Tuesday, 15 June 2021

Pending Registration Lien Frustration

 by Corbin Devlin

A new land titles registration process is causing grief for all those involved with builders’ liens.

Effective April 1, 2021 the process for all land titles registrations in Alberta underwent significant changes as part of Provincial government efforts at Red Tape Reduction. Section 14.1 of the Land Titles Act creates a “pending registration queue.” Builders’ liens are no longer registered on the day they are submitted (contrary to past practice). However, registrations are guaranteed priority based on the date of submission; i.e. a lien will apparently be accepted for registration based on the date of submission, even if the lien period expires between submission and registration.

Searches of title show any pending registrations. The Registrar no longer provides confirmation of registration; repeated searches of title are required to determine when registration is completed. There are various publications from the Law Society of Alberta and Service Alberta that provide more detailed background and explanation.

At the time of writing, there is a lag of about a month between submission and registration of an instrument in the queue. The implementation of the pending registration queue is causing unintended problems for lien claimants and those affected by lien claims alike.

  • A lien submitted for registration on time might still be “pending” when the lien period expires, leaving lien claimants uncertain if their lien will be accepted for registration. (All those who deal with liens a lot know that rejections occur unexpectedly from time-to-time, for various reasons.)

  • In place of a notice of rejection, the Registrar may now issue a notice of deficiency. The lien claimant who receives such a notice has 30 days to correct the deficiency and resubmit the document to retain their priority based on the original date of submission. Sounds good, right? But the Registrar will still reject an instrument submitted for registration if the “defects are such that they cannot reasonably be corrected.” It remains to be seen how this will be interpreted by the Registrar. Will an error in the land description, for example, be considered correctible? We used to get notices of rejection on the same day the lien was submitted, allowing time (in most cases) for a statement of lien to be corrected and resubmitted before the expiry of the lien period.

  • These changes undermine our ability to discharge liens on an expedited basis, as required to prevent disruptions in project financing. The normal process to discharge liens quickly is to apply to court pursuant to s. 48 of the Builders’ Lien Act, often with the consent of the lien claimant, for an order permitting alternate security to be paid into court. However, there is no mechanism to discharge a lien while it is in the pending registration queue. Cautious construction owners and lenders may suspend payment based on the fact that a lien is submitted, and now the parties have to await registration to before they can apply to court for an expeditious(?) discharge. This has the potential to significantly disrupt timely payments on construction projects (quite contrary to other Alberta government initiatives to promote prompt payment in the construction industry).

  • The above are some of the more obvious problems, but the “pending registration queue” is incompatible with the Builders’ Lien Act in other ways. There are various procedures and requirements – not to mention legal rights - triggered by the registration of a lien. For example, section 21 allows the owner to release the major lien holdback 45 days after a certificate of substantial performance is issued, provided that no lien has been registered. But what if a lien is in the queue?

The recent amendments to the Land Titles Act do not contemplate or integrate with the Builder’s Lien Act. Differing interpretations of the legislative gaps are bound to lead to disputes.

For questions regarding the information included in the post above, please contact Corbin Devlin or any other member of our Construction Industry Group.

Tuesday, 27 April 2021

Design Defects and Personal Liability: How Can Architects and Engineers Reduce Exposure To Personal Liability?

 by Shaun Chorney, Student-at-Law

In our previous article, we discussed the general principles involved in determining when architects and engineers can be held personally liable for mistakes in design. This article will expand on the theme of personal liability in design by focusing on specific strategies which can reduce exposure to personal liability.

The most common cause of action which retains a realistic likelihood of success in a claim against individual design professionals is the tort of negligent misrepresentation. This article will focus on reducing exposure to this particular cause of action.

Strategies to Reduce Exposure to Personal Liability

There are several strategies that architects and engineers can implement to reduce personal exposure to liability for negligent misrepresentation, including the use of reliance disclaimers, qualifying designs, contractual provisions limiting employee liability, defining the standard of care, and liability insurance. These strategies are not exhaustive and are in no particular order.

