The Alberta Prompt Payment and Construction Lien Act (the “Act”) is set to be implemented on August 29, 2022. As this date approaches, we have some final notes on what businesses can expect as the Act comes into force. Our prior commentary on the changes can be found in this article.
This post provides supplemental commentary on the transitional provisions of the Act and, in particular, what owners, contractors and other parties on construction projects can expect both prior to and after August 29. In addition, we will provide an update with respect to the adjudication process to be introduced under the Act.
Transition provisions
The transition provision of the Act provides that contracts and subcontracts entered into on or after the coming into force of the Act must conform to the provisions of the new legislative framework.[1] As a result, the “bright line” date to be aware of in this respect is August 29, 2022.
- It should be noted that certain changes implemented under the Act require a contract to expressly conform to them in order to be given effect whereas others will be implemented on the coming into force of the Act irrespective of any contractual provisions in place (or not in place). For example, the release of the statutory holdback on a yearly basis expressly depends on whether the contract between the parties allows for this to occur.[2]
- The prompt payment process as a whole broadly refers to work done “in respect to an improvement under a contract”. As such, the date of contract execution can be expected to dictate the application of the Act as it relates to the timelines for payments and disputing proper invoices. However, it is important to note that the prompt payment deadlines under the Act are triggered by a “proper invoice” issued by a contractor to the owner and are not triggered by invoices from subcontractors to contractors.[3]
- The changes include an extension of the lien deadline from 45 to 60 days in the majority of cases; these extensions are also reflected in the provisions of the Act that require the owner to maintain the “lien fund” for a set period after the work is complete. While there may be some argument as to whether or not liens related to contracts entered into prior to August 29, 2022 can rely on the 60 day deadline, owners and contractors should assume that liens will be registered up to 60 days and adjust their holdback timelines accordingly. Lienholders on the other hand would be wise to meet the 45 day deadline or risk becoming a test case.
Adjudication
Despite being mere weeks away from the implementation date, there is still no publicly listed registry of adjudicators under the Act.[4] While we can expect adjudications to be a ways off, adjudicators are necessary for the Act’s implementation as contemplated. We will provide further information in this respect as updates are announced.
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Miller Thomson is available to assist in preparing for the implementation of the Act and any issues which may arise in its wake. Please contact our Alberta Construction Group with any inquiries about the Act and how it will affect your business.
[1] Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 s 74(2) [PPCLA].
[2] Ibid, s 24.1(2)
[3] PPCLA, supra note 1, s 32.1
[4] Prompt Payment and Adjudication Regulation, Alta Reg 23/2022 s 12(1)
