October 13, 2011

Canadian Construction Association discusses prompt payment legislation proposal

VINCE VERSACE

news editor

The Canadian Construction Association (CCA) is prepared to lead a national dialogue on prompt payment nationwide among its members thanks to legislation proposed in Ontario on the matter.

“There are some philosophical discussions CCA should have to get some feedback from the rest of the country. One of them is the extent to which industry should be going to government and asking for an imposition of terms, into a construction contract, that you cannot contract out,” said Michael Atkinson, CCA president, to the association’s general contractor council recently.

“You’re essentially giving up to government the ability to negotiate your contract from both sides, whether its owners and general contractors, general contractors and subtrades, all the way down.”

An update on the prompt payment legislation, proposed by the National Trade Contractors Coalition of Canada (NTCCC) in Ontario, was provided at CCA’s recent general contractor council meeting in Quebec City.

The legislation’s genesis was as a private member’s bill introduced by Ontario MPP Dave Levac on June 1. The provincial government was prorogued that same day until after the recent October provincial election. The NTCCC worked with Levac on the proposed bill and consulted all three provincial parties.

The legislation drew initial criticism from the Ontario General Contractors Association (OGCA). The association said it also is an advocate for prompt payment but felt the proposed legislation was not effective since it did not address the concerns of general contractors. Since June the OGCA and NTCCC have met to discuss the legislation to build a broader proposal to address each of their concerns.

“They’ve taken those and made some revisions. At our last meeting we came to an agreement to develop something that applies to subcontractors and general contractors,” David Blake of OGCA told CCA’s general contractors council.

Both OGCA and NTCCC have agreed to base the legislation on CCA CCDC contract language and to have Geza Banfai, senior partner with the national firm of Heenan Blaikie LLP, develop the legislation’s framework.

The CCA general contractor council decided it would be best to begin a larger consultation on the issue because the possibility of prompt payment legislation being explored nationwide is a reality.

“Given that the final wording (of Ontario’s prompt payment legislation) may set a precedent in other provinces, the general contractors council is inviting the CCA trades council to try and develop a national strategy to improve the payment and flow of funds that effect all contractors in the contractual chain,” said John Bockstael, CCA’s general contractors council chair, at the association’s board of directors meeting in Quebec City.

Atkinson noted that though there exists prompt payment legislation in the United States it “varies significantly” from state to state and that the final wording in Ontario’s proposed legislation is the key.

He reminded CCA members that when it comes to any type of prompt payment legislation they should keep in mind the extent to which they would allow “statutory imposition of a clause in a contract, across the board, that you cannot contract out.”

Clive Thurston, OGCA president, explained in a subsequent interview with the Daily Commercial News, that research conducted by the OGCA and NTCCC which compared such legislation worldwide revealed that in all but three jurisdictions a pay when paid clause exists alongside the prompt payment provisions.

Thurston added that the agreement between NTCCC allows OGCA on developing the legislation will ensure the rights of general contractors are respected.

“In the end, we are the ones that have to deal with the owners, we are the ones who have to get the money,” said Thurston.

“Anything that strengthens that ability is good for everybody,” he added.

“We believe it is the right thing to do and we are excited to get involved and look forward to moving with the NTCCC who are taking the lead on this.

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