Saskatchewan Releases Prompt Payment Regulations
September 8, 2020
On August 20, 2020, the Government of Saskatchewan filed The Builders’ Lien Amendment Regulations, 2020 (the Prompt Payment Regulations) for The Builders’ Lien (Prompt Payment) Amendment Act, 2018 (the Prompt Payment Bill). As of the date of this post, neither the Prompt Payment Bill nor the Prompt Payment Regulations are in effect; they will come into effect when proclaimed by Saskatchewan’s Lieutenant Governor.
The Prompt Payment Bill is discussed in detail in our previous post, Saskatchewan Introduces Prompt Payment Bill for Construction Industry. To summarize, the Prompt Payment Bill requires that owners pay contractors within 28 days of receiving a “proper invoice”, and that contractors pay their subcontractors and suppliers within seven days of receiving payment from the owner. If a payor disputes an invoice, they must give a written “notice of non-payment” to the payee; the dispute may then be resolved through a procedure called “adjudication”.
The Prompt Payment Regulations contain important information for owners, contractors, and subcontractors including who is exempt from prompt payment deadlines and how to properly give notice of non-payment and adjudication. Below we cover the key points. However, due to the legal nature of regulations, the Prompt Payment Regulations could be amended at any time. Please consult the Prompt Payment Regulations or contact your legal counsel regularly to ensure that you are aware of any changes.
Who is Exempt From Prompt Payment?
The Prompt Payment Regulations exempt the following entities from the prompt payment regime:
i) Persons supplying “services or materials for any improvement with respect to a mine or mineral resource” other than oil and gas
ii) Architects, engineers, and land surveyors
iii) Persons supplying “services or materials with respect to an improvement related to infrastructure in connection with the generation, transmission or distribution of electrical energy pursuant to The Power Corporation Act”
How do you Give a Notice of Non-Payment?
The Prompt Payment Regulations include forms to be used in giving notice of non-payment. It is important to note that there are different forms to be used depending on whether you are an owner giving notice to a contractor, a contractor giving notice to a subcontractor, or a subcontractor giving notice to another subcontractor.
The Prompt Payment Regulations also prescribe how notices of non-payment must be delivered. Notices can be delivered in person, by email, by fax, or by registered mail. Specific requirements for these different modes of delivery are set out in the Prompt Payment Regulations. For email, those requirements are as follows:
- Use the email address set out in the contract
- The email must include the following information:
- The name, address, telephone number, and email address of the party giving notice
- The name of the party receiving the notice
- The date and time the email was sent
- The name and telephone number of a person to contact in the event of transmission problems
- Confirmation that the original notice has been signed and is available for inspection at a specified place and time (e.g. at your office between 8 AM and 5 PM on business days)
How do you Submit a Dispute to Adjudication?
As noted in our previous post, the Prompt Payment Bill establishes a procedure called adjudication that allows parties to obtain quick decisions on disputes. Adjudication is available for disputes relating to notices of non-payment as well as other payment-related disputes, disputes about the failure or refusal to issue a certificate of substantial performance, and anything else the parties agree to address.
If a party wishes to submit a dispute to adjudication, they must give the other party a written “notice of adjudication”. The Prompt Payment Regulations include a form to be used for this purpose. A notice of adjudication can be delivered in person or through any method of service set out in The Queen’s Bench Rules.
How can you Respond to a Notice of Adjudication?
If you receive a notice of adjudication and wish to respond, the Prompt Payment Regulations state that you must provide your response and copies of any documents on which you intend to rely within five days of receiving the documents on which the other party intends to rely. The response and documents must be delivered through a method of service set out in The Queen’s Bench Rules.
Who can be an Adjudicator?
The Prompt Payment Regulations set out the minimum qualifications for the adjudicators who will rule on disputes submitted to adjudication. To be certified as an adjudicator, you must, among other things, have a minimum of 10 years of relevant working experience in the construction industry. Relevant working experience includes experience in the industry as an accountant, architect, engineer, quantity surveyor, project manager, arbitrator, or lawyer.
Conclusion
The Prompt Payment Regulations contain important details about how the prompt payment regime introduced in the Prompt Payment Bill will be implemented. Some details are still yet to be determined, such as what body will administer adjudications and when the Prompt Payment Bill and Prompt Payment Regulations will come into effect. However, businesses in the construction industry should begin ensuring that their invoicing and payment processes are brought into compliance with the prompt payment regime. Contact McKercher LLP if you have any questions about the Prompt Payment Bill and Prompt Payment Regulations and their impact on your business.
About the Authors:
Caroline is a partner in the Saskatoon office and practices primarily in the area of commercial litigation, including contract, construction, real estate, and shareholder disputes.
Collin is a partner at the Saskatoon office with experience in construction contracts, tendering, construction litigation and dispute resolution, wrongful dismissal and employment issues, security enforcement, and professional discipline.
Tyler is a student-at-law in the Saskatoon office.
About McKercher LLP:
McKercher LLP is one of Saskatchewan's largest, most established law firms, with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have helped our firm to rank in the top 5 in Saskatchewan by Canadian Lawyer magazine (2019/20). Integrity, experience, and capacity provide innovative solutions for our clients' diverse legal issues and complex business transactions.
This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances. Counsel should be consulted concerning your own situation and any specific legal questions you may have.