Reliance Disclaimers

To successfully prove negligent misrepresentation, one of the elements that a plaintiff must demonstrate is that they reasonably relied on the representations of the defendant. A reliance disclaimer seeks to limit liability by constraining the entities that are permitted to rely on the representations of the representor. Reliance disclaimers are often included with the design materials. An effective disclaimer should stipulate that the materials have been prepared for a specific party, and only that specific party is permitted to rely on the materials; it should also indicate that all excluded parties assume all risk associated with the unauthorized use of the design materials.

Provided that the reliance limitation is unambiguous, Courts have repeatedly found that these disclaimers are valid and will defeat the claims of parties that have been excluded from relying on the design materials. These disclaimers can protect both the design firm and the individual architects or engineers.

Qualification of Designs

Similar to a reliance disclaimer, liability exposure can be reduced by qualifying the design. Any undetermined variables which may affect the design should be identified and stated as such in the design materials. An example of a commonly unknown variable that can substantially affect the implementation of a building design is subsurface conditions. The materials should indicate the evidence and assumptions that the designs are predicated on; the materials should also indicate that actual conditions may differ and materially affect the construction of the design. Qualification of designs can reduce liability exposure for both the design firm and its employees, and it can protect against the claims of the contracting party and third-parties.

Limitation of Liability

Design firms can use contractual provisions to shield both the firm and their employees from claims of parties that the firm has contracted with. The design contracts can include language that limits the contracting party’s ability to personally sue the design firm’s employees. These limitations can include restricting liability to a set dollar amount (such as the dollar value of the contract), excluding liability for consequential or indirect damages, or expressly restricting all claims against the individual employees. These provisions can apply to multiple causes of action, including claims of negligent misrepresentation. They will not shield the employees from third-party claims but they will limit the claims of the contracting party receiving the design materials.

Courts have held that contractual clauses restricting the personal liability of a firm’s employees can be valid, notwithstanding that the individual employees are not a party to the contract. In London Drugs Ltd. v Kuehne & Nagel International Ltd., the Supreme Court of Canada held that employees can be protected by express or implied limitation clauses so long as the employees were acting in the course of their employment and were performing the services provided for in the contract between their employer and the plaintiff when the loss occurred.

Defining the Standard of Care

Design firms can define the standard of care that they and their employees will exercise in providing design services. This is typically done through a provision in the contract between the design firm and the contracting party. Defining the standard of care can reduce uncertainty if the contracting party claims negligent misrepresentation against the design firm or its employees.

When the standard of care has not been defined, the standard of care will generally be assessed as the degree to which a reasonable party, in the position of the alleged negligent party, would have exercised caution and due diligence in carrying out the work. Multiple variables can affect this analysis and can lead to unintended results. Defining the standard of care allows design professionals to more clearly describe the extent of their professional obligations and can decrease ambiguity in claims of negligent misrepresentation. Defining the standard of care will apply to the claims of the contracting party receiving the design materials but will not apply to third-party claims.

Liability Insurance

Another key consideration for architects and engineers wishing to reduce their exposure to personal liability is insurance coverage. Insurance policies can protect design firms and their employees in the event of a lawsuit. As with all things insurance, liability coverage will depend on the particulars of the insurance policy and can vary widely. For risk-conscious design professionals, the acquisition of expansive insurance coverage is a reliable strategy for reducing exposure to personal liability.

For more information on this article or any other construction law matter, please feel free to contact any member of our Construction Law industry group.

Wednesday, 3 March 2021

Design Defects and Personal Liability: When Can Architects and Engineers Be Held Personally Liable?

By Shaun Chorney, Student-at-law

When substantial defects in project design result in delay, injury, or other damage, the project architects and engineers are typically held responsible. This often comes in the form of a claim being advanced by the project owner or general contractor against the architecture and engineering firms responsible for designing or approving the design plans. These claims typically flow through the design contract or the tort of negligent misrepresentation.

