4th Session, 42nd Legislature
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Bill 28
THE PROMPT PAYMENT FOR CONSTRUCTION ACT
| Table of Contents | Bilingual version (PDF) | Explanatory Note |
(Assented to )
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
PART 1
INTRODUCTORY PROVISIONS
The following definitions apply in this Act.
"agreement" means a contract or subcontract. (« accord »)
"court" means the Court of Queen's Bench. (« tribunal »)
"milestone" means the point in time provided for in an agreement for the submission of a proper invoice when a specified portion of the work is complete. (« étape »)
"modification" means a modification to an agreement that
(a) varies a price or its method of calculation under the agreement;
(b) increases or decreases the obligations under the agreement;
(c) varies the method of performing the obligations under the agreement; or
(d) varies the schedule for performing the obligations under the agreement. (« modification »)
"payee" means a contractor or subcontractor entitled to receive payment under an agreement. (« bénéficiaire »)
"payment bond" means a bond held as security for the payment of certain classes of persons performing labour or services, or providing materials, under an agreement. (« cautionnement de paiement »)
"payment certifier" means
(a) the person identified in an agreement as being responsible for certifying proper invoices; or
(b) if no such person is identified in the agreement, a person agreed to by the payor and payee to be the payment certifier. (« certificateur »)
"payor" means the owner or any contractor or subcontractor required to make a payment under an agreement. (« payeur »)
"performance bond" means a bond given by a person to guarantee the performance of an agreement by that person. (« cautionnement d'exécution »)
"prescribed" means prescribed by regulation. (version anglaise seulement)
"proper invoice" means a written invoice, bill or other request for payment for work performed under an agreement that contains the following information and meets any other requirements specified in the agreement under which it is submitted:
(a) the payee's name and address;
(b) the date of the proper invoice and the period during which the payee performed the work;
(c) information identifying the authority, whether in the contract, subcontract or otherwise, under which the work was performed;
(d) a description, including quantity if appropriate, of the work performed or the services or materials supplied;
(e) the amount payable for the work performed or the services or materials supplied, and the payment terms;
(f) the name, title, telephone number and mailing address of the person to whom payment is to be sent;
(g) any additional prescribed information. (« facture en bonne et due forme »)
"regulation" means a regulation under this Act. (« règlement »)
"subcontract" and "subcontractor" have the same meaning as "sub-contract" and "sub-contractor" in subsection 1(1) of The Builders' Liens Act. (« contrat de sous-traitance » et « sous-traitant »)
"work" includes the provision of any service or the supply of any materials under an agreement. (« travaux »)
Terms used in Builders' Liens Act
In this Act, "construction", "contract", "contractor", "holdback", "materials", "owner", and "services" have the same meaning as in subsection 1(1) of The Builders' Liens Act.
The purpose of this Act is to strengthen the stability of the construction industry and lessen the financial risks faced by contractors and subcontractors by providing for timely payments to them under construction contracts and subcontracts.
This Act binds the Crown.
Act does not apply to prior contracts
This Act does not apply to
(a) a contract made before the day this Act comes into force; or
(b) a subcontract made under a contract to which clause (a) applies.
Holdbacks under Builders' Liens Act
Any entitlement to receive payments under this Act is subject to the payor's obligation to retain holdbacks under The Builders' Liens Act.
Act does not apply to P3 contracts
This Act does not apply to a contract in respect of a public-private partnership, within the prescribed meaning, if the parties to the contract are participants in the partnership.
Application to subcontracts with P3 participants
For certainty, subsection (1) does not exclude the application of this Act to a subcontract entered into by a participant in a public-private partnership and, for that purpose,
(a) the participant is considered to be an owner; and
(b) the subcontract between the participant and the subcontractor is considered to be a contract between an owner and a contractor.
Every agreement is deemed to be amended insofar as is necessary to conform with this Act.
Restrictions on submitting proper invoice
A provision in an agreement that prohibits the submission of a proper invoice without the prior approval of the owner or certification of the payment certifier is of no force or effect.
