construction activity. In- frastructure Ontario has a ro- bust pipeline of projects," says Richard Wong, chairman of the construction and infrastructure group at Osler Hoskin & Har- court LLP in Toronto. "Now that the government has the set out the policies and general rules, it will be up to the private and public sector to ad- just their processes," he says. "July 1 is soon. Within an or- ganization, you will have busi- ness units that must co-ordinate their payment processes," says Wong. "As an industry, these changes will help get the cash moving. That is generally a good thing as long as rights are not prejudiced." While the changes are sig- nificant, the regulations that will accompany the legislation were drafted in a fair way, says Neil Abbott, a partner at Gowling WLG in Toronto and a specialist in construction law. "The good news is these regulations were presented to stakeholders. The regulations are well thought out, but you still have to put them into practice. Even if people have been following it, once it hits, you have to deal with it, Abbott says, comparing it to when in- dividuals start to deal with their tax returns despite knowing the deadline well in advance. In stage one, the prompt payment framework requires a contractor to provide a "proper invoice" to the owner. The own- er is then required to pay that invoice within 28 days and the contractor must pay subcontrac- tors within the next seven days, unless there has been a notice of non-payment issued by the owner. The non-payment notice, along with reasons, must be pro- vided within 14 days of receiving the invoice. While the mandatory inter- im adjudication requirements will not take effect for another 17 months, this should not be a reason to fail to comply with the new rules on prompt payments. "Make sure your payment people are aware of the changes. Ignorance of it is no excuse. This is not an industry where you can stick your head in the ground," says Abbott. As well, voluntarily agreeing to adjudication over payment disputes before stage two takes effect is not a bad idea, he says. "There is nothing to stop you from doing this now. Many par- ties are already doing it," says Abbott. FOCUS Available risk-free for 30 days Online: store.thomsonreuters.ca Call Toll-Free: 1-800-387-5164 | In Toronto: 416-609-3800 © 2018 Thomson Reuters Canada Limited 00251CG-92276-NP Discover a better way to navigate and understand this complex area For 25 years, The Annotated Canada Business Corporations Act has been a cornerstone for research on federal corporate law. For this edition, Wayne Gray has made his original text easier to navigate and interpret statutes, regulations, and jurisprudence from across Canada. Introducing Gray's Commentaries on Federal Corporate Law, a comprehensive, easy-to-follow, and essential reference with a particular focus on the Canada Business Corporations Act (CBCA) and the Canada Not-for-profit Corporations Act (CNCA). You'll find commentary and analysis spanning over 1200 pages, citing more than 2000 cases, along with 90 issue-specific memoranda relating to CBCA and CNCA corporations – including many that address questions that have never been put to the courts. Reorganized and rewritten to speed up research and deepen understanding If your practice involves transactions, advising corporations, or dispute resolution, turn first to this invaluable new resource. Visit store.thomsonreuters.ca/gray for a complete Table of Contents. Gray's Commentaries on Federal Corporate Law (formerly The Annotated Canada Business Corporations Act) Wayne D. Gray Print + ProView Order # L459-26200-9-65203 $604 March 2018 0-459-26200-9 3 volume looseleaf supplemented book + ProView online access Anticipated upkeep cost – $445 per supplement (8-10 per year) Supplements invoiced separately ProView only Order # L95268-65203 $568 Print only Order # L95267-65203 $604 Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes. eBooks not available to trade bookstores, third-party distributors, and academic institutions. Neil Abbott says companies can voluntarily agree to adjudication over payment dis- putes before stage two of the Construction Act becomes law in 2019. See A lot, page 12 Construction Act: A Timeline 2011: The Protecting Contractors Through Prompt Payment Act is introduced into the legis- lature. It dies on the order paper as a general election is called. 2013: Prompt Payment Act, 2013 is introduced. Public hearings take place, but the legislation is set aside as the government decides a more extensive review is needed to also look at delayed payment and cash f low issues. February 2015: The expert review begins. April 2016: The report of the panel — entitled "Striking A Balance" — is delivered to the provincial government. May 2017: Construction Lien Amendment Act is introduced into the legis- lature. December 2017: The legislation is passed by the legislature and receives Royal assent. February 2018: The province announces a con- sultation process related to the drafting of the regula- tions within the statute. July 2018: Stage one of the act, known now as the Con- struction Act, will be take effect. Stage one deals with modernization and other selected amendments. October 2019: The prompt payment and mandatory interim adju- dication of construction disputes is scheduled to take effect. A new provin- cial agency made up of adjudicators with experi- ence in the construction industry will be created. — Shannon Kari

• Cover