Breach of Contract

When claims flow through the contract between the design firm and the party seeking compensation for the design flaws, the design firm will be held accountable, and the individual employees responsible for the design defects are frequently shielded from the breach of contract claims. If a claim for breach of contract is made against an individual responsible for the design errors, the individual can often point to the contract to show that the agreement was entered into by the company, not themselves as an individual. In most cases, this will provide a full defence to a claim for breach of contract against an individual architect or engineer.

Tort Claims

The same cannot be said for claims arising out of tort. In a tort claim alleging negligent misrepresentation, it is usually more difficult for individual design professionals to escape liability by hiding behind the company for which they work.

In the case of London Drugs Ltd. v Kuehne & Nagel International Ltd. (“London Drugs”), the Supreme Court of Canada confirmed that an employee acting in the course of his or her employment can be held personally liable for breaching a duty of care owed to a client or customer of the employer. In the 2017 Ontario Court of Appeal decision of Sataur v Starbucks Coffee Canada Inc., the Court reaffirmed and commented on the decision of London Drugs:

The motion judge held that the claim against the individual defendants did not disclose a reasonable cause of action because “the general rule remains that employees are not liable for what they do within the scope of their authority and on behalf of their corporation”. Respectfully, the general rule is the opposite. As Justice McLachlin said succinctly in London Drugs… “It has always been accepted that a plaintiff has the right to sue the person who was negligent, regardless of whether the employee was working for someone else or not.” Put in the negative, there is no general rule in Canada that an employee acting in the course of her employment cannot be sued personally for breaching a duty of care owed to a customer.”

Negligent Design

The personal liability of engineers who drafted faulty design drawings in a highway construction project was discussed in the case of Edgeworth Construction Ltd. v. N.D. Lea & Associates Ltd. (“Edgeworth”). In this case, both the engineering firm and the individual engineers were sued in tort by the contractor responsible for constructing the project; there was no contractual relationship between the engineering firm and the contractor.

The Supreme Court of Canada held that the engineering firm which drafted the faulty design plans was liable for negligent misrepresentation, even though there was no contractual relationship between the engineering firm and the contractor. However, the Court determined that the individual engineers were not personally liable. In coming to this conclusion, the Court held that to find the individual engineers personally liable, there must have been something “more” than the single fact that the engineers affixed their seals to the plans:

“The only basis upon which they are sued is the fact that each of them affixed his seal to the design documents. In my view, this is insufficient to establish a duty of care between the individual engineers and Edgeworth. The seal attests that a qualified engineer prepared the drawing. It is not a guarantee of accuracy. The affixation of a seal, without more, is insufficient to found liability for negligent misrepresentation.”

Interpretation of Edgeworth

It is not precisely clear what constitutes something “more”, such that it warrants personal liability; this determination has been the subject of litigation in several cases. In Strata Plan No. VR 1720 (Owners ) v Bart Developments Ltd. (“Bart”), three individual engineers were personally sued for errors contained in their building condition survey. The engineers argued that the contract was between the plaintiffs and their employer, so they should not owe an individual duty of care to the plaintiffs. The Court dismissed this argument, holding that the individual engineers did indeed owe a duty of care to the plaintiffs in creating the survey:

“While it is true that the plaintiffs did not engage CSA (the engineering firm) because they intended to rely on the skill of any individual they could identify by name, it is equally true that CSA held itself out as a firm of “consulting engineers”, with “engineers, architects and technologists ...[who] focus their interests exclusively upon resolving” the very problem, building deficiencies, the plaintiffs contracted with CSA to address.”

“There is no question that all three of the personal defendants had a degree of experience and technical skill nor that each was actively involved in the survey and preparation or presentation of the report to the plaintiffs. The personal defendants must have known the plaintiffs would rely on their report. The extent of their involvement distinguishes them from the engineers in [Edgeworth], who merely affixed a seal “without more”.”

Bart suggests that individual design professionals may have increased exposure to personal liability when their employer markets itself on the basis of the expertise of its design staff; especially when those individual design professionals are actively working with the plaintiff.

