emerging in the industry. Whereas previously, owners, general contractors,
subtrades and suppliers shared common goals and enjoyed
strong interpersonal relationships (which, in turn, led to the timely
settling of accounts), relationships today are far less cordial. They are
conducted at arm’s length through technology and detailed contracts,
when only a handshake used to suffice. Trust has eroded among the
various players in the construction game. With it, respect and care for
one’s peers has disappeared. Such change manifests itself in delayed
payments, among other unscrupulous practices.
The American experience
A discussion on current strategies and experiences followed. The
participants heard a presentation from Chris Wright, a lawyer
with the Seattle-based firm, Watt, Tieder, Hoffar & Fitzgerald, LLP.
Wright spoke to the American experience with prompt payment legislation,
a solution that many in the CCA summit viewed as a tonic
for curing the Canadian industry’s payment woes. Wright cautioned
that legislation has worked – to a degree. While the law helped to
bring the late-payment practices of a number of firms under control,
it also left open a few loopholes that led to long-running court
actions. Wright explained that while mechanisms exist in the legislation
to solve disputes via binding arbitration, if that process fails,
claimants can wait up to two years to have their prompt payment
cases heard in court.
The participants were then asked to consider the American experience
and whether elements of that solution could be exported
into Canada. Although opinions in the room were divided over
whether an American-style legislated solution should be adopted
in Canada, a few consensuses did emerge. The group believed that
a legislative approach should at least be considered. Many also felt
that the federal government here in Canada should take the lead
on introducing prompt payment legislation, and then trickle down
its solution to the provinces and territories. ( Just as the United
States federal government did, after which 49 of the 50 states followed
suit.)
Participants agreed that Canada is a far different social and cultural
animal than the United States. Our prompt payment model,
therefore, should also be different. In addition to legislation,
the Canadian solution might consider stronger language in industry
standard contracts, such as those created by the Canadian
Construction Documents Committee (CCDC). It should also, perhaps,
draw on the experiences of other countries, such as the United
Kingdom and Australia, which have implemented prompt payment
laws. Other elements of a uniquely Canadian solution might include
a system of adjudication to help resolve disputes quickly, a right to
Prompt Payment in the Provinces
Most people in Canada’s construction
industry already know that Ontario
came within a hair’s breadth of enacting
prompt payment legislation in the
spring of 2014, only to have the bill set
aside and eventually die on the order
paper when the province elected a new
government. The issue is back on the
table with the current government’s
review of the Construction Lien Act
and progress is expected in 2016.
Ontario’s delay appears to have paved
the way for Quebec to take the lead on
prompt payment. The participants at the
CCA summit heard from Pierre Hamel
of the Association de la construction du
Québec that a report on prompt payment
is already in the hands of the provincial
government and that draft legislation
may be released following delivery of
the Charbonneau Commission’s report.
A quick straw poll around the room
revealed that progress on prompt
payment in other provinces varies.
Some, such as Alberta and Nova Scotia,
are actively pursuing legislation. Many of
the remaining provinces have opted to
wait and see how solutions develop in
other provinces or at the federal level.
CCA
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