Exception re testing and commissioning
Subsection (1) does not apply to
(a) a provision in a contract that requires work to be tested or commissioned before a proper invoice may be submitted; or
(b) a provision in a subcontract that requires work to be tested or commissioned before a proper invoice is submitted, if a similar clause is included in the contract to which the subcontract relates.
A person may not contract out of or waive any of the rights, obligations or remedies provided for under this Act, except as authorized under subsection (2).
Retaining amount payable as performance security
If, as a condition of entering into an agreement, a payor requires a payee to provide a performance bond and the payee is unable or unwilling to provide a bond that is satisfactory to the payor, the payor and the payee may agree, in writing, to allow the payor to retain an amount otherwise payable under this Act as a performance security, in lieu of a performance bond, for work to be performed under an agreement until that work is completed.
PART 2
OBLIGATIONS TO PAY CONTRACTORS AND SUBCONTRACTORS
PAYMENTS TO CONTRACTORS
Unless a contract provides for milestone payments, a payor who is an owner must make progress payments to a contractor for work performed under the contract on a monthly basis or at shorter intervals provided for in the contract.
If no date for progress payments is provided for in the contract, the contractor must submit to the owner or payment certifier, on or after the last day of the month, a proper invoice that sets out a claim for the work performed in that month.
If the contractor misses the deadline to submit a proper invoice and the owner or payment certifier does not consent to an extension, the contractor may include the work in the proper invoice to be submitted the following month.
Timing of payment to contractor
The owner must pay the contractor no later than 20 days after the earlier of
(a) the day the contractor's proper invoice is approved or certified in accordance with the contract; and
(b) the day the contractor's proper invoice is deemed to be approved or certified under section 18.
Final payment — date specified
If a contract specifies a date for final payment, an owner must make a final payment to a contractor for the work performed no later than the earlier of
(a) the date specified in the contract; and
(b) 20 days after the earlier of
(i) the day the contractor's final proper invoice is approved or certified in accordance with the contract, and
(ii) the day the contractor's final proper invoice is deemed to be approved or certified under section 18.
Final payment — no date specified
If no date for final payment is specified in the contract, the contractor must submit to the owner or payment certifier, after completion of the work, a final proper invoice and the owner must pay the contractor no later than 20 days after the earlier of
(a) the day the contractor's final proper invoice is approved or certified in accordance with the contract; and
(b) the day the contractor's final proper invoice is deemed to be approved or certified under section 18.
PAYMENTS TO SUBCONTRACTORS
Progress payments by contractors and subcontractors
Unless a subcontract provides for milestone payments, a payor who is a contractor or subcontractor must make progress payments to a subcontractor for work performed on a monthly basis or at shorter intervals provided for in the subcontract.
If no date for progress payments is provided for in the subcontract, the subcontractor must submit to the payor a proper invoice that sets out a claim for the work performed in a month no later than
(a) 5 days before the end of the month if the subcontract is with a contractor; or
(b) 10 days before the end of the month if the subcontract is with a subcontractor.
If the subcontractor misses the deadline to submit a proper invoice and the payor or payment certifier does not consent to an extension, the subcontractor may include the work in the proper invoice to be submitted the following month.
Timing of payment to subcontractor
The payor must pay the subcontractor no later than the earlier of
(a) 7 days after the payor receives payment for the work that is subject to the proper invoice; and
(b) 27 days after the earlier of
(i) the day the subcontractor's proper invoice is approved or certified in accordance with the subcontract, and
(ii) the day the subcontractor's proper invoice is deemed to be approved or certified under section 18.
Final payment — date specified
If a subcontract specifies a date for final payment, a payor must make a final payment to a subcontractor for the work performed no later than the earlier of
(a) the date specified in the subcontract; and
(b) 27 days after the earlier of
(i) the day the subcontractor's final proper invoice is approved or certified in accordance with the subcontract, and
(ii) the day the subcontractor's final proper invoice is deemed to be approved or certified under section 18.
