Understanding some Ontario Construction Act timeline and adjudication provisions


Ontario Construction News staff writer

The new prompt payment and adjudication rules under the Ontario Construction Act have yet to be tested in practice, and undoubtedly many owners, contractors and subtrades/suppliers will encounter challenges in following the rules and administering the new law’s provisions.

However, the Act and related regulations outline key elements in the process, and industry participants will benefit by attending programs and presentations such the OGCA/Travelers discussion last Thursday.

Here are just a few points to consider:

What can be adjudicated?

Aspects of the contract relating to payment can be adjudicated as long as the project is currently under-way and qualifies under the Ontario Construction Act.

Specifically, adjudication is intended to deal with disputes relating to he valuation of services or materials provided under the contract.

1. Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order.
2. Disputes that are the subject of a notice of non-payment.
3. Amounts retained by way of set-off.
4. Payment or non-payment of holdback.
5. Any other matter that the parties to the adjudication agree to, or that may be prescribed.

What is a “Proper Invoice”?

The “proper invoice is necessary to set the notice and adjudication provisions in motion under the Ontario Construction Act. Until the owner is delivered the invoice by the prime contractor, the “pay when paid” provisions cannot commence.

1. The contractor’s name and address.
2. The date of the proper invoice and the period during which the services or materials were supplied.
3. Information identifying the authority, whether in the contract or otherwise, under which the services or materials were supplied.
4. A description, including quantity where appropriate, of the services or materials that were supplied.
5. The amount payable for the services or materials that were supplied, and the payment terms.
6. The name, title, telephone number and mailing address of the person to whom payment is to be sent.
7. Any other information that may be prescribed.

The invoice will be monthly, unless another period is set out in the contract. (It is okay to set out invoices based on project milestones, by mutual agreement, for example.)

Several organizations have published detailed timelines for the various deadlines and notifications with the new act.

In general, the owner must pay the contractor the amount of the proper invoice within 28 days of receipt unless, within 14 days of receipt, the owner gives the contractor a notice of non-payment in the statutory form specifying the amount that is not being paid and detailing all reasons for non-payment.

If payment in full is made to the contractor, then the contractor must pay its subcontractor the full amount owing within seven days of its receipt of payment, unless the contractor delivers, within seven days of receipt of the owner’s notice of non-payment or (if the owner did not give a notice of non-payment) within 35 days of the date on which the contractor gave the owner the proper invoice, a notice of non-payment in the statutory form to its subcontractor and provides an undertaking to refer the matter to interim adjudication within 21 days of giving the notice of non-payment to the subcontractor.

These provisions cascade down through to subcontractors and sub-sub contractors.



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