In my next blog article, I will be addressing other factors and strategies which can limit personal liability for mistakes in design.

Wednesday, 23 December 2020

Bill 37 Prompt Payment Legislation: The Unclear Adjudication Process

 by Kathleen Garbutt

The Alberta Government has promised to enact the new Prompt Payment Amendment Act, often referred to as “Bill 37”, in July 2021. One of the major changes introduced in Bill 37 is the implementation of an adjudication system to resolve payment disputes.

What We Know

The current version of Bill 37 lacks detail with respect to what the adjudication process will look like. Here is what we know.

The Minister of Service Alberta will appoint “Authorized Nominating Authorities” who will be able to assign third party adjudicators to disputes.

Although the adjudications are intended to be a final and binding process, the parties to the adjudication process will still have the option to register a builders’ lien and enforce the lien through the Court process.

Parties to a contract may refer matters to adjudication “respecting any prescribed matter”. There is no information yet with respect to what will be included in the list of “prescribed matters”. Adjudications will be conducted in accordance with the procedures set out in the Regulation or as established by the Authorized Nominating Authority.

The Adjudication process is not mandatory; however, either party (owner or subcontractor) may refer a dispute to adjudication. Once a matter is referred to adjudication, the adjudicator’s decision is final and binding. The adjudicator’s decision is subject to judicial review or appeal only in limited circumstances such as where the adjudicator made a mistake of law or did not follow the procedures for adjudication.

Where a contract contains a dispute resolution clause that provides for adjudication this clause will apply only to the extent it does not conflict with the Regulations which govern the Bill 37 adjudication process. Where there is a conflict between a contract and the Regulations, the Regulations will apply.

Bill 37 has received royal assent and proclamation is expected in the summer of 2021.

What We Are Still Learning

The Regulation with respect to the adjudication process has not yet been released. Without this information it is impossible to know exactly what the adjudication process will look like. However, Ontario has already implemented legislation similar to Bill 37 which includes an adjudication process.

In Ontario adjudications are conducted through the Ontario Dispute Adjudication for Construction Contracts. Unlike the proposed process in Alberta, the adjudicator’s decision in Ontario is an interim decision and therefore not binding on the parties. 

Also in contrast to Ontario, Alberta has provided for the appointment of multiple nominating authorities and these may include private entities.

In Ontario parties to a construction contact may apply for adjudication with respect to the following categories of disputes:

  1. The valuation of services or materials provided under the contract;
  2. Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order;
  3. Disputes that are the subject of a notice of non-payment (i.e. disputed invoices);
  4. Payment of a holdback;
  5. Non-payment of holdback; and
  6. Any other matter that the parties to the adjudication agree to, or that may be prescribed.

Likely, the “prescribed matters” that can be referred to an adjudicator in Alberta will be of a similar nature.

Although the adjudication process in Ontario has been in place for a while now, industry experience with the process is still quite limited, as there appears to be a strong tendency to seek a negotiated resolution prior to adjudication. Perhaps this is an indication that the legislation is meeting the objective of promoting early resolution, albeit not directly through the adjudication process.

What’s Next?

This is a new concept and we are still learning about the benefits and consequences of this scheme. It appears that the goal of the adjudication process is to provide a quick and cost-effective means for parties to resolve disputes without the need to resort to the Courts. Although this is an attractive concept, the final and binding nature of this process can leave parties who are unhappy with the outcome of an adjudication with little recourse.

We will continue to monitor the development of Bill 37 and provide updates.

To review Bill 37 click here.

To review our previous articles on Bill 37 follow the links below: 

Thursday, 12 November 2020

Pay What You Owe – Proposed Changes to the Builders’ Lien Act Regarding Prompt Payment

 by Corbin Devlin & Moe Denny

On October 21, 2020 the Province introduced Bill 37: The Builders’ Lien (Prompt Payment) Amendment Act, 2020 (“Bill 37”), which contained a number of significant changes to Builders’ Lien Act, RSA 2000, c B-7, renamed under Bill 37 to the Prompt Payment and Construction Lien Act (the “Act”). Upon reading Bill 37 many at our office were left scratching their heads as the Bill contains a number of loose ends, which is why we weren’t surprised to hear that the Province released further amendments to the Bill on November 4, 2020.

