Aligned with similar acts in Ontario, Saskatchewan and Alberta, Bill 38, The Builders’ Lien Amendment Act — also known as the Prompt Payment law — requires that owners pay all invoices in a timely manner to contractors. If businesses do not comply with this act, they may find themselves facing consequences.
Legislation overview
The Prompt Payment law stipulates that a contractor must give the owner a proper invoice each month, unless alternate arrangements have been made within the contract. After being given an invoice, the owner is responsible for paying the invoiced amount within 28 days. In turn, after receiving any or all of the amount invoiced, the contractor is also obligated to pay any subcontractors their proportionally owed share within seven days. These deadlines continue to apply at each step along the payment chain.
While other provinces include limited exemptions for specific industries in their comparable acts, architects and engineers are currently the only groups exempt from the application of Prompt Payment in Manitoba.
What is a “proper invoice?”
For the purposes of Prompt Payment, a “proper invoice” means any written bill — or other request for payment — that meets contract requirements and includes the following:
- The contractor’s name and address
- The date of the invoice and the period during which the work, services or materials were provided
- Information identifying the contract under which the work, services or materials were provided
- A description of the work, services or materials provided
- The amount invoiced for the work, services or materials that were provided, in addition to payment terms
- The name, title, telephone number and mailing address of the invoice recipient
- Any other information required by the regulations
In the case of disagreement
If a proper invoice is disputed by the owner, they may refuse to pay all or part of the invoiced amount. If a dispute occurs, the owner is required to deliver a notice of non-payment to the contractor within 14 days of being given the invoice.
If a payment dispute occurs, or the previously mentioned regulations aren’t followed, either the owner or contractor may request adjudication. Adjudication is intended to be a fast-tracked and impartial resolution to payment disputes, carried out by the adjudication authority as designated by the minister.
Notice of adjudication
If adjudication is to be pursued, a written notice must be given to the other party. This must include:
- The name and address of each party
- The nature of the dispute, including a brief description
- The nature of the resolution that’s being sought
The notice of adjudication must be delivered before a contract is completed, which in Manitoba is deemed to occur 90 days after the date on which the work, or a substantial part of the work, is ready for use.
Failure to comply
Adjudication decisions are considered “interim and binding” and must be paid within 10 days, with limited rights of judicial review for matters such as bias or fraud. Decisions can still be overturned in court.
If the amount payable to a contractor isn’t paid by the owner when due, the contractor may suspend any further work until paid the amount owed, plus interest and any reasonable costs incurred as a result of this suspension of work.
To accommodate the requirements of these two new systems, the lien registration timeline has been extended from 40-days to a 60-day period.
Relevant forms
To help facilitate the resolution of payment disputes and the process of adjudication, the Province has supplied owners and contractors with the following forms to use for the purpose of upholding the Act:
Form 1 — Notice of Non-Payment by Owner to Contractor
Form 2 — Contractor’s Notice of Non-Payment by Owner
Form 3 — Notice of Non-Payment by Disputing Contractor
Form 4 — Payor Subcontractor’s Notice of Non-Payment by Contractor or Applicable Subcontractor
Form 5 — Notice of Non-Payment by Disputing Payor Subcontractor
Form 6 — Notice of Adjudication
Form 7 — Request to Contractor for Consolidation
Form 8 — Notice of Consolidation
To learn more, contact one of the authors or a member of our construction & infrastructure group in Manitoba.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
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