British Columbia Introduces Prompt Payment Legislation

A Bill has been tabled in British Columbia that is intended to modernize its construction legislation and take steps towards ensuring that builders in the province are paid on time. Specifically, Bill M223 (the Prompt Payment (Builders Lien) Act)(the “Bill“) was introduced on May 28, 2019 by BC Liberal House Leader Mary Polak as part of the Fourth Session of the 41^st Parliament of the Legislative Assembly of British Columbia..

Essentially, the Bill proposes to amend British Columbia’s Builders’ Lien Act (“BLA”), and allow British Columbia to follow in the footsteps of other provinces such as Saskatchewan, Nova Scotia, Quebec and Ontario. According to Minister Polak:

“This bill will ensure that those who build our province, contractors, subcontractors and workers, are paid in a timely fashion”

Ms. Polak further stated:

“By setting payment deadlines, we can protect hard-working British Columbians from unexpected and unnecessary financial hardship and minimize payment disputes.”

Unfortunately, the text of the Bill does not fully address the requirements of a well designed prompt payment regime nor does it modify other elements of the existing BLA.

Currently, the Bill provides for a prompt payment regime that is loosely based on the Ontario Construction Act. Specifically, the new Bill includes prompt payment provisions directly derived from Construction Act including, in part, as follows:

• A definition of a “proper invoice” which is largely based on the Ontario definition;
• The giving of a proper invoice on a monthly basis unless the contract provides otherwise;[1]
• A prohibition on certification as a pre-condition to the giving of a proper invoice[2] except as it relates to testing and conditioning;[3]
• The ability to revise a proper 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);[4]
• A 28 day payment period following the receipt of a proper payment from a contractor subject to a notice of non-payment;[5]
• 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;[6]
• A 7 day payment period for a contractor to pay its subcontractors, subject to the giving of a notice of non-payment;[7]
• Payment rules based on specific amounts unpaid and disputes with subcontractor work (i.e. payment on a rateable basis, as applicable) and a requirement to pay undisputed amounts to subcontractors;[8]
• A requirement to undertake to adjudicate if a contractor issues a notice on non-payment on the basis of non-payment by the owner;[9]
• Similar payment provisions for subcontractor to subcontractor payments as applicable for contractor to subcontractor;[10]
• The ability for parties to rely on set-off under Section 12 (set-off by trustee) or section 17(3) (lien set off)[11] (note, that this provision references provisions of the Ontario Act which are not equivalent in the British Columbia Builder’s Lien Act which the Bill is intended to amend); and
• Interest on late payments on the basis of the Courts of Justice Act[12] (again, problematically, a reference to an Ontario-specific requirement).

Bill M223, while laudable in intent, raises several critical issues. Some of these are technical issues as noted above which result from what appear to be a direct references to provisions of the Ontario Construction Act. However, most notably, this Bill does not include any reference to an adjudication regime aside from the undertaking to conduct an adjudication that forms part of the notice of non-payment requirements.

To successfully replicate the model contained in Ontario’s Construction Act model, significant modifications to Bill M223 would be required.

As the Bill moves through the legislature, we look forward to seeing whether British Columbia’s new legislation will be adapted or whether the bill will serve as a precursor to a fully sponsored government bill to follow.

Stay tuned for updates as we await the details of the new legislation.

[1] Bill M223 at s. 3.2(1).

[2] Bill M223 at s. 3.2(2).

[3] Bill M223 at s. 3.2(4).

[4] Bill M223 at s. 3.2(5).

[5] Bill M223 at s. 3.3(1) and (2).

[6] Bill M223 at s. 3.3(2) and (3).

[7] Bill M223 at s. 3.4.

[8] Bill M223 at s. 3.4(3) and (4).

[9] Bill M223 at s. 3.4(5).

[10] Bill M223 at s. 3.5.

[11] Bill M223 at s. 3.6.

[12] Bill M223 at s. 3.8.

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