On February 25, 2022, the Government announced that Bill 37 will come into force on August 29, 2022. Miller Thomson has been closely following the development of Bill 37: The Builders’ Lien (Prompt Payment) Amendment Act) (“Bill 37”) which first received royal assent on December 9, 2020. Bill 37 is intended to update the Alberta Builders’ Lien Act, RSA 2000 c B-7, and introduce a prompt payment system in Alberta.
Prompt Payment provides for strict timeframes for payments between owners, contractors, and subcontractors, with the goal of ensuring that parties on construction projects are paid in a timely and reasonable manner. With the confirmed implementation date, the government has also provided regulations, which further illuminate the Prompt Payment and Adjudication structure parties we will see after August 29, 2022:
- Prompt Payment and Adjudication Regulation, Alta Reg 23/2022;
- Builders’ Lien Forms Amendment Regulation, Alta Reg 22/2022.
Background
Bill 37 will make several changes to the Alberta Builders’ Lien Act, highlights include:
- the time for registering liens in the construction industry will be extended from 45 days to 60 days;
- the time for registering liens in the concrete industry will be extended from 45 days to 90 days;
- the implementation of the prompt payment regime which relies on the concept of a “proper invoice” to trigger timelines for payment and adjudication of disputes;
- the Builders’ Lien Act will be renamed the Prompt Payment and Construction Lien Act.
Please refer to our prior commentary which discusses these changes in some detail:
- Charles W. Bois, Emma L. Johnston, and Matthew E. Wray, “Prompt payment update” (June 17, 2021);
- Emma L. Johnston, Bronwhyn Simmons, and Julia S. Amelio, “Updates to Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020” (April 22, 2021);
- Anna Kosa, Steve Rehak, and Emma L. Johnston, “Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020 passed its third reading in the legislative assembly of Alberta” (December 15, 2020);
- Anna Kosa, Steve Rehak, Leanna Olson, and Lori Goldberg, “Prompt payments and adjudication are set to arrive in Alberta’s construction industry” (November 17, 2020);
- Emma L. Johnston, “The Alberta Construction Trust, the decision in ATB Financial v DLM Oilfield Enterprises Ltd, 2020 ABQB 562, and Bill 37 (Prompt Payment)” (November 17, 2020).
The Regulations
As anticipated, the Prompt Payment and Adjudication Regulation will fill the major hole left by the legislation, being the details of the Adjudication process. This Regulation includes rules governing:
- The conditions for payment of lien holdbacks, payment timelines, interest on late payments and the right to information (ss. 2–5);
- The creation of the “Nominating Authority” and the administration and qualification of adjudicators (Part 2, ss. 6-18);
- Matters which may be adjudicated, which includes payment disputes as well as “any other matter in relation to the contract or subcontract…[]… that the parties in dispute agree to, regardless of whether or not a proper invoice was issued or the claim is lienable” (s 19(e));
- Timelines for the Adjudication process (Part 3, ss. 19-30)
- A qualification to the concrete exception providing that it does not apply to “entities that install or use ready-mix concrete”. Ready-mix concrete is further defined in s 36.
- A transitional provision providing that any long term contracts entered into prior to August 29, 2022, will have two years from the implementation date to ensure the contracts terms are in accordance with the Act (s 37), the Act provides that the contracts entered into after August 29, 2022, must conform with the new legislation, while those entered into prior will be governed by the prior regime (Section 26).
The Builders’ Lien Forms Amendment Regulation (s. 4) adds five new forms to those available under the current forms regulation: an “Owner’s Notice of Dispute”, and four types of Notice of Non-Payment – a “Contractor’s Notice of Non-Payment” due to non-payment by the owner, a “Contractor’s Notice of Non-payment Dispute” due to the contractor disputing the amount a subcontractor is entitled to, a “Subcontractor’s Notice of Non-Payment Where Contractor Does Not Pay” due to non-payment by the contractor, and a “Subcontractor’s Notice of Non-payment Dispute” due to the subcontractor disputing the amount another subcontractor is entitled to.
Going Forward
Miller Thomson is available to assist you in preparing for the implementation of Prompt Payment and Construction Lien Act on August 29, 2022, which should mean ensuring your contracts are in line, and that you are prepared to deal with the timelines imposed by the proper invoice and adjudication system.
Stay tuned for additional commentary on the Regulations and the details of the Adjudication Regime.
