Nova Scotia to Modernize its Construction Legislation and Introduce Prompt Payment and Adjudication

Nova Scotia has introduced legislation to ensure that Nova Scotia’s contractors, subcontractors and suppliers are paid on time. Specifically, Bill 119 (An Act to Amend Chapter 277 of the Revised Statutes, 1989 the Builders’ Lien Act)(the “Bill“) achieved first reading on March 15, 2019 and second reading on April 2, 2019.

The Bill proposes to amend Nova Scotia’s Builders’ Lien Act (“BLA”), and would implement long-awaited changes that will affect Nova Scotia’s construction industry, which employs over 30,000 workers and generates close to $6 billion in economic activity. Nova Scotia’s Justice Minister, and the Minister responsible for the BLA, Mark Furey, has stated after introducing the Bill that:

“The construction industry is important to the economic growth of the province and to the well-being of the people who work in the industry…This legislation and the regulations to be created under it will clearly set out the prompt payment responsibilities of all parties on a construction project…[and] will help companies meet payroll, purchase supplies and cover other expenses in a timely fashion.”[1]

The new Act will be renamed the Builders’ Lien and Prompt Payment Act, and according to the explanatory notes, it is intended to “establish a system of prompt payment requirements for payments to be made under construction contracts” and introduces a new process of adjudication.[2]

The Bill incorporates a number of prompt payment concepts from Ontario’s Construction Act under Section 6 including, as follows:

• the “proper invoice” which must be given to an owner within a prescribed period of time or intervals unless the contract provides otherwise;[3]
• the giving of a proper invoice cannot be conditional on prior certification of a payment certifier or on owner’s prior approval;[4]
• upon receipt of a proper invoice, the owner must pay the amount within the prescribed time (which has not yet been prescribed by regulation) unless it choses to dispute all or any portion of the amount payable by way of notice of non-payment;[5]
• payments to the contractor and subcontractors must be made within prescribed periods of time (which have not yet been prescribed by regulation) and where there are multiple payees, they are to be paid on a proportionate basis;[6] and
• interest will accrue on amounts not paid when due.[7]

As well, Section 4J of the Bill states that a “party to a contract may refer a dispute that is the subject of a notice of non-payment to adjudication pursuant to the procedure set out in the regulations”. The adjudication regulations are not yet available, but it appears that Nova Scotia will take a narrower approach to the availability of adjudication than Ontario has. Specifically, adjudication is only available in the circumstances described in notices of non-payment.[8]

It appears that the Bill also contemplates additions in relation to the appointment of adjudicators, fees, appeals, and enforcement, however these have not yet been articulated as they will be done by way of regulation.[9]

Minister Furey has stressed the importance of connecting with interested stakeholders in the construction industry prior to the legislation being proclaimed, and has advised that there will be an extensive, targeted consultation process commencing in the Spring. These consultations, which will focus on the proposed regulations, will be held with key players including contractors, subcontractors, suppliers, trade unions, engineers, roadbuilders, municipalities, the Canadian Federation of Independent Business, the Nova Scotia Federation of Municipalities, and other interested stakeholders.

As the Bill moves through the legislature, we look forward to seeing whether Nova Scotia’s new legislation will align with Ontario’s approach to prompt payment and adjudication, which comes into force in October 2019.

[1] Nova Scotia Government Website, Prompt Payments for Construction Industry, March 23, 2019 – https://novascotia.ca/news/release/?id=20190315001

[2] Bill 119, Nova Scotia Legislature, 2^nd Session, 63^rd General Assembly, Nova Scotia, 68 Elizabeth II, 2019 https://nslegislature.ca/legislative-business/bills-statutes/bills/assembly-63-session-2/bill-119

[3] Bill at 4A/B(1).

[4] Bill at 4B(2).

[5] Bill at 4(C)(1) and (2).

[6] Bill at 4(D) and (E).

[7] Bill at 4H.

[8] Bill at 4J.

[9] Bill at Section 3.

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