Prompt Payment and Adjudication in Manitoba: The Ontario Approach Adopted

In June 2017, the Manitoba Law Reform Commission (“MLRC”) commenced a project to review its Builders’ Liens Act, which had not been fully reviewed since it was introduced in 1981. The MLRC review was triggered by a number of factors, including judicial criticisms of the existing legislation, local and national efforts around prompt payment, and the introduction of a Bill in Ontario that would amend Ontario’s Construction Lien Act (Bill 142).

Following significant consultations in relation to both the Builders’ Lien Act and prompt payment issues, on November 19, 2018 the MLRC issued its Final Report titled The Builders’ Liens Act of Manitoba: A Modernized Approach (the “Final Report”).

MLRC’s Final Report is a major achievement thanks largely to the efforts of the MLRC, its retained consultant and retired construction expert, Betty Johnstone, as well as input from industry and legal stakeholders. The report contains 87 recommendations (which are summarized in Chapter 9). Many of these recommendations are focused on modernizing the mechanics of the Builders’ Liens Act, however a number of them relate to prompt payment, adjudication and surety bonding.

Broadly speaking, the MLRC recommended a prompt payment and targeted adjudication regime similar to that included in Ontario’s new Construction Act. As well, and similar to the Ontario model, the MLRC recommended mandatory surety bonding on all public projects in excess of $500,000 and a comprehensive claim protocol to be included in the bond forms. The following are some of the salient details of the Final Report’s package of recommendations:

• The Act should be amended to incorporate a new remedy imposing statutory timelines and processes requiring prompt payment of amounts owed under contracts and sub-contracts as well as penalties for failure to adhere to the prescribed timelines. (Recommendation #43)
• The Act should be amended to incorporate similar provisions to sections 6.1-6.9 of Ontario’s Construction Act [the prompt payment provisions with certain modifications]. (Recommendation #44)
• A private adjudication system should be developed and implemented akin to the adjudication system established by Part II.1 of Ontario’s Construction Act with such modifications as are necessary to synchronize its contents with other remedies in the Act. (Recommendation #46)
• The Government of Manitoba ought to seek out opportunities to enter into extra-provincial agreements with other provinces and/or the federal government for the creation and implementation of extra-provincial adjudicator pools. (Recommendation #47)
• Mandatory bonding requirements should be adopted on public contracts within the Province of Manitoba for contracts in excess of $500,000 and contractors should be required to obtain and provide to the public owner:

(a) a performance bond with a coverage limit of at least 50% of the contract price; and

(b) a labour and material bond with a coverage limit of at least 50% of the contract price that extends protection to subcontractors and persons supplying labour and material for the improvement. (Recommendation #84)

• A comprehensive claim protocol should be established for bonding and uniform bonding forms should be prescribed by regulation. (Recommendation #85)

As Ontario continues to roll out the provisions of the new Construction Act, including the prompt payment and adjudication regime coming into force in October 2019, it is interesting to see the province of Manitoba follow suit. We look forward to seeing Manitoba’s proposed legislation, given that, as we know from the Ontario experience, the devil is in the detail. As well, with a recommendation to seek out opportunities for extra-provincial agreements, we look forward to the Government of Canada, the Government of Ontario and the Government of Manitoba working together in potentially providing an aligned approach on prompt payment and adjudication.

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