The purpose of this article is to review the prompt payment provisions of Bill 37; we will discuss the adjudication and other provisions separately.

Bill 37 initially appeared to leave Contractors at significant risk of having to pay Subcontractors prior to receiving corresponding payment from the Owner. Amendments have addressed this initial concern. As amended on November 4, 2020, Bill 37 now largely mirrors the similar legislation already in force in Ontario. Though still not in effect, the proposed changes will have significant implications for construction businesses, one of the most significant changes being the introduction of the concept of “proper invoices” and prompt payment provisions.

Proper Invoices

Bill 37 introduces the requirement of a “proper invoice”, which is a critical first step in the prompt payment process. A proper invoice is: “a written bill or other request for payment for the work done or materials furnished in respect of an improvement under a contract or a subcontract.” According to section 32.1(1) of Bill 37 a proper invoice must contain:

1.       the Contractor’s name and business address;

2.       the date of the proper invoice and the period during which the work was done or materials were furnished;

3.       information identifying the authority, whether in a written or verbal contract or otherwise, under which the work was done or materials were furnished;

4.       a description of the work done or materials furnished;

5.       the amount requested for payment and the corresponding payment terms broken down for the work done or materials furnished;

6.       the name, title and contact information of the person to whom the payment is to be sent;

7.       a statement indicating that the invoice provided is intended to constitute a proper invoice; and

8.       any other information that may be prescribed.

Proper invoices must be given to an Owner at least every 31 days, unless the contract includes a provision for the testing and commissioning of work or material.

It should also be noted that the prompt payment clock begins on delivery of the proper invoice.

Payment by Owner

According to section 32.2 of Bill 37, upon receipt of a proper invoice, Owners must pay Contractors the amount payable under a proper invoice within 28 days, unless within 14 days of receipt of the proper invoice the Owner provides a Notice of Dispute in the prescribed manner (specifying the amount not being paid and detailing all reasons for non-payment). Any amounts not identified in the Notice of Dispute must be paid within the 28 calendar day period. If a Notice of Dispute is not provided, the amount claimed in the proper invoice must be paid in full.

Though not specified under Bill 37, the requirement that a Notice of Dispute detail “all reasons for Non-Payment”, suggests that an Owner may not be able to contest proper invoices by relying on reasons not specified in the Notice of Dispute. It will remain to be seen whether it will be permissible to rely on reasons for Non-Payment that are not contemplated at the time of submitting the notice.

Payment by Contractors

Where a Contractor receives a Notice of Dispute from the Owner, the Contractor can deliver a corresponding Notice of Non-Payment in the prescribed form to any Subcontractors affected by the dispute – otherwise the Contractor is obligated to pay its Subcontractors within 35 days of the issuance of the proper invoice. Where the Owner does not pay, the Contractor, when issuing the Notice of Non-Payment to its Subcontractors, must provide an undertaking to refer the matter to adjudication no later than 21 days after giving Notice of Non-Payment to the Subcontractor.

On the other hand, if a Contractor receives a partial payment from an Owner they will have three options: (1) the Contractor may pay on a proportionate basis the amount received within 7 days and deliver a Notice of Non-payment in the prescribed manner; (2) pay on a proportionate basis the amount received within 7 days and pay the Subcontractor the balance within 35 days (even if not received from the Owner); or (3), deliver a Notice of Non-Payment to the Subcontractors for the entire amount. 

Payment by Subcontractor

The concept of prompt payment applies to all tiers, from Owner to Subcontractors. A Subcontractor who after providing a proper invoice receives full payment from a Contractor is in turn required to pay its Subcontractors within 7 days of receipt of the payment. If the Subcontractor chooses not to pay, it must ‎deliver a Notice of Non-Payment within 42 days of the date the proper invoice was given by the Contractor to the Owner.

