The Ontario government has unveiled legislation to become Canada's first provnice to create a prompt-payment law.
Supported by contractors and subs who have long complained of foot-dragging by project owners on payments, the bill would amend the province’s Construction Lien Act to require project owners to make a payment within 28 days of receiving an invoice.
Under the proposal, contractors are required to pay their subcontractors within seven days of receiving payment from the project owner.
The project owner, in turn, has the right to issue a notice of nonpayment within 14 days of receiving an invoice from the contractor, detailing the amount that is not being paid and the reason for it. However, interest then begins to accrue on the unpaid amount of the invoice after it comes due.
"This new legislation will bring significant changes, not only a mandatory prompt payment regime and adjudication of construction disputes, but also changes to lien rights," say attorneys Neil Abbott and Ted Betts of Ottawa-based law firm Gowling WLG, who outlined key changes in a June article.
The Ontario Legislative Assembly is expected to hold a committee hearing on the bill in September, with potential passage before next June and the next round of provincial elections, according to a report by Osler, a Canadian law firm.
The proposal comes after more than 14 months of discussions with industry stakeholders and an in-depth report commissioned by the provincial government.
Meanwhile, the Mechanical Contractors Association of Canada is making a strong push in Ottawa for a federal prompt-payment law. The subcontractors group helped push a bill through the Senate, which still must be passed by the House of Commons.
Canada is the only country in the western world that still does not have a prompt payment law for public projects, according to a report by the National Trade Contractors Coalition of Canada. The U.S., U.K., and the European Union all have long since passed legislation, supporters contend.