On November 4, 2024, Alberta’s Minister of Service Alberta and Red Tape Reduction (Hon. Dale Nally) introduced Bill 30, known as the Service Alberta Statutes Amendment Act, 2024 (“Bill 30”).[1] Bill 30 passed through second and third readings in November and December and received royal assent on December 5, 2024. Bill 30 will come into force on Proclamation, a date which is yet to be announced.

Bill 30 amends three pieces of Albertan legislation: the Condominium Property Act, the Prompt Payment and Construction Lien Act[2] (“PPCLA”), and the Public Works Act (“PWA”).[3]This blog will focus on the Bill’s proposed changes to the PPCLA and the PWA, which are intended to, as stated by Minister Nally,  “keep money flowing through the construction chain in private and public projects” and “ensure contractors have access to adjudication services and keep the prompt payment process running smoothly”.[4]

Amendments to the Prompt Payment and Construction Lien Act

During the Second Reading of Bill 30, Mr. Nally explained that the government has been working closely with the construction industry and, in doing so, has identified concerns with the PPCLA, including shortfalls in the adjudication process, rigidity around payments to consulting professions like engineers and architects, ambiguity around when a construction contract is complete under the act, and “other uncertainties that have caused confusion”.[5]

To resolve these issues, the PPCLA amendments within Bill 30 are intended to streamline adjudication processes, allow consulting professionals to opt out of the PPCLA lien holdback requirements, and address the ambiguity around when a construction contract is considered complete.[6]

Bill 30 alters the PPCLA by:

  • Amending section 1.1 to expressly bar application of the PPCLA to a public work (as defined in the PWA), except as provided in the PWA.[7]
  • Repealing section 5 and substituting a new section which would allow “a member of a prescribed class of professionals acting in a consultative capacity” to waive any right or obligation under Part 2 (“Creation of Lien”) of the PPCLA.[8]
  • Repealing section 33.4 and substituting a new section which:[9]
    • Allows a party to a contract or subcontract to refer a dispute to adjudication, regardlessof whether a court action has been commenced.
    • Allows a party to commence an adjudication if notice is given 30 days (or less) from the “date of final payment”, defined as the earlier of:
      • The date on which complete payment of amount in the contract or subcontract is made, and
      • The date on which complete payment of the amount set out in the contract or subcontract is required to be paid under sections 32.2, 32.3, or 32.5 (i.e. the payment deadline provisions).
    • Further clarifies that “final payment” does not include a payment of the major lien fund or the minor lien fund, or a payment for any work done or material furnished after either:
      • The certificate of substantial performance is issued, or
      • The remaining work is capable of completion or correction at a cost of not more than 3% of the first $500,000 of the contract or subcontract price, 2% of the next $500,000, and 1% of the balance.
    • Allows an adjudication to proceed even if a court action is commenced on or after the day the dispute is referred for adjudication, unless the court directs otherwise.[10]
    • Directs that if a court makes an order on the merits of a disputed matter while the adjudication is ongoing, the adjudication is automatically terminated.
  • Modifying section 33.6(5) such that an adjudicator’s determination of a matter is binding on the parties to the adjudication, except where:[11]
    • A court order is made,
    • An arbitrator has been appointed under the Arbitration Act and they have made an award, or
    • The parties have entered into a written agreement resolving the matter.
  • Modifies the registration requirements of an adjudicator’s order (under section 33.6(4)) to accord with the above amendments.[12]
  • Combines sections 33.7 and 33.8, and expressly provides that an application for judicial review does not stay the determination of a matter by an adjudicator, unless the court directs otherwise.[13]

Amendments to the Public Works Act

Bill 30 also amends the PWA in a number of respects, all of which are aimed at extending the existing prompt payment rules and processes under the PPCLA to public-sector projects.

The PWA amendments would provide prompt payment protections to the contractors and subcontractors who work on Government of Alberta construction projects and, by doing so, would allow the government to “lead by example”.[14]

The primary changes to the PWA by Bill 30 are:

