.JPG)
On August 29, 2022, changes to Alberta’s Builders’ Lien Act came into effect, including a name change to the Prompt Payment and Construction Lien Act, SA 2000, c P-26.4 (the “PPCLA” or the “Act”). This marked the first significant update to Alberta’s lien legislation in several decades and was driven in part by a desire to incorporate prompt payment and adjudication regimes, similar to those implemented in Ontario and other Canadian jurisdictions.
While prompt payment and adjudication in Alberta is little more than two years old, industry members have expressed concerns about the adjudication process and identified obstacles to the adoption of the prompt payment regime introduced under the Act. There has also been a level of interest in extending the prompt payment regime to government projects.
Touted by the Minister as reducing "red tape" to simplify complex processes for Albertans, on November 4, 2024, the Minister of Services introduced Bill 30, the Service Alberta Statutes Amendment Act, 2024 (“Bill 30”). Bill 30 proposes, among other things, changes to the PPCLA and to the Public Works Act, RSA 2000, c P-46 (the “PWA”). As of the date of this publication, Bill 30 has passed its second reading. The Minister suggests that if passed after a third reading, the amendments introduced under Bill 30 will be in effect as early as Spring 2025.
In this article, we highlight the key proposed changes to the PPCLA and PWA.
Key Proposed Amendments to the PPCLA
Optional Waiver for Consulting Professionals
The proposed amendments to the PPCLA include an optional waiver of rights and obligations under Part 2 of the Act for regulated professional engineers and architects. Unlike the existing provisions of the PPCLA, which prohibit an agreement to waive application of the Act, the proposed amendments would allow engineers and architects to waive their lien rights, and by extension, any associated holdback requirements where their contract expressly contemplates such a waiver. Such waiver is qualified insofar as it would only apply to the extent that it does not conflict with and is not inconsistent with the regulations. This waiver does not apply to the prompt payment and adjudication regime of the Act.
Bolstering the Adjudication Regime
The uptake of the adjudication process in Alberta has been slow, with 23 notices being filed during the period of August 29, 2022 to March 31, 2024. [1]ARCANA, the Nominating Authority in Alberta, has raised issues with implementation of the new adjudication regime under the Act, specifically in respect of jurisdictional issues in the interpretation of the PPCLA and the negative impact of court interventions in the adjudication process. [2] Additionally, emerging jurisprudence has highlighted the need for clarity in respect of the finality of an adjudicator’s decision. [3]In response to these concerns, Bill 30 proposes amendments to the adjudication regime, aiming to give fuller effect to the legislature's intention of making adjudication the default forum for resolving construction disputes.
As a starting point, Bill 30 proposes to extend the window for a party to commence adjudication proceedings from the date the contract is complete (as the PPCLA currently contemplates) to 30 days after the date of final payment, unless the parties to the adjudication agree otherwise. The “date of final payment” is defined in the amendments to mean the earlier of (i) the date on which complete payment of the amount set out in the contract or subcontract is made, and (ii) the date on which complete payment of the amount set out in the contract is required in accordance with the statutory prompt payment deadlines. It is not tied to substantial performance.
A further attempt to bolster the adjudication process is evidenced by the proposed changes to the PPCLA’s treatment of multiplicity of proceedings. For one, the proposed amendments remove the qualification that a party can only initiate adjudication if it has not already commenced a court action with respect to the same dispute. Similarly, under the current wording of the PPCLA, if an adjudication is initiated on the same day that a party commences a court action regarding the same dispute, the adjudication is automatically discontinued, and the court action proceeds. However, the proposed amendments allow both the adjudication and the court action to continue simultaneously unless a party applies for a ruling, or the court decides on its own to direct otherwise. An adjudication will only be automatically terminated if the court issues a decision on the merits of the dispute while the adjudication is still ongoing.
The proposed amendments under Bill 30 also aim to strengthen the adjudication regime by seeking to reinforce the finality of an adjudicator’s decision. To this end, the proposed amendments narrow the circumstances in which an adjudicator’s decision is not binding on the parties. For instance, under the existing language of the PPCLA, a party need only enter into a written agreement to appoint an arbitrator for an adjudicator’s decision to no longer bind them. The proposed amended language narrows the category to instances where an arbitrator has been appointed by the parties under the Arbitration Act and has made an award in respect of the matter. A similar narrowing of the exceptions to the registration and enforcement of an adjudicator’s order has also been proposed.
The proposed amendments support the notion that adjudication be the default method for resolving disputes. However, ambiguity remains regarding the binding nature of an adjudicator's decision, as the proposed language does not explicitly resolve the lingering question of whether such a decision is final.