If the Subcontractor has ‎received a Notice of Non-Payment from the Contractor, it must within 7 days of receiving the notice from the Contractor deliver its own Notice of Non-Payment to its Subcontractors, and must provide an undertaking to refer the matter to adjudication no later than 21 days after giving Notice of Non-Payment to the subcontractor. If it does not, it must pay its Subcontractors within 42 days of the proper invoice being given by the Contractor to the Owner.

Additional Considerations

Considering the above, it is important that proper invoices be accurate; nevertheless, revisions can be made to proper invoices if:

1.       the parties to the proper invoice agree to a revision;

2.       the date of the proper invoice is not changed; and

3.       the proper invoice continues to meet the requirements (noted above).

Lastly, proper invoices must be properly served on the corresponding party. To constitute proper service, the proper invoice must be served in any manner permitted by the Act or the Alberta Rules of Court, Alta Reg 124/2010 (“Rules”). Some manners of service permitted by the Rules include personal service, registered mail, and electronic methods.

Are You Ready for the Change?

If passed, Bill 37 and the corresponding prompt payment provisions will take effect on proclamation, and are sure to bring a cultural shift to the construction industry in Alberta, with cash flowing more quickly from owners, to contractors to subcontractors, and so on.

In light of the significant changes proposed, members of the construction industry should review Bill 37 to ensure they understand the requirements of preparing and delivering “proper invoices”, payment, or notices within the appropriate time periods.

Additionally, to prepare for the likely passing of Bill 37, members of the industry should consult legal counsel for guidance on revising contacts and updating project management and documents management systems.

Please feel free to contact Moe Denny, Corbin Devlin, or any member of our Construction Industry Group in regards to the information above or any other construction law matter.

Monday, 26 October 2020

A First Look at Alberta’s Proposed Prompt Payment Legislation

By Graham Henderson

Last week the Government of Alberta introduced Bill 37, which proposes new rules relating to issues such as builders’ liens, payment terms, invoicing, and dispute resolution in the construction industry. Below, we highlight the key changes that are proposed in Bill 37.

Payment & Invoicing

Bill 37 is intended to implement a regime providing prompt payment for construction work performed in Alberta. In this regard, Bill 37 introduces new deadlines for payment of invoices and new restrictions on payment terms in construction contracts. The key changes relating to payment and invoicing are as follows: 

  1. Owners, contractors and subcontractors will be required to pay “proper invoices” within 28 days after receipt. 
  2. Bill 37 defines a “proper invoice” for the construction industry, and sets out the minimum requirements for the content of a proper invoice.
    • For example, under Bill 37, proper invoices will need to include specific information such as (i) a description of the work or materials provided, (ii) the period of time during which the work or materials were provided, and (iii) the authority (whether in a written or verbal contract or otherwise) for the work or materials to be provided.
  3. Construction contracts will be prohibited from including ‘pay-when-paid’ clauses (clauses stating that a person is not obligated to pay a subcontractor until after that person receives payment). 
  4. Construction contracts will be prohibited from requiring certification from a person or approval from an owner before a proper invoice can be issued. However, prior certification or approval will be permitted in contracts for testing and commissioning. 
  5. With respect to the mandatory 10% holdback currently required under the Builders’ Lien Act, Bill 37 expands on existing provisions regarding progressive release of the holdback over the course of a project (under current rules, a progressive release is permitted through certificates of substantial performance) by providing an additional mechanism for progressively releasing the holdback. 
    • Pursuant to the new mechanism, a progressive release of the holdback will be allowed when specific requirements are met. For example, such requirements include that (i) the contract price would need to exceed a certain amount (that amount is not yet prescribed by the Government of Alberta), and (ii) the construction contract would need to include certain terms expressly permitting the progressive release of the holdback.

