Saskatchewan became the latest in a string of provinces to modernize its construction laws by passing The Builders’ Lien (Prompt Payment) Amendment Act, 2018 (“Act“). This revamped construction legislation was introduced on November 20, 2018, passed second reading on April 2, 2019, and passed third reading on May 2, 2019.
Saskatchewan’s bill, which is modelled after Ontario’s new Construction Act, introduces a prompt payment and adjudication regime into the construction industry. The Government of Saskatchewan advocates that this legislation will better protect and define the rights and obligations of owners, developers, contractors and subcontractors.[1]
The definition for a “proper invoice” is set out in section 5.1 of the Act and is based on the new Ontario definition, being “a written bill or other request for payment for services or materials with respect to an improvement under the contract”, provided it contains the information set out in section 5.1 and meets any other requirements that the contract specifies.
A proper invoice must be given to an owner on a monthly basis, unless the contract provides otherwise.[2]
Importantly, Saskatchewan also follows Ontario’s lead in including section 5.3(2) in its new legislation, which provides that “a provision in a contract that makes the giving of a proper invoice conditional on the prior certification of a payment certifier or on the owner’s prior approval is of no force or effect.”
Effectively, an owner cannot make the certification of payment a precondition to delivery of a proper invoice, thereby eliminating a mechanism that, if utilized, could avoid timely payment.
The new prompt payment regime, which, again, mirrors Ontario’s legislation, provides the following:
- An owner shall pay the amount payable under the proper invoice no later than 28 days after receiving it from the contractor.[3]
- If an owner disputes a proper invoice, it may refuse to pay any portion of the amount payable if, no later than 14 days after receiving the proper invoice from the contractor, the owner provides the contractor with a notice of non-payment.[4]
- At the contractor-subcontractor level, section 5.5(1) of the new Actobliges a contractor who receives full payment to pay each subcontractor who supplied services or materials under the contract no later than seven days after receiving payment.
- If the owner does not pay, in full, the amount payable under a proper invoice within the time specified, the contractor must pay each subcontractor 35 days after giving the owner a proper invoice, unless the contractor gives the subcontractor a notice of non-payment no later than seven days after receiving a notice of non-payment from the owner.[5]
Delving further down into the construction pyramid, each subcontractor who receives full payment shall pay each subcontractor who supplied services or materials no later than seven days after receiving payment.[6] If the contractor does not pay the subcontractor in full, each subcontractor shall pay each subcontractor seven days after the subcontractor receives payment from the contractor; or, if no payment at all has been made, 42 days after the proper invoice was given to the owner.[7] The subcontractor is not obligated to pay its subcontractor if it provides a notice of non-payment no later than seven days after receiving a notice of non-payment from the contractor, or if no notice was given, within 42 days.[8]
Adjudication
As noted, Saskatchewan has modelled its new adjudication regime on what has been legislated in Ontario. Accordingly, in Saskatchewan, the availability of adjudication is not without limits. Section 21.21 sets out the matters that may be adjudicated, including (but not limited to):
- the valuation of services or materials provided under the contract;
- payment under the contract, including with respect to a change order, whether approved or not, or a proposed change order;
- failure or refusal to certify substantial performance pursuant to section 41; and
- any other matter that the parties to the adjudication agree to.
Saskatchewan is also taking Ontario’s lead in including the option of consolidated adjudications within its new regime. Parties may agree to adjudicate disputes together, by a single adjudicator, as a consolidated adjudication.[9]
Conversely, if the parties do not agree to consolidate the adjudication, the contractor may nevertheless require its consolidation.
Currently, no Regulations have been passed in respect of the legislation, however Section 104 of the new Act defines the broad parameters within which the government may make regulations. We await their development with interest.
[1] Government of Saskatchewan Press Release: “Legislation Introduced to Establish Payment Timelines for Construction Industry”, dated November 20, 2018 [https://www.saskatchewan.ca/government/news-and-media/2018/november/20/builders-lien-act]
[2] Section 5.3 of The Builders’ Lien (Prompt Payment) Amendment Act, 2018 (“Act“).
[3] Section 5.4(1) of the Act.
[4] Section 5.4(2) of the Act.
[5] Sections 5.5(4), 5.5(5), and 5.5(7) of the Act.
[6] Section 5.6(1) of the Act.
[7] Sections 5.6(4) and 5.6(5) of the Act.
[8] Sections 5.6(6) and 5.6(8) of the Act.
[9] Section 21.31(1) of the Act.