Manitoba construction industry’s “Prompt Payment law” comes into effect April 1 | Insights

Manitoba companies hiring construction contractors need to take urgent note of the new Prompt Payment law which comes into effect April 1.

Bill 38, The Builders’ Lien Amendment Act — also known as the Prompt Payment law — stipulates that paying your contractor needs to happen quickly, or businesses will face consequences.

The new law outlines that contractor invoices must be paid on time, and if there’s any delay, the case will be adjudicated in a fast-tracked process for dispute resolution. The Act aligns with similar construction prompt payment acts already on the books in Ontario, Saskatchewan and Alberta.

Breakfast seminar to learn more

MLT Aikins lawyers, Baillie Chisick, Daryl Chicoine and John Martens, are presenting at a two-hour Prompt Payment breakfast seminar March 25 beginning at 7:15 a.m. at St. Boniface Golf Club in Winnipeg. The event will be moderated by the firm’s Tyler Kochanski and feature an in-depth look at the purpose of prompt payment, the types of contracts impacted by this new law, and the various timelines laid out for owners, general contractors, subcontractors and suppliers.

Attendees will also learn the requirements for a proper invoice to trigger payment obligations, what happens if a payment is disputed, and how the new interim adjudication process works. Included in the seminar will be information on how prompt payment has worked in other provinces and what the new deadlines are to register or serve a builders’ lien in Manitoba.

Titled The Future of Construction Payments: Insights on the Prompt Payment Act, the Winnipeg breakfast seminar will teach those in the construction industry and the companies that hire them how to prepare for the new changes.

Understanding the new legislation is critical for stakeholders—most importantly lenders—to be able to respond diligently to the timelines imposed.

The Legislation

Owners must pay contractors within 28 days of receiving a monthly “proper invoice” from contractors. They then have seven days to pay their subcontractors, who in turn, must pay their subcontractors in seven days, and so on.

When a disagreement occurs

Owners can dispute a proper monthly invoice within 14 days of receiving it by providing a notice of nonpayment to the contractor, who must then provide notifications to the affected subcontractors within seven days.

Adjudication is available to resolve prompt payment disputes as well as a range of other construction disputes. Adjudication decisions are considered “interim and binding” and must be paid within 10 days (with limited rights of judicial review for matters such as bias or fraud). Decisions can be overturned in a later court or arbitration decision.

Some exemptions apply

To date, the only groups exempt from the application of prompt payment and adjudication in Manitoba are architects and engineers. This differs from other provinces which have limited additional exemptions for specific industries. For example, nuclear is exempt in Ontario, mining and power utility construction are exempt in Saskatchewan and public works is exempt in Alberta.

To accommodate the requirements of these two new systems, Bill 38 extends the lien registration timeline from the current 40-day period to a 60-day period.

Failure to comply

If contractors in Manitoba fail to abide by Prompt Payment, the case goes to adjudication with a fast-tracked process for dispute resolution.

Adjudication decisions are considered “interim and binding” and must be paid within 10 days, with limited rights of judicial review for matters such as bias or fraud. Decisions can still be overturned in court.

To accommodate the requirements of these two new systems, Bill 38 Prompt Payment extends the lien registration timeline from the current 40-day period to a 60-day period.

To better navigate these prompt payment complexities, MLT Aikins encourages all interested parties to register for this breakfast event.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation. 

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