[co-author: Patrick Schembri - Articling Student]
Cash flow and payment delays due to disputes are a critical concern for construction companies who rely on the timely receipt of funds to maintain operations and pay subcontractors and suppliers. The introduction of prompt payment legislation is intended to address these issues. 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.
Bill 37 will impose a number of significant changes to construction contracts. In particular:
Finally, it appears that the above changes will apply only to contracts entered into on or after the date Bill 37 is proclaimed, which is currently targeted for July of 2021.
Bill 37 will have a significant impact on the construction industry in Alberta. Accordingly, we recommend that industry participants familiarize themselves now with the key elements of Bill 37 and commence proactive planning measures. The Construction team at Bennett Jones is ready to respond to any questions or concerns regarding Bill 37. We will also continue to monitor Bill 37 and will provide updates as they become available.