Written by Brian P. Reid, Jason D. Roth, Geoff P. Stenger, Alison Archer and Patrick Schembri
On October 21, 2020, following other Canadian jurisdictions, Bill 37, Builders' Lien (Prompt Payment) Amendment Act, 2020, passed its first reading in the Legislature of Alberta. If Bill 37 receives royal assent, it will, following proclamation, amend Alberta's Builders' Lien Act (BLA) and become the Prompt Payment and Construction Lien Act (PPCLA). In our previous updates, we provided a summary of the key features of the PPCLA when it passed its first reading, and when it was subsequently amended.
On April 8, 2021, Bill 62, Red Tape Reduction Implementation Act passed its first reading in the Legislative Assembly of Alberta. If Bill 62 receives royal assent, it will further amend the Amendment Act, which received royal assent on December 9, 2020, and will come into force on proclamation.
Many central features of the PPCLA, as discussed in our previous posts, remain largely unchanged. These features include the implementation of a prompt payment regime, changes to lien and holdback deadlines, and the addition of new holdback release mechanisms. However, if Bill 62 receives royal assent, it will make several important, additional changes including:
- Application: Bill 62 identifies certain circumstances where the PPCLA applies, and where it does not. In particular, Bill 62:
- Establishes that the PPCLA may apply to "a prescribed class of professionals acting in a consultative capacity."
- Clarifies the circumstances in which the PPCLA will not apply to a construction project involving the government. For example, the PPCLA will not apply to public works, agreements to finance and undertake an improvement if the Crown is a party to the agreement, or to other entities, undertakings, or agreements to be set out in the regulations.
- Adjudication: Bill 62 makes some significant changes to the adjudication process and the effect of an adjudicator's determination. It also adds provisions addressing the enforcement of an adjudicator's order. In particular:
- Adjudication Process: An adjudication cannot be initiated where an action has already commenced in a court regarding the same dispute unless the parties agree otherwise. Additionally, an adjudication cannot be initiated after the relevant contract or subcontract has been completed unless the parties agree otherwise. When an adjudicator reaches a decision, he or she must issue a written notice of determination and provide any corresponding order.
- The Effect of Adjudication: Importantly, Bill 62 removes previous language stating that the adjudicator's determination was final and binding. Instead, an adjudicator's determination will be binding on the parties unless: a court order is made; a party applies for judicial review; the parties enter into an agreement to appoint an arbitrator; or the parties enter a written agreement to resolve the matter. This change makes Alberta's legislation more consistent with other jurisdictions that have interim binding adjudication.
- Enforcement of Adjudication Orders: An adjudicator's order must be registered by a clerk of the court if it is submitted by one of the parties and:
- 30 days or more have passed since the parties received the order;
- the parties have not applied for judicial review;
- the parties have not entered into a written agreement to appoint an arbitrator;
- the parties have not entered into a written agreement to resolve the matter; and
- any other requirements set out in the regulations are met.
- 2 years after the notice of determination is issued; or
- 2 years after the date of the final resolution of an application for judicial review.
- Judicial Review: Bill 62 removes the listed grounds for bringing a judicial review of an adjudicator's determination and provides for further rules to be set out in the regulations.
- Electronic Certificates of Substantial Performance: Bill 62 also states that a Certificate of Substantial Performance may be provided electronically in accordance with the terms of the relevant agreement.
Once proclaimed, Bill 62 and the Amendment Act will have a significant effect on the construction industry in Alberta. We recommend that industry participants keep themselves updated on ongoing developments, and take proactive planning measures to prepare themselves for these effects. The Construction team at Bennett Jones is ready to respond to any questions or concerns regarding the Bill 62 and the Amendment Act. We will also continue to monitor Bill 62 and provide updates as they become available.