Saskatchewan Announces Implementation Date for Prompt Payment

On October 20, 2021, the Government of Saskatchewan (“Saskatchewan”)  announced that The Builders’ Lien (Prompt Payment) Amendment Act, 2019 (the “Act”) will be proclaimed into force on March 1, 2022.

Although the Government passed legislation in 2019 and released regulations in 2020, it deferred implementation of the legislation. This announcement will have wide ranging implications for the construction industry in Saskatchewan.

Prompt Payment and Adjudication

Upon its implementation, the prompt payment regime will mandate payment by owners to contractors within 28 days of receiving a monthly proper invoice from contractors. Once contractors receive payment, they will have seven days to pay their subcontractors and each further subcontractor will have seven days to pay its contractors.

Owners can dispute a proper monthly invoice within 14 days of receiving it by providing a notice of nonpayment to the contractor, who must then provide notifications to affected subcontractors within seven days. If notice is not provided to affected subcontractors, the contractor remains liable to pay within the above timeframes.

Under the prompt payment scheme, adjudication is available to resolve prompt payment disputes as well as a range of other construction disputes. Once a dispute arises, the contractor or subcontractor can unilaterally initiate adjudication. Adjudication is a fast-track process to have disputes decided within short timeframes. Adjudication decisions are binding although they can be overturned in court or arbitration.

The Adjudication Authority — the SCRDO

In addition to announcing the implementation date, the Government has indicated that the Saskatchewan Construction Dispute Resolution Office (“SCRDO”) is the official Adjudication Authority under the Act.

The SCRDO is a newly created non-profit corporation with the directors and officers who are the current leaders of the Saskatchewan Construction Association, the Regina Construction Association and the Saskatoon Construction Association. The association with the SCA is unsurprising given the SCA previously indicated it was setting up the adjudication authority.

Under the Regulations, Adjudicators in Saskatchewan will need to have 10 years of relevant working experience in the construction industry and must complete required training.

The SCRDO will be responsible for overseeing adjudications in Saskatchewan, including:

  • creating, developing and providing oversight of programs for the training of adjudicators
  • establishing and maintaining a registry of adjudicators
  • appointing adjudicators
  • establishing a complaints process
  • developing procedures and other reasonable steps to ensure adjudication is available

The announcement also indicated SCRDO will collaborate with Alternative Dispute Resolution Saskatchewan to train and oversee adjudicators.

Preparing for Implementation

To prepare for the implementation of prompt payment, organizations will need to ensure that their contracts, administrative procedures and financing are ready to meet the requirements under the new legislation.

Consider if your organization has:

  • Reviewed its contracts to determine whether and how they are affected
  • Assessed whether your organization can meet the tight timelines for review and processing of invoices
  • Determined whether your project management is well-equipped for fast-paced adjudications over payment or other construction disputes
  • Considered whether employees are effectively trained to administer prompt payment administrative requirements

If your organization has not taken the steps above, the time to do so is now, well in advance of March 1, 2022.

MLT Aikins has the right combination of legal and industry experience to help you navigate the implementation of prompt payment in Saskatchewan, including in updating your construction contracts, establishing administrative procedures and policies, and training employees. We can help your organization prepare for and appropriately implement prompt payment and reduce risk under the new legislation. Contact a member of our construction projects team for assistance.

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