Key Proposed Amendments to the PWA
Industry stakeholders have expressed interest in integrating a prompt payment and adjudication framework on government projects, highlighting the need for timely payments on such projects and the desire to align the handling of government projects in Alberta with other Canadian jurisdictions that have adopted prompt payment and adjudication principles for public projects. In response to these concerns, and among other changes to the PWA (including housekeeping updates to the tender process), Bill30 proposes the incorporation of a prompt payment and adjudication regime for government projects akin to that already in place for private sector projects through the PPCLA.
Prompt Payment in the PWA Context
The proposed amendments include proper invoice requirements identical to those in the PPCLA. Bill 30 proposes similarly mandated monthly billings through proper invoices, which must be issued at least every 31 days, and proposes to preserve the 28-day payment deadline for undisputed amounts between the Crown and a contractor. An important difference between prompt payment under the PPCLA and the proposed amendments to the PWA lies in the payment obligations down the contractual chain. Unlike the PPCLA, where the payment timeline between contractors and subcontractors is tied to payment of undisputed amounts under a proper invoice by the owner, the proposed amendments to the PWA flow down the proper invoice requirements to every tier of subcontractor and tie the payment deadlines down the contractual chain to the receipt of a proper invoice from the subcontractor or sub-subcontractor (as applicable).
The proposed changes implement the payment deadlines from the PPCLA: a contractor must pay its subcontractors within 35 days and a subcontractor must pay its sub-subcontractors within 42 days. However, unlike in the PPCLA, the proposed amendments to the PWA require payment to be made "regardless of whether or not the Crown has made any payment to the contractor for the labour, equipment, material, or services described in the proper invoice provided to the contractor." They do not incorporate a requirement for the Crown to issue a Notice of Dispute for any disputed amounts in a proper invoice. Instead, the onus remains on the unpaid contractor or subcontractor to file a Notice of Claim. With that said, the proposed amendments remove the existing time periods within which a Notice of Claim must be filed, ostensibly to allow an unpaid contractor or sub-contractor to file a Notice of Claim as soon as the relevant payment deadline passes.
Adjudication in the PWA Context
Bill 30 proposes to incorporate into the PWA by reference the adjudication regime set out in the PPCLA, subject to some modifications. For instance, the proposed amendments contemplate a lengthy number of exceptions to the application of the adjudication regime, including for disputes that seek relief other than payment and any disputes for which the claimant seeks an order or declaration in respect of, inter alia, the validity of the termination of a contract, delay or modification of a construction schedule, or the achievement of a milestone date under the relevant contract. The proposed adjudication regime under the PWA also caps the amount claimed in any adjudication to $200,000.
No Waiver
Whereas the PWA does not presently prohibit agreements by parties to contract out of the remedies provided under the legislation, the proposed amendments contain the same waiver as is found in the current wording of the PPCLA. Presumably, this is to reinforce the mandatory nature of the proposed prompt payment and adjudication regimes, as applicable, on government projects.
The proposed incorporation of prompt payment and adjudication into the PWA is indeed a step in the right direction and may serve to assuage concerns about timely payment and effective dispute resolution on government projects. However, the proposed amendments, as they exist currently, fall short of fully addressing stakeholder concerns insofar as they fail to encompass P3 projects. While indeed such projects engage different considerations based on their complexity and the fact that they often include maintenance work, the absence of a uniform application of prompt payment and adjudication to all construction projects in Alberta, including P3 projects, renders the Minister’s attempts to “close the loop” on prompt payment and adjudication somewhat perfunctory.
Conclusion
Although the proposed amendments in Bill 30 are responsive to some industry concerns, they are unlikely to fully address issues regarding timely payment and the efficient resolution of construction disputes under both the PPCLA and the PWA. While some of these issues may be resolved through further judicial treatment, it is likely that additional legislative changes will be required to give fuller effect to the legislature’s intention.
[1] Arcana Annual Report 2023 pp. 9.
[2] Arcana Annual Report 2023 pp. 8.
[3] See e.g. Welcome Homes Construction Inc v Atlas Granite Inc., 2024 ABKB 301 where the Alberta Court of King’s Bench parses the difference in wording between the Alberta adjudication provisions and the equivalent wording under Ontario’s Construction Act, RSO 1990, c C.30. The Court held that adjudicator determinations are “final and binding, unless…”, whereas determinations in Ontario are deemed to be “interim and binding, until...” due to the differing language used in their respective legislation.
.svg)
