Canada: Saskatchewan Introduces Prompt Payment Bill For Construction Industry

Last Updated: November 29 2018
Article by Caroline J. Smith and Collin K. Hirschfeld

On November 20, 2018, the Saskatchewan government introduced a bill to amend The Builders' Lien Act (the Prompt Payment Bill). The Prompt Payment Bill mandates prompt payment of contractors and subcontractors on construction projects and creates a dispute resolution process called "adjudication" to resolve payment disputes. The Prompt Payment Bill is not yet law and is subject to change. Some of the details of how the legislation will work will be included in regulations that have not yet been made public. It is nevertheless important for those in the construction industry to understand the major changes included in the proposed Prompt Payment Bill so they can begin preparing for them.

Before discussing the changes contemplated in the Prompt Payment Bill, it is important to note that some parts of the Prompt Payment Bill differentiate between contractors and subcontractors in a way that does not entirely match the way those terms are used in the construction industry. For the purposes of the Prompt Payment Bill, a contractor is defined as any company or person hired directly by an owner. A subcontractor is defined as any company or person that provides services or materials to a contractor or another subcontractor. A person employed for wages is not considered a contractor or subcontractor. Obligations to pay wages are not altered by the Prompt Payment Bill.

The key points of the Prompt Payment Bill are as follows:

Invoicing and Payment Must be Prompt

A contractor must submit a "proper invoice" to the owner monthly unless the contract provides otherwise. To be considered proper, an invoice must include the information prescribed by the Prompt Payment Bill and its regulations, including information identifying the relevant contract or other authority (e.g. purchase order) under which the services or materials were supplied, and the name, title, telephone number, and mailing address of the person to whom payment is to be sent.

The owner must pay a proper invoice within 28 days of receipt.

Once the owner pays the contractor, the contractor has seven days to pay all subcontractors and suppliers whose services or materials were included in the invoice the owner paid. There is no requirement in the Prompt Payment Bill that a subcontractor provide proper invoices on a monthly basis, but contractors may include such a requirement in their subcontracts to ensure that they can submit their proper invoices to the owner monthly.

There is a Prescribed Process for Disputing Invoices

If the owner disputes the amount payable under a proper invoice, they must give the contractor a "notice of non-payment". Contractors and subcontractors can also dispute the amounts payable to their subcontractors and suppliers by giving them a notice of non-payment.

There are timelines, forms, and other requirements for delivering notices of non-payment, some of which are in the Prompt Payment Bill and some of which will be included in regulations.

Payment Disputes can go to Adjudication

What is Adjudication?

The Prompt Payment Bill establishes a procedure called "adjudication".

Adjudication is a quick process for getting decisions on disputes. It can be used to enforce the payment deadlines in the Prompt Payment Bill. Adjudication is available for disputes about invoices for which a notice of non-payment has been issued, other payment-related disputes, disputes about the failure or refusal to issue a certificate of substantial performance, and anything else the parties agree to address.

The person who makes the decision is called the "adjudicator". The parties may agree on who should be the adjudicator, or the "Adjudication Authority" can appoint an adjudicator. Currently there is no body designated as the Adjudication Authority. The Saskatchewan Minister of Justice can designate a body to be the Adjudication Authority; if no body is designated as the Adjudication Authority, the Minister of Justice is the Adjudication Authority.

Adjudication is supposed to be used before the contract or subcontract in question is completed, but the parties can agree to adjudicate after completion. Each adjudication is supposed to address only one issue, unless the parties agree otherwise.

How is an Adjudication Started?

Any party to a dispute can refer it to adjudication by giving the other party a "written notice of adjudication". A written notice of adjudication will include a brief description of the dispute and the other information specified in the Prompt Payment Bill.

How Does an Adjudication Work?

The party that referred the dispute to adjudication must give the adjudicator a copy of the applicable contract or subcontract and any documents they want to rely on. It is currently unclear whether the other party has a right or obligation to give documents to the adjudicator, but the adjudicator may make directions about this issue.

In making his or her decision, the adjudicator can review the documents provided by the parties, visit the construction site, and get assistance from an expert like an accountant or engineer. The adjudicator can also issue directions about the conduct of the adjudication, so he or she could likely decide if they want any submissions or evidence from the parties other than the documents they provide.

The adjudicator must make his or her decision within 30 days of receiving documents from the party that referred the dispute to adjudication, but the parties can agree to extend the deadline.

What Happens When the Adjudicator Makes a Decision?

An adjudicator's decision binds the parties, but only until it is superseded by a decision made on that issue in court or in an arbitration or an agreement between the parties on the issue. In the meantime, however, if an adjudicator decides that one of the parties must pay the other, that payment must be made within 10 days of the adjudicator's decision being sent to the parties. If the payment is not made, the successful party can file the decision with the court and it can be enforced like a court order.

The decision of an adjudicator can be set aside by the court for one of the narrow list of reasons given in the Prompt Payment Bill and its regulations, including adjudicator bias or failure to comply with the required procedures.

What are the Costs of Adjudication and who Pays Them?

The adjudicator will charge a fee. The parties will split the fee between themselves equally and pay their own costs unless the adjudicator determines that one of the parties should pay some or all of the fee or costs because they acted in bad faith.


Those involved in the construction industry will need to review their invoicing and payment procedures to ensure that they comply with the requirements of the Prompt Payment Bill and its regulations, when passed. However, the most significant change proposed in the Prompt Payment Bill is likely the adjudication process. The adjudication process offers a way of reaching an interim resolution of payment-related disputes while the construction project is still underway, and could significantly alter the dynamics between owners, contractors, and subcontractors regarding payment issues.

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.

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Caroline J. Smith
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