Ontario prompt payment legislation takes effect

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Large concrete earth tubes were installed during the construction phase.

As of the beginning of October, Ontario has finally rolled out all parts of its prompt payment legislation. The last piece to be put in place was the adjudication authority.

ADR Chambers Inc. of Toronto has been selected as the authorized adjudicating authority. The new body will oversee the adjudication process for construction disputes, including the training and qualification of adjudicators.

“Our government is pleased to announce the full implementation of Canada’s first-ever prompt payment regime and a new, streamlined dispute resolution process that will cut red tape to support jobs and growth in Ontario’s construction industry,” said Doug Downey, attorney general of Ontario.

“Effective today, subject to transition rules, these changes to the Construction Act will help prevent payment disputes from delaying work on construction projects, speed up the payment process and reduce time and money spent on litigation.”

Industry groups are enthusiastic about the final steps completed for the legislation. “The construction industry has been calling for a solution that addresses payment challenges for years, and the new prompt payment regime brought in by the Ontario government will ensure all parties are paid on a timely basis,” remarked Clive Thurston, president of the Ontario General Contractors Association.

The legislation has been in the making for over a decade. Bill 142, the Construction Lien Amendment Act, which passed in the provincial legislature Dec. 5, 2017, establishes clear payment timelines for all parties involved in a construction project. The legislation states that once an invoice is received, owners are required to pay general contractors within 28 days. After that, general contractors are required to pay the sub-contractors within seven days. An adjudication period is in place to settle disputes. General contractors and sub-contractors receive mandatory interest on late payments and can suspend work on a project if not paid.

“Prompt Payment Ontario and all of its members thank the government for holding fast to making prompt payment and adjudication a reality,” said Sandra Skivsky, chair of the National Trade Contractors Coalition of Canada (NTCCC).

“The government’s changes to the Construction Act and implementation of the prompt payment and adjudication framework will result in a more efficient and productive industry. A stronger construction industry means a stronger Ontario economy that is open for business.”

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