The Prompt Payment and Construction Lien Act: Two years on

Introduction

On August 29, 2022, amendments to the Alberta Builders’ Lien Act, RSA 2000, c B-7 (the “BLA”) came into force and that act became the Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 (the “PPCLA”).  The PPCLA makes a number of amendments to the BLA, primarily introducing the concepts of prompt payment[1] and adjudication,[2] in addition to more procedural elements such as extending the lien period to 60-days. At the two-year mark these additions are more familiar on Alberta projects, but we expect most parties are far from comfortable with the obligations imposed by the prompt payment timelines and the possibilities of in project construction adjudications.

As of August 29, 2024, the transition period set out in in the PPCLA has passed. The transition provisions provided that contracts or subcontracts entered into prior to August 29, 2022 were governed by the terms of BLA, however, where a contract was in force prior to August 29, 2022 and scheduled to be in force past August 29, 2024,[3] that contract was required to be amended within those two years to comply with the new provisions of the PPCLA.[4] While we anticipate that not all contracts have been amended, and the language in the transition provisions is less than clear, it is likely the case that the terms of the PPCLA now apply to all construction agreements in Alberta, irrespective of the date entered into or the status of amendments. It is certainly the case that many parties will be operating on this assumption. On contracts pre-dating August 29, 2022, this means the new prompt payment obligations, potential construction adjudications and extended holdback periods are now in effect. Owners should be alert to these obligations, and the possibility that potential claimants will seek these remedies.

Changes made by PPCLA

Miller Thomson LLP’s construction lawyers have previously written about the substance of the changes implemented as part of the PPCLA coming into force, in particular in the posts listed below:

• The last days of contingent payments: Pay-when-paid clauses and the PPCLA
• Alberta’s new prompt payment and construction lien legislation: An overview
• What to expect as the implementation of prompt payment in Alberta looms: The final countdown
• Bill 37: Prompt payment slated to come into force on August 29, 2022 (and Regulations!)
• Potential timelines for implementation of Bill 37, the Builders’ Lien (Prompt Payment) Amendment Act, 2020
• Updates to Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020
• Bill 37: Builders’ Lien (Prompt Payment) Amendment Act, 2020 passed its third reading in the legislative assembly of Alberta
• Prompt payments and adjudication are set to arrive in Alberta’s construction industry

Case law

In addition, we have provided commentary on case law arising from the PPCLA, and the Ontario Construction Act, which includes many similar provisions. These decisions are very informative in understanding how the legislation will be interpreted, and the many pitfalls that parties should seek to avoid. These articles can be found as follows:

• Timeliness of lien litigation, consent orders and Lesenko v Wild Rose Ready Mix Ltd
• Alberta construction adjudications are final and binding? Judicial interpretation of Part 5 of the Prompt Payment and Construction Lien Act
• Exemptions to a tribunal’s authority to determine its own jurisdiction and the scope of arbitration clauses
• The Superior Court of Justice provides guidance on adjudication determinations and the return or reduction of security in construction lien claims
• The gatekeeper function when preserving a construction lien
• Ontario Court rejects motion filed under section 47 of the Construction Act; clarifies the concept of “abandonment of contract” in construction lien matter
• CCS Contracting Ltd. v. Condominium Corporation No. 1520090 and certificates of Lis Pendens under the Prompt Payment and Construction Lien Act
• Ontario’s construction dispute interim adjudication: Pros and cons

Lastly, please note that if the applicable contract was formed prior to August 29, 2022 and has not been amended to conform with the PPCLA, then the safest path is still to register a lien within the 45-day lien period. As always when it comes to preserving lien rights, it is better to be safe than sorry. On the opposing side we would similarly caution owners not to rely on a 45-day holdback release period as liens may still appear until the expiry of the 60-day lien period.

Do not hesitate to contact Miller Thomson’s Construction and Infrastructure Group if you have any questions about construction liens or regarding the changes brought about by the PPCLA.

[1] PPCLA, Part 3.

[2] PPCLA, Part 5.

[3] PPCLA, s. 74(3).

[4] Prompt Payment and Adjudication Regulation, Alta Reg 23/2022, s. 37.