Canada: Canada Prompt Payment Act Update: Senate Approved

In an effort to lead reform in the payment practices of the Federal bureaucracy, the Canadian Senate introduced prompt payment legislation under Bill S-224, the Canada Prompt Payment Act (the "Bill") which, if passed, would apply to construction contracts made with the Federal Government and related subcontracts.

After passing its second reading last November, the Bill was referred to the Standing Committee on Banking, Trade and Commerce (the "Committee").

The Bill was the topic of discussion in four Committee meetings in mid-February; over the course of four days, the Committee heard from representatives from the industry as well as government officials and legal experts in construction law and constitutional law.

On April 4, 2017, the Committee released its report on recommended changes to the Bill (the "Committee Report"). On May 4, 2017, the revised Bill passed third reading and will now need to proceed through the House of Commons before it becomes law.

Committee Hearing Transcripts

Full transcripts of the testimony can be found on the Committee's website. What follows is a brief summary of key issues raised by stakeholders during the Committee's meetings.

The transcripts demonstrate clear support for the Bill amongst sub-contractor representatives. Payment enforcement was raised as a key issue in the construction industry. Without an effective enforcement mechanism, funds received by general contractors do not flow down to sub-contractors in a timely manner, forcing sub-contractors to pay suppliers, employees, etc. with credit while they wait for their payment. Furthermore, the court system may take years to resolve a particular conflict. There was support for a faster adjudication process that would be specific to the construction industry.

However, there were also industry representatives who took the position that the Bill paints with "too broad a brush" and attempts to apply a "one size fits all" approach in an industry that varies immensely in project size and complexity across the country.

There were also concerns raised about the Federal Government's role in overseeing and/or enforcing payment when a dispute occurs between contractors "down the chain" that have entered into a private contract between themselves. Concerns with respect to the constitutionality of the Bill were also raised.

Constitutionality of Bill S-224

The Committee heard from both the Department of Justice and Gerald Chipeur of Miller Thomson LLP on the constitutionality of Bill S-224.

A senior counsel member from the Department of Justice stated that he believed the constitutionality of the Bill was "questionable" because the regulation of construction contracts is generally a provincial matter.

Mr. Chipeur opined that the Bill was in fact constitutional. He stated:

The Supreme Court of Canada is clear that Parliament has jurisdiction over federal property and that anything that is integral to the property or the creation of that property is within the federal jurisdiction and is paramount to any provincial common law or legislation.

The Committee Report

Several proposed amendments to the Bill were put forward in the Committee Report.

Overall the proposed changes seemed to demonstrate a concentrated effort to align the language of the Bill with the payment application approval process. The Committee Report's proposed amendments softened the language of the Bill, requiring that payment applications meet contractual requirements and that payment applications be certified before any prompt-payment deadline begins to run.

For example, among other proposed changes, the Committee recommended that:

  • the definition of "payment application" should be limited to invoices, bills, or other requests for payment that "meets the requirements for submission and content set out in a construction contract"
  • the government and contractors' payment deadlines should only begin to run after payment applications are approved or certified
  • final payment applications should be approved or certified before the government or contractor's deadline begins to run
  • in the definitions section, wording was added to clarify the definitions of "milestone" and "payment application" and put them in the context of a construction contract

The Committee Report also proposed further protection for sub-contractors in the language of the Bill, specifically that milestone payments from contractor to subcontractor could not be set at longer intervals than those set out in the contractor's contract with the government.

The Committee Report proposed amendments that expanded on the timing and requirements for an adjudication process under the Bill similar to what I being considered in lien legislation reform in Ontario. For example, in addition to the current wording of the Bill, the Committee Report recommended that:

  • parties have 10 days to provide written submissions to the adjudicator after the adjudicator's appointment, or the receipt of notice that a party intends to refer the dispute to an adjudicator, whichever is later
  • the adjudicator has to render a decision in 28 days, or a greater amount of time agreed on by the parties
  • if the adjudicator fails to render a decision in time, the parties can refer the dispute to a different adjudicator as long as they comply with the notice provisions
  • the parties must obey the decision of the adjudicator until the matter is "finally determined" by legal proceedings, arbitration, or mutual agreement by the parties

Conclusion

Now that the Bill has passed third reading in the Senate, the Bill must proceed through the House of Commons before becoming law. For up to date progress on the Bill, visit the Senate webpage for the Canada Prompt Payment Act here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.