On March 1, 2022, Saskatchewan’s new prompt payment legislation came into force. The Builders’ Lien (Prompt Payment) Amendment Act, 2019 (the “Amending Act”) amends the Builder’s Lien Act and is designed to protect contractors and subcontractors by setting timelines for the prompt payment of invoices by owners. The legislation also aims to more efficiently resolve construction disputes by putting in place an adjudicative body through which disputes must be resolved within specified timelines. The objective is to implement a more cost-effective and timely regime for the resolution of disputes and payment of invoices[1]. The details of the legislation were the subject of a previous post by the authors.
The prompt payment regime has been long-awaited by the construction industry in Saskatchewan. In the early years of this regime, the transitional provisions will be relevant in determining whether the Amending Act applies and to which contracts. The legislation provides that any contract for an improvement that is entered into before the coming into force of the Amending Act will be governed by the Builder’s Lien Act as it existed before the Amending Act’s provisions came into force[2]. As a result, the prompt payment framework will not apply to such contracts. Subject to certain specified exclusions in the Amending Act, the prompt payment framework will apply to contracts which are entered into on or after the coming into force of the Amending Act[3].
There are industries which the Amending Act precludes from the prompt payment regime. The legislation does not apply to “contracts for services or materials for any improvement with respect to a mine or mineral resource[4]”, or to contracts in relation to infrastructure “in connection with the transmission or distribution of electrical energy[5]”, it also does not apply to architects, engineers, and land surveyors[6].
The coming months will be important as they will reveal how this new legislative scheme plays out and affects change in the construction industry in Saskatchewan. Ontario introduced prompt payment legislation and an adjudication regime in 2019 and the province has seen a relatively slow adoption of the adjudicative process since then. In its first year, the Ontario Dispute Adjudication for Construction Contracts (“ODACC”) reported just twenty-seven adjudications, with that annual number only increasing to fifty by the end of the 2021[7]. Contrary to expectations, most disputes in Ontario thus far do not relate to the issue of “prompt payment” but rather relate to general construction disputes[8].
Similarly, in Saskatchewan, it may take time for the market to adjust to the new regime by a) rendering “proper invoices” as defined by the legislation (which triggers the application of the new regime); and b) seeking dispute resolution by utilizing the new adjudicative process. However, since the prompt payment regime was introduced in Ontario, other provinces such as Saskatchewan have had more time to learn about the new regime and to observe it in action. The next 1-2 years will indicate whether that period of learning and observation leads to a more expeditious adaptation to the prompt payment regime by the construction industry in Saskatchewan.
[1] Upon the coming into force of the legislation, the Attorney General of Saskatchewan stated that “[t]he prompt payment of contractors and subcontractors, combined with an effective dispute resolution process, is imperative to ensure construction projects across the province progress without delays.”
[2] Section 13.
[3] Ibid.
[4] The Builder’s Lien Regulations, c. B-7.1, s. 5.1 (a).
[5] The Regulations, s. 5.1 (b).
[6] The Regulations, s. 5.1 (c).
[7] https://canada.constructconnect.com/dcn/news/government/2022/04/legal-notes-analyzing-the-slower-than-expected-adoption-of-adjudication
[8] Ibid.
