On May 28, 2019, British Columbia Liberal House Leader, Mary Polak, introduced Bill M-223 (the Prompt Payment (Builders Lien) Act) (the “Bill”) during the Fourth Session of the 41st Parliament of the Legislative Assembly of British Columbia. The underlying objective behind the Bill is to take steps toward ensuring that builders, contractors and subcontractors are paid without delay.
The Bill seeks to amend the existing British Columbia Builders Lien Act (“BLA”) and bring British Columbia in line with other jurisdictions who have introduced prompt payment legislation such as Saskatchewan, Quebec, Nova Scotia and Ontario. During the Session, Minister Polak stated as follows:
“By setting payment deadlines, we can protect hard-working British Columbians from unexpected and unnecessary financial hardship and minimize payment disputes.”
However, the Bill was not met with optimism from the construction industry as certain homebuilders associations have already voiced their concerns that they were not given an opportunity to be involved in the process.
The Bill mirrors the 2017 Ontario Construction Act in its prompt payment clauses including the following:
- A definition of a “proper invoice” which is very similar to the Ontario definition;
- The requirement of giving a proper monthly invoice unless otherwise provided in the contract;
- A prohibition on certification as a pre-condition to the giving of a proper invoice except as it relates to testing and conditioning;
- Abilities to revise an invoice under certain conditions (e.g. owner agreement, no change to the date of the proper invoice, and no departure from the requirements of the definition of a proper invoice);
- A 28-day payment period following the receipt of a proper invoice from a contractor unless a notice of non-payment is given;
- A 14-day period for an owner to review a proper invoice prior to providing a notice of non-payment and a requirement to pay undisputed amounts;
- A 7-day payment period for a contractor to pay its subcontractors, unless a notice of non-payment is given; and
- Ability of parties to claim and rely on set-off rights for claims.
Notwithstanding the worthy underlying intention of the Bill, it mistakenly contains many direct references to the Ontario Construction Act. In particular, the Bill fails to take into account that most payments in the industry are made monthly and the introduction of a 28-day prompt payment deadline will disrupt regular and long-adhered-to payment and invoicing cycles. Further, although the Bill references the use of adjudication to resolve disputed amounts, the Bill fails to provide for a specific alternative dispute resolution process if a dispute arises. The standard-form CCDC contracts typically require amicable negotiation, then mediation and then arbitration or litigation.
It is unclear whether the Bill is attempting to mandate mediation, arbitration or litigation to resolve disputes, or whether it leaves it to the parties to decide by way of contract. It is equally unclear, given the Bill’s direct references to provisions of Ontario’s Construction Act, whether this is just an oversight by legislative drafters or a sign of future changes to BC’s Builders Lien Act.
It perhaps would be worthwhile to take a wait-and-see approach and use Ontario as a real-time case study to see the implications of prompt payment legislation in the industry before implementing similar legislation in British Columbia.
We foresee the Bill undergoing revisions as the legislative process moves forward and look forward to keeping you apprised of any new details and working with you to better understand your rights and obligations if prompt payment legislation is implemented in British Columbia.