Federal Prompt Payment for Construction Work Act (S.C. 2019, c. 29, s. 387)

Holdback

Marginal note:Payment subject to holdback

• 12 (1) Any payment for construction work made to a party under subsection 9(2), 10(1) or 11(1) may be subject to a holdback provided for by the contract entered into between that party and the party that is to pay them.

• Marginal note:Limit

  (2) However, the amount of a holdback made under the contract cannot exceed what that amount would be if the holdback was made under the construction law of the province in which the construction project is located.

• Marginal note:Payment of holdback

  (3) The amount of the holdback must be paid by no later than the day on which that payment would be made under the construction law of the province in which the construction project is located.

Non-payment

Marginal note:Notice of non-payment

13 A notice of non-payment must include the following:

• (a) a description of the construction work covered by the notice of non-payment;

• (b) the amount that will not be paid;

• (c) the reasons for the non-payment, including whether the party that must pay does not have the necessary funds to do so as a result of also receiving a notice of non-payment that covers the construction work referred to in paragraph (a); and

• (d) any other information prescribed by regulation.

Marginal note:Interest on unpaid amounts

• 14 (1) Interest must be paid and begins to accrue on the following unpaid amounts from the expiry of the time limit for payment provided under this Act or, when applicable, the shorter time limit set out in the contract between the parties:

  • (a) any amount that is not covered by a notice of non-payment;

  • (b) any amount that is covered by a notice of non-payment, if the only reason for non-payment of that amount is that the party that must pay does not have the necessary funds to do so as a result of also receiving a notice of non-payment that covers the construction work that must be paid for; and

  • (c) any amount that is covered by a notice of non-payment, if there is a reason for non-payment of that amount other than the reason referred to in paragraph (b), but only for the portion of that amount that an adjudicator orders to be paid.

• Marginal note:Applicable interest rate

  (2) The interest rate applicable to the amounts referred to in subsection (1) is the rate prescribed by regulation or, if the contract between the parties sets out an interest rate, the greater of the rate prescribed by regulation and the rate set out in the contract.

Dispute Resolution

Marginal note:Designation

15 The Minister may, in accordance with any criteria prescribed by regulations, designate the Adjudicator Authority.

Marginal note:Adjudication

• 16 (1) If a contractor or subcontractor has not been fully paid for its construction work within the time limit for payment provided under this Act or, when applicable, the shorter time limit set out in its contract, that contractor or subcontractor may obtain from an adjudicator a determination respecting any dispute over the non-payment by the party that is to pay it under the contract.

• Marginal note:Notice to other party

  (2) A contractor or subcontractor that seeks to have the dispute referred to in subsection (1) determined by an adjudicator must provide the party that is to pay it under the contract with a notice of adjudication no later than the 21st day after the later of the following:

  • (a) the day on which the contractor receives a certificate of completion with respect to the construction project from Her Majesty or a service provider; and

  • (b) if any of its construction work is covered by the last proper invoice submitted with respect to the construction project, the expiry of the time limit provided under this Act for payment for that work.

• Marginal note:Notice of adjudication

  (3) A notice of adjudication must include the following:

  • (a) the names of the parties to the dispute;

  • (b) a brief description of the dispute, including details of how and when it arose;

  • (c) the amount requested to be paid;

  • (d) the name of a proposed adjudicator; and

  • (e) any other information prescribed by regulation.

• Marginal note:Proposed adjudicator

  (4) For the purposes of paragraph (3)(d), the name must be selected from a list of adjudicators established by the Adjudicator Authority and that selection cannot be restricted by contract.

• Marginal note:Right to information — certificate of completion

  (5) On request, a contractor must inform any subcontractor in the subcontracting chain of the date on which the contractor received a certificate of completion with respect to the construction project from Her Majesty or the service provider.

Marginal note:Joint appointment

• 17 (1) The parties to a dispute must jointly appoint an adjudicator to determine the dispute.

