Canadian Senate approves federal prompt payment legislation

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prompt payment senate
Senator Don Plett (centre) introduced The Canada Prompt Payment Act

The Canadian Senate has passed Bill S-224, the Canada Prompt Payment Act, following third reading, following last-minute amendments incorporating provisions similar to impending new provincial legislation in Ontario.

Industry groups lobbying for the bill were enthusiastic, though the legislation still needs to be approved by the House of Commons to become law.

“The passage of Bill S-224 in the Senate marks a significant milestone in our efforts to push for legislation that mandates timely payments for our businesses and for the over 1.3 million construction industry workers in our industry,” said Ed Whalen, president of the Canadian Institute of Steel Construction (CISC).

Bill S-224 requires that federal government project owners must make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in a contract.

The payment requirement is consistent down the contractual chain, says a statement from bill sponsor Sen. Don Plett. The bill has provisions for milestone payments, when applicable, and permits contractors the right to suspend work, terminate a contract and collect interest on late payment.

“It’s a great day for Canada’s construction industry. We thank the Senate for their support on this industry priority and we look forward to working with Members of Parliament on the next phase. It’s all about doing the right thing,” said Del Pawliuk, president of the Mechanical Contractors Association of Canada.

“The Senate has shown incredible leadership by passing this bill,” John Galt, chair of the National Trade Contractors Coalition of Canada, said in a statement. “Trade contractors, tradespeople, suppliers, and any of the 1.2-million Canadians in the construction industry who work on federal government projects will benefit tremendously if the House of Commons also passes S-224.”

The Journal of Commerce reports that Plett, a former trade contractor from Manitoba, was forced to introduce amendments at the committee stage to address last-minute concerns. The amendments were adopted unanimously by the committee and approved by the Senate.

Plett indicated the amendments did not change the bill’s essential nature.

“They did not change the substance or intent of the bill, but brought some of the timelines in line with the recommendations from the Reynolds report,” he said, referring to Ontario’s study proposing reform to the Construction Lien Act. “They addressed some of the concerns of the general contractors, and one dealt with a concern about an efficient timeline for adjudication.

“At the end of the day, all of the amendments clarified and strengthened the legislation. They were all supported by our trade contractors, and they passed unanimously.”

Plett was reported as saying there is bipartisan support for the bill in the House of Commons among backbenchers and that only cabinet could derail it. Liberal MP Judy Sgro is sponsoring the bill in the House of Commons.

“I have every confidence that, unless cabinet gets in the way, this legislation will pass,” he said.

Plett acknowledged said constitutional expert Gerald Chipeur told the Senate committee the legislation is without question within the federal government’s jurisdiction.

Relating to claims adjudication, Plett said general contractors and trade contractors both agreed, “a right to suspend should only arise following an adjudication and a failure to abide the adjudicator’s ruling.”

“We had men in tears here,” Plett was quoted as saying. “Passing the Senate was one giant step forward for this legislation and regardless of what happens in the House of Commons, it is clear from the passion of our subtrades, this bill will not go down without a fight.”

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