Disputes & Adjudication

Bill 37 provides new rules relating to dispute resolution, including a new dispute adjudication regime. The key changes relating to dispute resolution are as follows: 

  1. Owners, contractors and subcontractors have 14 days to issue a notice disputing a proper invoice.
  2. With respect to partially disputed invoices, Bill 37 will require owners, contractors and subcontractors to release payment of the undisputed portion of a proper invoice. 
  3. Bill 37 will establish a new dispute adjudication system intended to provide an alternative to resolving disputes through the Courts. Some details of the adjudication system are as follows: 
    • A party to a contract or subcontract may refer a dispute to adjudication.  
    • A party may only refer to adjudication a dispute with the other party to their contract or subcontract. Therefore, entities involved in a project but not contracted with each other will be unable to adjudicate with each other (for example, a subcontractor and the owner’s consultant will be unable to adjudicate). 
    • The adjudication procedures in Bill 37 override any contrary adjudication procedures in a construction contract. 
    • An adjudication must be performed by a qualified adjudicator, appointed by a Nominating Authority that will be established by the Minister of Service Alberta. 
    • The determination of a matter by an adjudicator is final and binding on the parties, except that it may be reviewed by the Court on certain grounds through an Application for judicial review.
4. Further rules for the dispute adjudication system, such as the procedures for conducting an adjudication, will be provided in regulations established by the Government of Alberta and in procedures established by the Nominating Authority.  

Builders’ Liens

Bill 37 mostly leaves the current builders’ lien procedures unchanged. However, Bill 37 does modify lien deadlines and the minimum amount of a lien claim:

  1. The deadline for registering liens for the concrete industry is extended from 45 days to 90 days. Oil and gas well projects will also have a deadline of 90 days, which is consistent with the current rules in Alberta.
  2. The deadline for registering liens for the rest of the construction industry is extended from 45 days to 60 days.
  3. The minimum dollar value of a lien claim is increased from $300 to $700.

Other Information and Changes

In addition to the changes outlined above, the following information and changes are noteworthy:

  1. Alberta’s Builders’ Lien Act will be renamed to the Prompt Payment and Construction Lien Act.
  2. Bill 37 expands the availability of information requests relating to a construction project. Specifically, additional people involved with a project (not just the lienholder, as is the case under Alberta’s current rules) will be allowed to request information such as statements of accounts, contracts and mortgage terms.
  3. The new rules proposed in Bill 37 will not apply retroactively. They will only apply to contracts entered into after the rules come into force.
  4. The proposed changes do not apply to projects that would not have been governed by the Builders’ Lien Act.

If Bill 37 passes, then the next step will be for the Government of Alberta to develop regulations associated with Bill 37. Service Alberta currently intends to bring the new rules into force in July 2021.

McLennan Ross LLP will update you when any developments occur and when the new rules come into force. In the meantime, McLennan Ross LLP will be providing additional articles, information and analysis on the changes proposed in Bill 37.

Previous Posts regarding Bill 37: 

Bill 37: Proposed Prompt Payment Legislation - October 22nd, 2020
UPDATED: Trends in Prompt Payment Legislation - September 4th, 2019

Thursday, 22 October 2020

Bill 37: Proposed Prompt Payment Legislation

Editors note: As this topic evolves, our team will continue to provide updates and commentary. Our most recent article pertaining to this subject can be found here.

  By Graham Henderson and Corbin Devlin

The Alberta Government has introduced Bill 37, which proposes wide-ranging changes to the Alberta Builders’ Lien Act. The Act is proposed to be renamed the Prompt Payment and Construction Lien Act.

The amendments are focused on addressing payment timelines in the construction industry. If passed, the changes will impact a wide variety of topics, such as lien registration deadlines, pay-when-paid clauses, and holdback rules.  As mentioned in the Alberta Construction Law Blog, this proposed reform follows the example of other Canadian jurisdictions.  However, the Bill is custom tailored to Alberta, based on priorities identified in recent consultations by Service Alberta, as well as existing features of the Builders’ Lien Act that are unique to Alberta.

More information on Bill 37 is outlined in the press release issued by the Alberta Government.

McLennan Ross LLP will be providing further details and commentary on Bill 37 in the near future.