Final payment — no date specified
If no date for final payment is specified in the subcontract, the subcontractor must submit to the payor or payment certifier, after completion of the work, a final proper invoice and the payor must pay the subcontractor no later than the earlier of
(a) 7 days after the payor receives payment for the work that is subject to the subcontractor's final proper invoice; and
(b) 27 days after the earlier of
(i) the day the subcontractor's final proper invoice is approved or certified in accordance with the subcontract, and
(ii) the day the subcontractor's final proper invoice is deemed to be approved or certified under section 18.
AMOUNT OF PROGRESS PAYMENTS
The amount of a progress payment to which a payee is entitled is
(a) the amount specified under the agreement; or
(b) if the agreement does not specify the amount for progress payments, the value of the work approved by the payor that was performed in the payment period, determined relative to the value of the entire contract or subcontract, including the value of all modifications.
MILESTONE PAYMENTS
Milestone payments under contract
If a contract provides for milestone payments, a payor who is an owner must make a milestone payment to a contractor for work performed under the contract no later than 20 days after the earlier of
(a) the day the contractor's proper invoice in respect of the milestone is approved or certified in accordance with the contract; and
(b) the day the contractor's proper invoice in respect of the milestone is deemed to be approved or certified under section 18.
Milestone payments under subcontract
If a subcontract provides for milestone payments, a payor who is a contractor or subcontractor must make a milestone payment to a payee no later than the earlier of
(a) 7 days after the payor receives payment for the work that is subject to the proper invoice in respect of the milestone; and
(b) 27 days after the earlier of
(i) the day the subcontractor's proper invoice in respect of the milestone is approved or certified in accordance with the subcontract, and
(ii) the day the subcontractor's proper invoice in respect of the milestone is deemed to be approved or certified under section 18.
Restriction on milestone payments in subcontracts
A provision in a subcontract that requires milestone payments is of no force or effect unless
(a) the contract under which the subcontract is made provides for milestone payments; and
(b) in respect of milestones relating to time periods, milestone payments are provided at intervals no less frequent than the intervals provided in the contract.
) Before entering into a subcontract with a subcontractor, a contractor or subcontractor must give notice to the subcontractor of any milestone payment provisions under the contract.
DEEMED APPROVAL OF PROPER INVOICE
Deemed approval or certification
A proper invoice is deemed to be approved or certified by the payor or payment certifier 10 days after its receipt if submitted by a contractor, or 30 days after its receipt if submitted by a subcontractor, unless, before that time, the payor or payment certifier gives notice to the payee disputing the amount in the proper invoice in whole or in part or requiring a revision to the proper invoice.
The notice must set out
(a) the reasons for the dispute or required revision, including any references to the relevant provisions of the agreement; and
(b) the amount of payment being disputed or in respect of which a revision is required.
The part of a proper invoice in respect of which an amount is disputed or a revision is required is limited to the following:
(a) if the dispute relates to any cost, loss or damages that are recoverable under the agreement, an estimate of the amount of the cost, loss or damages;
(b) if the dispute of a proper invoice in whole or in part is limited to the value of a modification or its method of evaluation, an estimate of the portion of the value of the modification that is the subject of the disagreement.
If the payor disputes any amount payable under a proper invoice,
(a) the payee must revise or reissue the proper invoice, without altering its date, to separately set out the disputed and undisputed amounts;
(b) the payor must pay the undisputed amount; and
(c) if the payee does not agree to the revision or to accept a revised amount in respect of the revision,
(i) the payee may refer the matter to interim adjudication in accordance with section 22, and
(ii) the payor must pay any disputed amount if ordered to do so, and within the time required, by the adjudicator.
