Canadian Lawyer - sample

20 M A Y 2 0 1 9 w w w . c a n a d i a n l a w y e r m a g . c o m pened is that the payment process has bogged down as a result of having to filter all of these layers." In "Building a Federal Framework for Prompt Payment and Adjudication," Singleton Urquhart Reynolds Vogel LLP concluded: "[T]he existing prompt payment policies and/or proposed voluntary codes are inadequate to achieve prompt payment, particularly at the trade contractor level and below, such that the implementation of prompt payment legislation at the federal level makes sense" and recommended that the federal legislation be like Ontario's. The report suggested the federal government enact legislation for the timely building of construction projects by ensuring cash flows through the various levels quickly, avoid increased costs by addressing contingencies added to the bid price and reduce the risk of disruption on projects related to insolvency of contractors and subcontractors. Wong sees the federal initiative as a harmonization of the federal and provincial regimes to encourage consistency, which is helpful when similar projects are carried out in dif- ferent jurisdictions. The report discusses a potential model law for the provinces, an intergovernmental agree- ment between the federal and provincial governments to co-ordinate payment and a rule that would see the federal legislation apply in provinces that have no prompt payment legislation. Ontario, unlike many other jurisdictions that have introduced prompt payment legislation, added adjudication to the process to ensure more timely and efficient resolution of disputes. "I think now that the genie is out of the bottle for adjudication of prompt payment in Ontario, there's a good prospect that other provinces will follow suit," leading the federal government to look for consistency across Canada for federal government projects, says Matthew Alter, head of the Construction Group at Cassels Brock & Blackwell LLP in Toronto. While some foreign jurisdictions have adopted lien and prompt payment legislation in recent years, the United Kingdom introduced adjudication in the 1990s because of the many trade insolvencies, says Alter, who co-wrote The Ontario Construction Lien Act: Kirsh and Alter - A Guide to Construction Liens in Ontario with Harvey Kirsh. The number of civil contract disputes and arbitrations involving construction projects in the U.K. is believed to have dropped off as a result. The impact of Ontario's new statutory mechanism to ensure payments are made within a certain timeframe from the owner on down and an expedited binding dispute mech- anism process is expected to be significant, says Howard Kru- pat, a partner with the focus of practice on construction and infrastructure dispute resolution with DLA Piper (Canada) LLP in Toronto. "From a practical point of view, I think what it will mean is construction industry participants really have to get ready for pretty significant changes in the way they administer the payment process and the way that they administer their con- struction contracts, generally," he says. "The big picture chan- ges are: getting money to all participants in the construction industry — suppliers, subcontractors, contractors — the idea is to get payment to them; plus, more quickly than they've been accustomed to." Looking at the experience in the U.K. and other jurisdic- tions that have adopted prompt payment legislation, he is hopeful that Ontario's solutions will be effective. But, he says, Ontario has added an element, which may serve as a testing ground for other provinces. "One of the unique things in Ontario is we're going to continue to have a robust construction lien regime alongside of prompt payment adjudication, which is different than what other jurisdictions around the world have. So, we'll see how liens and prompt payment and adjudica- tion all work together," he says. "I think Ontario will be a good test case, generally, for how this system will work, and other provinces will be watching closely to see what the impact of this is here. "This is going to be something that law- yers are going to really have to be attuned to, and it's going to have a big impact on the advice they give to their clients in terms of managing construction disputes in the most efficient manner possible. Changes will likely be required to construction con- tract documents to accommodate these changes, and I think there's going to be an adjustment period in the construction industry and it will be very exciting to see how it all plays out." An adjudication regime is part of Saskatchewan's draft lien legislation, along with prompt payment. And it's closely aligned with what Ontario has implemented, says Jared Epp, a partner at Robertson Stromberg LLP in Saskatoon. The way specific aspects of the legislation are rolled out, however, could differ from place to place. Saskatchewan, for instance, is also bringing in legislative requirements related to bonding, which is something that Ontario didn't include. And because Saskatchewan is a much smaller province with a smaller construction industry, how the adjudication regime is implemented could differ from the process in Ontario. But he sees a very similar framework, which could well become the foundation for prompt payment legislation across the country. "Saskatchewan, like Ontario, is conceiving of a very broad adjudication regime as part of this new legislation and it would allow a lot of the interim disputes and disputes before "The big picture changes are: getting money to all participants in the construction industry — suppliers, subcontractors, contractors — the idea is to get payment to them; plus, more quickly than they've been accustomed to." Howard Krupat, DLA Piper (Canada) LLP

• Cover