Prompt payment and adjudication legislation has been implemented across Canada and now, in B.C., Bill 20 proposes the enactment of the Construction Prompt Payment Act (the “Act”) The Bill was introduced on October 7, 2025 and the stated intent of the legislation is to establishes a scheme for prompt payment and timely, accessible adjudication in the construction industry. Although the bill is still at first reading, we expect the legislature to follow other provinces. Ontario for instance amended its Construction Act in 2019 to introduce prompt payment and adjudication.
What is Prompt Payment
The intent of prompt payment legislation is to alleviate payment delays down the construction pyramid. The Act legislates that if a party provides services or materials to an improvement and issues a proper invoice for their work the owner must pay the contractor within 28 days after the invoice date. Parties down the construction contract chain (subcontractors, sub-subcontractors, material suppliers) are to be paid within 7 days of the party above them having received payment.
Of course there are various conditions and requirements under the Act. An improvement for instance, in relation to which payment is due, must meet the following definition:
includes anything made, constructed, erected, built, altered, repaired or added to, in, on or under land, and attached to it or intended to become a part of it, and also includes any demolition or removal of any of those things and any clearing, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land
What constitutes a proper invoice is also laid out in the Act. A proper invoice must include, in addition to the amount and a description of the services and material supplied, the milestone to which the invoice relates, information identifying the contract or purchase order under which the services and material were supplied, and, if specified, information from the contract relating to how payment is to be made.
In addition to a proper invoice, a party is obliged to invoice monthly, unless the contract provides otherwise, and any contract provision that makes a proper invoice conditional on certification by a payment certifier or the approval of the owner is void. Further, the Act legislates interest provisions, providing that interest begins to accrue on amounts not paid at the higher of a) a rate to be prescribed under the Act, or b) the rate set out in the contract.
The Act does not amend the holdback requirements under the Builders Lien Act and any payment is still subject to the required holdback under the Builders Lien Act.
Payment Disputes
If an owner disputes an invoice, there is recourse under the Act by way of a notice of non-payment, but there are prescribed timelines that must be observed. A owner is not required to pay an invoice if they give the invoicing party written notice of non-payment in the prescribed form by 14 days after the invoice date. Down the construction chain, a contractor or subcontractor must provide notice of non-payment, by the earlier of a) 7 days after the person receives a notice of non-payment or b) the person’s calculated payment date for the invoice.
Adjudication
A disputed invoice could sit in limbo after a notice of non-payment is issued or a party may refer the dispute to adjudication. The adjudication process involves one party providing written notice as dictated by the Act. The notice must include, but is not limited to, a brief description of the dispute, the nature of the redress sought, and the name of a proposed adjudicator.
An adjudication may be commenced during the construction project but it cannot be commenced more than 90 days after the a contract between an owner and contractor is completed, abandoned or terminated. With respect to any subcontracts, an adjudication cannot be commenced more than 90 days after the earliest of the following events:
-
- the date the contract between the owner and the contractor is completed, abandoned or terminated;
- the date the subcontract is certified under section 7 (3) [certificate of completion]of the Builders Lien Act as completed; or
- the date the subcontractor last supplied services or materials for the improvement under the subcontract.
Powers of the Adjudicator
If the parties cannot agree on an adjudicator, the adjudication authority, appointed by the Minister, may appoint an adjudicator. It is noteworthy that the parties cannot appoint an adjudicator, in advance, in their construction contract. The adjudicator’s role is broad as not only can they determine whether a party has failed to make a payment as prescribed by the Act, they can also determine the value of services or materials and decide if payment is required for a change order, whether approved or not.
The adjudicator will charge a fee which is split among the parties equally, unless the adjudicator determines that one party or another must pay the fee or otherwise.
In addition to allocating the adjudicator’s fee, the adjudicator has the power to take a number of different steps, including:
- issue directions in relation to the conduct of the adjudication;
- ascertain the relevant facts and law;
- draw inferences based on the conduct of the parties to the adjudication;
- conduct an on-site inspection of the improvement;
- obtain the assistance of an accountant, building contractor, architect, engineer or other person, as the adjudicator considers necessary to determine the fact in question and the adjudicator can direct the parties to pay for the cost of same at the adjudicator’s discretion; and
- make determinations as to whether the dispute may be the subject of an adjudication and if the adjudicator has jurisdiction to conduct the adjudication.
The adjudicator must make a written determination within 30 days of receiving certain records prescribed by the Act or as otherwise directed by the adjudicator. Unless the parties consent, the time to make a determination cannot be extended and a determination issued after this timeline is considered void. The adjudicator’s decision is binding on the parties but the matter can still be tried in an arbitration or in court. Any amount a party may be ordered to pay, must be paid within 15 days after the determination is issued.
The payment or adjudicator’s determination cannot be stayed if a party has chosen to have the matter determined by an arbitrator or the courts. Equally, a dispute can be referred to adjudication even if the dispute is the subject of a legal proceeding or an arbitration.
Judicial Review
The Act allows for an adjudicator’s decision to be judicially reviewed if a party takes the position that the adjudicator did not have the proper authority to make the determination or if the determination was unfair or unreasonable. Unless the adjudicator acts in bad faith, the Act provides that no legal proceeding for damages lies against an adjudicator arising from the performance of their duties under the Act.
As mentioned above, prompt payment and adjudication legislation has been in effect in provinces like Ontario for many years now. In a follow up article we will provide a comparison of the B.C. and Ontario legislation and highlight key issues with the prompt payment and adjudication process that have already made their way through the Ontario courts.
Regulations to the Act
We can expect a comprehensive set of regulations to accompany the Act. The Act already delineates how the Minister is at liberty to make regulations regarding whether something is a service or material for the purpose of the Act. Further, the Minister can make different regulations in relation to different classes of improvements and contracts including different sectors of the construction industry or public or private ownership of a Project.
Amendments to the Builders Lien Act
The Act also makes consequential and related amendments to the Builders Lien Act. Most notably the Act abolishes the Shimco lien in B.C. Unique to B.C., the decision in Shimco Metal Erectors Ltd. v. Design Steel Constructors Ltd. determined that a party that supplies work and services to an improvement has an independent lien against the required holdback under the Builders Lien Act in addition to a lien rights against the land. This lien, coined the Shimco lien, is enforced by commencing an action for a claim against the holdback. The Shimco lien against the holdback can be advanced even if no lien has been filed against the lands and the holdback cannot be paid out once the action has been commenced. The Shimco lien has been the subject of much debate in the B.C. construction industry and many construction professionals disagree with this alternate lien scheme.
This article is intended to be a general overview of the proposed Construction Prompt Payment Act. We will provide updates and further clarification regarding the application of this important legislation to the construction industry as the bill progresses through the legislature.