RIGHT TO SUSPEND PERFORMANCE AND PAYMENT
Suspending work for failure to pay
If a payor fails to make a payment in accordance with this Act, the payee may suspend the performance of work under the agreement 10 days after giving notice of default as follows:
(a) if the payee is a contractor, by giving notice to the owner and sending a copy of the notice to all subcontractors with whom the contractor has subcontracted for that portion of the work for which the payor has failed to make the payment;
(b) if the payee is a subcontractor, by giving notice to the payor and sending a copy of the notice to the owner, the contractor and all subcontractors with whom the subcontractor has subcontracted for that portion of the work for which the payor has failed to make the payment.
If the payee commences and diligently pursues interim adjudication under section 22, the payee may, after giving notice to a subcontractor to whom the payee gave notice of default under subsection (1), suspend payment to that subcontractor of any amount the payee owes the subcontractor for work done that is work for which the payor has failed to pay the payee.
Deadline for suspended payments
If the payee complies with subsections (1) and (2), the deadline for payment by the payee is extended to the earlier of
(a) the day on which the default is corrected; and
(b) the day on which the default is resolved by settlement or by the decision of an adjudicator.
The suspension of payment to a subcontractor to whom the payee has given notice under subsection (2) does not constitute a breach of the agreement the payee has with the subcontractor.
A contractor or subcontractor whose payment obligation is suspended must pay interest in accordance with section 21 on the amount of the suspended payment that is agreed upon as owing or awarded by an adjudicator under section 22, starting from the date on which the payment would otherwise have been due.
When work resumes under the agreement following a suspension of work, the party resuming the work is entitled to
(a) an extension of time for completion of the work equal to the amount of time work was suspended;
(b) the payment of reasonable resumption costs; and
(c) the payment of any other amounts to which the party is entitled under the contract, subcontract or this Act.
SETOFF
A payor may retain an amount otherwise payable to a payee under a proper invoice as a setoff, but only if
(a) the setoff relates to a debt, claim or damages incurred or accrued in respect of the same contract or subcontract under which the invoice was issued; and
(b) the payor, before the date the invoice would otherwise be payable under this Act,
(i) gives the payee notice of the amount and the particulars of the claim for setoff, and
(ii) provides the payee with any documents on which the payor relies in support of their claim.
A payor retaining an amount under this section must pay interest in accordance with section 21 on the amount that is agreed upon between the payor and payee as owing or is awarded by an adjudicator under section 22, starting from the date on which the payment would have been due if it had not been retained.
INTEREST ON OVERDUE PAYMENTS
If payment of an amount is overdue under this Act, the payor must pay interest on the overdue amount at the rate
(a) set out in the agreement; or
(b) provided for prejudgment interest under section 79 of The Court of Queen's Bench Act;
whichever is greater.
INTERIM ADJUDICATION
A party to an agreement that is subject to this Act may refer a dispute respecting payments under this Act to interim adjudication in accordance with the regulations.
The adjudicator must be appointed in accordance with the regulations.
An interim adjudication must be conducted in accordance with the regulations.
Dismissal if adjudication not diligently pursued
The adjudicator may dismiss an interim adjudication if, in the opinion of the adjudicator, the party who referred the dispute is not diligently pursuing the adjudication.
The adjudicator must give notice of their decision to the parties involved in the adjudication.
Decision of adjudicator is binding
Subject to subsection (2), a decision of an adjudicator is binding on the parties to the agreement and may be registered in the court and enforced as if it were an order of the court.
Authority of court, arbitrator or arbitral tribunal
The referral of a matter to interim adjudication under section 22, and any resulting decision of the adjudicator, does not affect the jurisdiction of the court, or of any arbitrator or arbitral tribunal that has authority to deal with the matter, to consider and make a determination in respect of the matter.
RIGHT TO TERMINATE CONTRACT FOR NON-PAYMENT
A payee may terminate an agreement for non-payment of amounts due to the payee in accordance with a decision of an adjudicator made under section 22.
If the payee intends to terminate the agreement, the payee must give notice to the payor and to every subcontractor with whom the payee has a subcontract in relation to the payee's contract or subcontract with the payor.
The notice must state that if the payor does not make full payment of the outstanding amount decided by the adjudicator within 15 days after receipt of the notice, the payee may terminate the agreement.
