Aligned with similar acts in Ontario, Saskatchewan and Alberta, the amendments to the Act — also known as prompt payment— requires that owners pay proper invoices in a timely manner to contractors, and in turn contractors promptly pay subcontractors and suppliers. If anyone involved in the project does not comply with the Act, they may find themselves facing consequences.
Legislation overview
The amended Act 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 the 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 every step along the payment chain.
While other provinces include limited exemptions for specific industries in their comparable legislation, 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, it 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 proper invoice.
If a payment dispute occurs 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 Manitoba Prompt Payment Adjudication Authority.
Notice of Adjudication
If adjudication is to be pursued, a written Notice of Adjudication 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 relief requested
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. In limited circumstances, the Court of King’s Bench can overturn an adjudication decision.
If the amount payable to a contractor is not paid by the owner when due, the contractor may suspend any further work until it has been paid the amount owed, plus interest and any reasonable costs incurred because of the suspension of work.
To accommodate the timelines associated with prompt payment, the deadline to file or serve liens under the Act has been extended from 40 days to 60 days.
Relevant forms
To help facilitate the resolution of payment disputes and the process of adjudication, the Act provides the following forms:
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 and 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.
Share
