June 10, 2011

Associations debate merits of Ontario prompt payment bill

VINCE VERSACE

staff writer

Provincial prompt payment legislation introduced the day Queen’s Park prorogued may die on the vine but stakeholders see it as opportunity to further debate and action on the subject.

“It is a statement bill that highlights an important issue. All contractors, whether they are general contractors or subcontractors, deserve to be paid on time and this bill enshrines payment terms into law,” said Ron Johnson, a director with the National Trade Contractors Coalition of Canada (NTCCC).

MPP Dave Levac introduced his private member’s bill, the Protecting Contractors Through Prompt Payment Act, 2011, on June 1. The provincial government was prorogued that same day until after this October’s provincial election. Queen’s Park insiders and industry stakeholders said they understand that private members’ bills rarely come into law but this bill brings attention to the issue.

The bill requires that a person carrying out construction work or supplying related goods and services, under a construction contract, should receive a progress payment on the date specified in the contract. Or, if no date is specified, the progress payment should be made at the end of every month during which construction work is carried out or related goods and services are supplied under the contract.

The bill also states that progress payments would be made in the amount specified in the contract. If no amount is specified, a progress payment based on the value of the construction work carried out or goods and services provided to date, relative to the contract’s total value, should be made. Interest would be payable on any unpaid amount of a progress payment at 18 per cent per year.

The NTCCC worked with Levac on the bill and consulted all three provincial parties, each indicating support on the issue. Prompt payment will be a significant provincial election issue for the NTCCC, said Johnson. Levac has committed to reintroducing the bill in the fall.

Johnson added that the legislation is similar to that in place in 30 states in the United States and 20 countries worldwide.

The Ontario General Contractors Association (OGCA) believes more work still needs to be done to the bill, stating it is not representative of the prompt payment challenges facing the industry.

“We fully support prompt payment for everyone. It is not just an issue for the trades. Our feeling is that the issue is more complicated than is being made out,” said Clive Thurston, OGCA president. “The whole system has issues from the top and on down. It goes to issues like the complexities of tenders, payment terms and owners not being able to pay within certain periods.”

General contractors and subcontractors alike need to fully understand the performance obligations of the contracts they are signing, added Thurston.

“The nature of bidding and tendering is more complicated today than ever because of supplementary conditions,” he stated. “The world has changed to why people are not getting paid. It is not as simple as there is some mean ogre out there keeping money.”

The Council of Ontario Construction Associations (COCA) said prompt payment is of great concern to its membership and supports the bill.

“We are in favour of anything that facilitates fair payment to people who have legitimately completed work. This bill puts a stake in the ground,” said Ian Cunningham, COCA president. “Contractors, whether they are generals or subtrades, should get paid. With this bill, payment terms would be embedded and everyone would have to abide by them.”

Print | Comment