To terminate the agreement, the payee must confirm the termination in writing following the expiry of the notice period and provide the confirmation to any person entitled to receive notice under subsection (2).
The termination of the agreement does not constitute a breach of the agreement and does not affect any right of the payee to be paid under the agreement by the payor.
RIGHT TO INFORMATION
A subcontractor may, by giving notice at any time, require a payor with whom the subcontractor has entered into a subcontract to disclose without delay any of the following:
(a) the due dates for any progress payments and the final payment to the payor relating to the work that is the subject of the subcontract;
(b) the payor's receipt of a payment relating to work performed by the subcontractor;
(c) a copy of any payment bond or performance bond posted by a contractor or subcontractor relating to work included in the subcontract;
(d) a copy of any certificate of substantial performance provided by the owner or a payment certifier in respect of the contract to which the subcontract relates.
Disclosure of payment received
Immediately upon receiving a payment as described in clause (1)(b), the payor must give notice to each subcontractor who has requested disclosure under that clause of the date and amount of the payment received that relates to the work performed by the subcontractor.
If the payor does not provide the information in accordance with subsection (1) or the notice in accordance with subsection (2), or knowingly or negligently misstates the required information, the payor is liable to the subcontractor for any resulting damages.
Upon application by a payee, the court may, by order, require a payor to comply with section 25 and may make any order as to costs that it considers appropriate.
GIVING NOTICES
When notice of anything is required or authorized to be given to any person, the notice must be in writing and the person required or authorized to give it must do so
(a) by serving the notice personally on the person being given the notice;
(b) by mailing or delivering the notice to that person at their address last known to the person giving the notice, using a mail or delivery service that provides the person giving the notice with an acknowledgment of receipt;
(c) if the person has provided the sender with an e-mail address for the delivery of notices under this Act and the regulations, by sending it to that e-mail address; or
(d) in accordance with a prescribed method.
Evidence of receipt by registered mail
Evidence that notice has been given in accordance with the method described in clause (1)(b) and that the sender has received an acknowledgment of its receipt is proof, in the absence of evidence to the contrary, that the notice has been received by the person to whom it is addressed.
Subject to subsection (4), evidence that notice has been given in accordance with the method described in clause (1)(c) is proof, in the absence of evidence to the contrary, that the notice has been received by the person to whom it was addressed seven days after the day the notice was sent.
Notice given in accordance with the method described in clause (1)(c) is considered not to have been received by the person to whom it was addressed if
(a) sending the notice triggers an automated response indicating that the notice is not deliverable; or
(b) before the notice was sent, the person has notified the sender in writing that the e-mail address may no longer be used for such notices.
REGULATIONS
The Lieutenant Governor in Council may make regulations
(a) prescribing additional information to be contained in a proper invoice;
(b) defining "public-private partnership" for the purpose of section 6;
(c) respecting interim adjudication under section 22, including
(i) the establishment and maintenance of a roster of adjudicators and the selection of adjudicators from the roster for appointment in a dispute,
(ii) the appointment of a person to act as an adjudicator in a dispute, whether or not selected from a roster under subclause (i),
(iii) the process for adjudicating a dispute, including deadlines that must be met for specific stages in the process,
(iv) the procedures that an adjudicator must follow, and
(v) the fees and expenses payable by the parties in an interim adjudication, including the adjudicator's fees and expenses, and the portion of the fees and expenses that each party must pay;
(d) respecting the method of giving any notice, including additional electronic methods, for the purpose of clause 27(1)(d) and specifying the time at which such a notice is presumed to have been given;
(e) respecting any matter the Lieutenant Governor in Council considers necessary or advisable to carry out the purpose of this Act.
PART 3
C.C.S.M. REFERENCE AND COMING INTO FORCE
This Act may be referred to as chapter P142 of the Continuing Consolidation of the Statutes of Manitoba.
This Act comes into force on a day to be fixed by proclamation.