On May 30, 2023, Bill 38 – The Builders’ Liens Amendment Act (Prompt Payment), received Royal Assent. The aims of Bill 38 are to (1) get money into the hands of contractors and subcontractors quickly and more efficiently; (2) keep construction projects moving toward completion; and (3) reduce the negative–and potentially devastating–financial consequences that can befall small and medium-sized construction companies who are impacted by delayed payments.
Importantly, Manitoba’s new prompt payment legislation will establish deadlines for payment to contractors and subcontractors–a feature not included in Manitoba’s existing legislative scheme.
How Does it Work?
Under Bill 38, the countdown towards the owner’s deadline to pay a contractor begins when the owner receives a “proper invoice” from its contractor.
A “proper invoice” is a written bill or request for payment for work, services, or materials under a contract, and must include:
a. the contractor’s name and address;
b. the date of the invoice and the time period during which the work, services or materials were provided;
c. information identifying the contract or other authority under which the work, services or materials were provided;
d. a description of the work, services or materials that were provided by the contractor and its subcontractors, including quantity if appropriate;
e. the amount invoiced for the work, services or materials that were provided and the payment terms;
f. the name, title, telephone number and mailing address of the person to whom payment is to be sent; and
g. the information required by the regulations.
Once the owner receives a proper invoice, the invoiced amount must be paid to the contractor within 28 days.
The contractor, in turn, must pay its subcontractor within seven days after receiving full or partial payment from the owner. If an owner does not pay in full, the contractor must pay its subcontractor the entire invoiced amount within 35 days.
The subcontractor must pay its sub-subcontractor within seven days after receiving full or partial payment from the contractor. If the contractor does not pay in full, the subcontractor must nevertheless pay its sub-subcontractor within 42 days.
Bill 38 provides for limited exceptions to the 28-7-7 day deadline scheme.
Mandatory Adjudication
Another important change to Manitoba’s current scheme is the introduction of mandatory adjudication to resolve payment disputes. Matters that are to be referred to adjudication under the new scheme include:
• disputes that are the subject of a notice of non-payment given by the owner, contractor or subcontractor;
• failure to submit a proper invoice;
• failure to make a payment;
• disputes regarding the valuation of work, services or materials provided under a contract or subcontract;
• disputes regarding payment under a contract or subcontract, including in respect of a change order, whether approved or not, or a proposed change order; and/or
• other matters agreed to by the parties to the adjudication.
Many steps in the adjudication process will be further explained and clarified in prompt payment regulations made under The Builders’ Liens Act.
Claims for Lien
Contractors and subcontractors should also be aware that with the enactment of Manitoba’s prompt payment legislation, timelines affecting their ability to make claims for builders’ liens will be affected. Lien claimants will have 60 days after substantial performance or abandonment of the contract to make a claim for lien, instead of the 40 days currently provided for in the legislation.
While it is not yet known when Bill 38 will come into force, Manitoba’s new prompt payment scheme will have a significant impact on Manitoba’s construction industry.
Pitblado Law
2500 – 360 Main Street, Winnipeg, MB
204.956.0560 firm@pitblado.com www.pitblado.com