• Marginal note:Request for appointment

  (2) If the parties are unable to jointly appoint an adjudicator, either party may request that the Adjudicator Authority appoint an adjudicator for them.

• Marginal note:Appointment

  (3) On request, the Adjudicator Authority must appoint an adjudicator from a list of adjudicators it has established.

• Marginal note:Consent

  (4) The appointment of an adjudicator is subject to that adjudicator’s consent.

Marginal note:Determination

• 18 (1) An adjudicator must, except in the cases provided for in the regulations, determine the dispute.

• Marginal note:Determination binding

  (2) The adjudicator’s determination is binding on the parties to the dispute unless they come to a written agreement or the determination is set aside by a court order or arbitral award.

• Marginal note:Authority of court or arbitrator

  (3) Nothing in this Act restricts the authority of a court or of an arbitrator to consider the merits of a matter determined by an adjudicator.

Marginal note:Compliance with determination

• 19 (1) If a party that is to pay for construction work under its contract is ordered by the adjudicator to make a payment, the party must make the payment no later than the 10th day after the day on which it received the adjudicator’s determination, or within any other time limit set out in the determination.

• Marginal note:Filing of decision

  (2) If the party that is ordered to make the payment fails to do so within the applicable time limit, the party that is to be paid may

  • (a) suspend further construction work without this constituting a breach of the terms of its contract; and

  • (b) file in the Federal Court or a superior court of a province, as the case may be, a certified copy of the adjudicator’s determination within two years after the day on which that determination was received.

• Marginal note:Effect of filing

  (3) On the certified copy being filed, the determination becomes and may be enforced as an order of the Federal Court or superior court of a province, as the case may be.

Marginal note:Costs, fees and expenses

• 20 (1) Subject to subsection (2), each party to the adjudication must pay its own costs and an equal portion of the adjudicator’s fees and expenses.

• Marginal note:Exception

  (2) If the adjudicator is of the opinion that a party has acted in an abusive, scandalous or vexatious manner or in bad faith, the adjudicator may order that party to pay some or all of the other party’s costs or some or all of the other party’s portion of the adjudicator’s fees and expenses.

Marginal note:No summons

21 The adjudicator is not to be required to produce or give evidence in respect of any matter that comes to their knowledge as a result of exercising their powers or performing their duties or functions under this Act.

General Provisions

Marginal note:Regulations — Minister

22 The Minister may make regulations prescribing

• (a) the information referred to in section 8 and the form and manner in which it is to be submitted;

• (b) the form and content of a proper invoice and the manner in which it is to be submitted;

• (c) the form and any additional content of a notice of non-payment and the manner in which it is to be submitted;

• (d) the powers, duties and functions of the Adjudicator Authority;

• (e) the eligibility and qualifications of individuals who may be designated as adjudicators;

• (f) the powers, duties and functions of adjudicators;

• (g) the maximum fees for the services of an adjudicator;

• (h) the form and any additional content of a notice of adjudication and the manner in which it is to be submitted; and

• (i) the procedure and time limits governing the adjudication.

Marginal note:Regulations — Governor in Council

23 The Governor in Council may make regulations generally for carrying out the purposes and provisions of this Act, including regulations prescribing

• (a) criteria for the purpose of subsection 6(1); and

• (b) in respect of any province, any days that are to be excluded from the computation of time for the purposes of the time limits referred to in sections 9 to 11.

Marginal note:Section 126 of Criminal Code

24 Section 126 of the Criminal Code does not apply to or in respect of any contravention or alleged contravention of any provision of this Act or its regulations.

Transitional Provision

Marginal note:Non-application for one year

25 For one year after the day on which this Act comes into force, this Act does not apply in respect of the following contracts to perform construction work:

• (a) a contract entered into by a contractor, before the day on which this Act comes into force, with Her Majesty or a service provider; and

• (b) a contract entered into by a subcontractor, before the day on which this Act comes into force or within one year after that day, with a contractor referred to in paragraph (a) or with any other subcontractor.