LEGAL
Prompt Payment
& Interim Adjudication
Key points for industry to consider
By Maria Ruberto and Kyle L. Kuczynski, Pallett Valo LLP
Each common law province in
Canada has its own construction
lien legislation. Lien legislation
imposes obligations
on, and provides various remedies
to, various players in the construction
industry. However, in Ontario,
the Construction Act (the Ontario
Act) as it read before July 1, 2018,
did not provide for any certainty
of timely payments from owner
to contractor, from contractor to
subcontractor and so on down the
steps of the construction pyramid.
Following examples in other countries
and regions, and following a
lengthy review commissioned by the
Ontario government,1 Ontario introduced
‘prompt payment’ into its legislation,
the Ontario Act.2
Prompt payment came into
effect in Ontario on Oct. 1, 2019.
However, it did not automatically
apply to all construction contracts/
subcontracts. Rather, the transition
provisions in the Ontario Act
must be looked at to determine
whether prompt payment provisions
are applicable to a contract
or subcontract. If the contract or
procurement process was entered
on or after Oct. 1, 2019, then the
prompt payment provisions
of the Ontario Act apply to
construction contracts and
subcontracts. Therefore,
all players in the construction
industry need to ensure that their
contracts or subcontracts are compliant
with the prompt payment
DARIUS TUREK / 123RF TROYZEN / 123RF
OWNERS
CONTRACTORS
SUBCONTRACTORS
PILING CANADA 51