Bar association joins industry call for prompt payment rules

The Manitoba Bar Association’s Construction and Infrastructure Section has sent a letter to Premier Heather Stefanson, backing the construction industry’s call for prompt payment rules.

Prompt payment has long been a concern of the industry, particularly with sub-contractors awaiting compensation for work completed, sometimes seeing it tied up not just in processing delays but in issues between the general contractor and project owner.

The adoption of prompt payment rules has been recommended by the Manitoba Law Reform Commission, by integrating them within an update of the Builders’ Liens Act of Manitoba.

“As explained in the Commission Report, the BLA ‘is intended to supplement and enhance inadequate common law contractual remedies to provide more effective means to collect payment from various sources or levels within the construction pyramid.’,” the letter to the Premier notes. “As the industry has evolved, the BLA has not, and instead has handcuffed parties in the construction pyramid to legislatively prescribed payment, lien and trust provisions.

“There is growing concern that, over time, the absence of legislation that reflects the modern delivery of construction services in this province may result in the stunted development of the industry.”

“We’re happy to see support from the Bar Association section on this important issue. Our industry also supports moving on prompt payment, through the Builders’ Liens Act update,” Chris Lorenc, President of MHCA, said.

The letter notes the critical recommendations of the Law Reform Commission included:

• Adoption of prompt payment to address payment delays in the construction industry together with the creation of a private adjudication system with regulatory oversight, similar to what was developed and adopted in Ontario;
• The enhancement of the trust provisions under the BLA to keep project funds within the construction contract pyramid for each project;
• Improving the interconnection between the trust and lien provisions under the BLA. This recommendation flows from the 2015 decision in Stuart Olson Dominion Construction Ltd. v, Structal Heavy Steel, 2016 SCC 43 where the Supreme Court of Canada noted that the BLA does not provide any guidance on the intended interaction between the lien and trust remedies;
• Introduction of mandatory bonding requirements for public projects; and
• Modernizing the construction lien process and holdback requirements to reflect contemporary project management and project financing requirements.