Prompt Payment and Adjudication:
They Are Here!
This article examines the purpose of the new proper invoice provisions of the Construction Act and when they apply.
By Andrew J. Heal
As of October 1, 2019, the long-anticipated Prompt Payment and Adjudication provisions came into effect in Ontario. When does prompt payment apply? The first question is to have regard to the transition provisions of the Construction Act.
The lien modernization provisions changed definitions and extended the time to lien, and those provisions came into force for contracts (i.e. the contract with the owner) entered into on or after July 1, 2018, or where the procurement process for the improvement was commenced on or after July 1, 2018.
Similarly, the Prompt Payment and Adjudication provisions apply to contracts procured or entered into on or after October 1, 2019. This makes the transition provisions of the Construction Act important to carefully consider. Which part of the Construction Act applies? Parties will have to determine first when the contract was entered into or when the procurement process for that improvement was first commenced. A procurement process for an improvement is commenced on the earliest of the making of:
- A request for qualification;
- A request for quotations;
- A request for proposals; or
- A call for tenders (see Construction Act1(4)).
Why Prompt Payment and Adjudication?
The purpose of Prompt Payment and Adjudication is to get payments flowing more quickly through the imposition of statutory deadlines for payment, and the implementation of a mandatory real time interim binding dispute resolution regime (when invoked) which has been designed to resolve disputes more quickly, easily and cheaply during project performance.
The prompt payment provisions of the new Construction Act apply to:
- Payments made under contracts procured on or after October 1, 2019;
- All projects whether public or private projects;
- All payors whether the owner, contractor or subcontractor; and
- All projects regardless of size.
Also, this past summer, the Ministry of the Attorney General appointed the Ontario Dispute Adjudication for Construction Contracts Authority (“ODACC”) who will administer and process adjudications, including the appointment of adjudicators where the parties cannot agree on an adjudicator appointment.
ODACC is presently in the process of training and certifying adjudicators. An adjudication can only be conducted by an adjudicator listed in the ODACC registry. Please check out the ODACC website at: www.odacc.ca for some basic information on process.
If you would like more information as to what this interim binding adjudication process means for you please call us at 416.583.5900x 2004, or please join us for our next Prompt Payment and Adjudication webinar taking place November 21, 2019 @8.30a m for an hour, and you can join us using the link below.