Update on the status of the Prompt Payment and Construction Lien Act

The Alberta Trade Contractors Council (ATCC) met on Monday evening, 2024-03-25, with Ministers Dale Nally (Minister of Service Alberta and Red Tape Reduction of Alberta) and Pete Guthrie (Minister of Infrastructure) to discuss the Prompt Payment legislation, the DOW exemption, the return of the ‘stay’ provision to the legislation, and the Government of Alberta (GOA) opting in to the legislation.

Per the ministers, the DOW exemption was a one off, however the verbiage used states that this could apply to any project with a value >$5B. They stated that if this were to arise again, they would approach industry before granting the exemption. They went on to say that their understanding is that DOW will be paying in 75 days, but the DOW documentation was presented by the ATCC showing that in reality the payments, if on time, will be 115 days to subcontractors.

Both ministers agreed that the Government of Alberta (GOA) was working to replace a sentence, verbatim, that was removed prior to approval of the Prompt Payment and Construction Lien Act (PPCLA) legislation, back into the legislation, regarding the ‘stay’ provision. The ‘stay’ makes the legislation enforceable. The other party still has the ability to appeal the adjudicator’s decision but must pay before that appeal can proceed. The GOA’s issue is having enough time in a legislative session to get the ‘stay’ reinstated. Apparently, the spring session is already full, and the fall session may be as well. This (quasi-promised) amendment, that ATCC and others have been fighting for, for a year and a half now, will likely happen in the fall or in next spring’s sessions. Until the ‘stay’ is in place, adjudication is an exercise in futility, as it lacks teeth. However, since a number of provincial judges are using the PPCLA verbiage in their decisions, it will likely not go well for those who choose the sue rather than adhere to adjudicator’s decisions, unless there is an obvious legal flaw in the decision. This will be viewed as an abuse of the system.

A lot of work and industry consultations have gone on over the past year, with many stakeholders demanding that the GOA opt into PPCLA themselves. Minister Guthrie presented that the GOA has a 96% paid on time performance. It was pointed out however that this is only after invoices are approved, and that under the PPCLA, owners have 14 days to approve the invoice or to provide a written dispute, advising the contractor of what they are not paying (and why). Too often, with the GOA, this process, especially with change orders, can take months (eighteen plus cited for several projects), which the ATCC presented as wholly unacceptable. Both ministers agreed, the point is not if the GOA will pay, but when. The GOA should be leading the way, not lagging, and stated that a lot of work is being done in the background (assumedly to bring GOA into PPCLA). While it is tough to place a lien on the legislature, the point is not if the GOA will pay (although change orders are a tougher road to hoe), but when, and getting the GOA using the same practices as the PPCLA has created for industry.

ATCC has committed to pressuring the GOA to opt into the PPCLA and to replace the ‘stay’.

Some stats on the PPCLA however, show that liens are down 60% since the PPCLA came in. Part of this is the longer lien period and the fact that now late cheques still trickle in ahead of the 60 days, negating the necessity for a lien. Additionally, the news from BILD Alberta shows that the adjudications are working, even without the stay, at least on the residential side.

Per the PPCLA, all GC’s (who must then respond to subs in a further 7 days-21 days total to us) should be getting written notice of any disputed items within 14 days (from the GC’s invoice date-assumedly the last or 30 day of each month), and if no notice is given, the full amount needs to be paid to the GC in 28 days and to the subs in a further 7 days. If the notice of dispute is sent after 14 days, too bad, too sad, the owner has to pay and adjudication will hold this to be true.

Once the GOA opts in and once the ‘stay’ is reinstated, this will be a valuable piece of legislation, provided GCs, subs, and sub-subs, adhere to their part and seek adjudication within the allotted period of 21 days, after non-payment. Still a ‘road to hoe’, but a work in progress, now with an end in sight.