  • Repealing section 1 and substituting a more extensive section “Definitions” section.[15]
  • Adding section 1.1, which would prohibit the waiver of any or all of the Act’s provisions or remedies by an agreement (akin to section 5 of the PPCLA).[16]
  • Expanding the authority of the Minister, Deputy Minister, or an authorized employee of theirs, to enter into “any contract” on behalf of the crown.[17]
  • Allowing contract penalties under section 11 to be realized out of the security required under the contract or by withholding any money payable by the Crown to the contractor, but not both.[18]
  • Adding a section on “proper invoices” (similar to PPCLA section 32.1), which stipulates:[19]
    • That proper invoices must be given to the Crown, a contractor, or subcontractor at least every 31 days after work begins under the relevant contract or subcontract;[20] and
    • That a contract or subcontract provision that makes giving a proper invoice conditional on the prior approval of the party to be invoiced is of no force and effect.[21]
  • Adding sections which institute payment deadlines upon receipt of a proper invoice (similar to sections 32.2, 32.3, and 32.5 of the PPCLA). The proposed deadlines are:[22]
    • Payments from the Crown to a contractor: 28 days.
    • Payments from a contractor to a subcontractor: 35 days, regardless of whether or not the Crown has made payment to the contractor.
    • Payments from a subcontractor to a subcontractor: 42 days, regardless of whether or not the Crown, the contractor, or the subcontractor has made payment to the subcontractor.
  • Adding a section that contemplates the accumulation of interest on amounts unpaid for more than 45 days from the party’s receipt of the proper invoice.[23]
  • Adding sections which allow for the application of the PPCLA’s adjudication provisions to payment disputes under the PWA. In this respect:[24]
    • A party to a contract or subcontract (which is related to a public work) would be permitted to refer a dispute to adjudication.
    • Matters that may not be referred to adjudication include:[25]
      • Any dispute seeking relief other than the payment of a contractor or subcontractor for the provision of labour, equipment, material or services with respect to a public work;
      • Any dispute where the claim exceeds the maximum amount referred to in section 9(1)(i) of the Court of Justice Act, exclusive of costs and interests (currently, this is set at $100,000).[26]
    • If a party commences an action in court or an arbitration under the Arbitration Act, the court action and/or arbitration can proceed alongside the adjudication, unless the Court directs otherwise.
    • Similar to the PPCLA, if the Court makes an order on the merits of the dispute while the adjudication is ongoing, the adjudication is automatically terminated.
    • Any dispute resolution procedure(s) set out in a contract or subcontract can apply to a dispute, but only insofar as they do not conflict with the adjudication procedures under the PPCLA or as established by the responsible Nominating Authority.
    • An adjudication may be commenced any time after the notice of claim is delivered until:
      • A Court makes a determination on the dispute;
      • After 180 days have passed since the notice was delivered; or
      • A notice is given by the Crown under section 15(1).
    • Sections 33.6 to 33.9 of the PPCLA apply to PWA adjudications (subject to the specific procedures contemplated under PWA section 14.4).
  • Exempting the application of the prompt payment and adjudication provisions to a “capital asset upkeep contract”, a “special scope contract”, and any contract or subcontract related to the a capital asset upkeep or special scope contract (as defined in the Bill).[27]
  • Giving a claimant under the PWA priority over any person, other than the Crown, who has a claim under another enactment or at common law, with respect to any money payable under the contract or subcontract (subject to the other party’s legal obligations to pay employee wages).[28]

Other minor PWA amendments under Bill 30 include a slight modification to the public disclosure requirements for compliant tenders,[29] as well as the notification requirements for contractors working under a capital asset upkeep contract or special scope contract.[30]

In terms of timing, the new provisions of the PWA described herein would only apply to a contract or subcontract entered into on or after the amendments under Bill 30 come into force. Any contract or subcontract entered into prior to that date will be governed by the current version of the PWA, subject to the regulations.[31]

Takeaways

Bill 30 proposes significant changes to the PPCLA and PWA, which are aimed at expanding and clarifying the existing prompt payment and adjudication framework in Alberta with respect to private and public-sector construction projects. As was the case in the implementation of the original amendments to the PPCLA, the day-to-day impact on most businesses will arise from the bookkeeping requirements of prompt payment, however, the risks and opportunities presented by adjudication should be top of mind whenever parties find themselves in the midst of construction disputes.

Bill 30 received royal assent on December 5, 2024 and will come into force on Proclamation. If you have any questions about Bill 30, or how you or your organization may be impacted by these legislative changes, please contact Miller Thomson’s Construction and Infrastructure Group.

[1] “Bill 30, Service Alberta Statutes Amendment Act, 2024”, 1st reading, Alberta Hansard, 31-1, Day 64 (4 November 2024) at 1868 (Hon Dale Nally) [“1st Reading”]

[2] Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 [“PPCLA”]

[3] Public Works Act, RSA 2000, c P-46 [“PWA”]

[4] “Bill 30, Service Alberta Statutes Amendment Act, 2024”, 2nd reading, Alberta Hansard, 31-1, Day 66 (6 November 2024) at 1947 (Hon Dale Nally) [“2nd Reading”]

[5] Ibid

[6] Ibid

[7] Note: the PPCLA, as currently worded, does not apply to a public work as defined in the PWA

[8] Bill 30, Service Alberta Statutes Amendment Act, 2024, 1st Sess, 31st Leg, Alberta, 2024, s. 2 at 24 (first reading 4 November 2024) [“Bill 30”]. Note: The prescribed classes of professionals to which this provision applies would be set out in future regulations.

[9] Ibid at 24-26

[10] Note: currently, the PPCLA requires an adjudicator to discontinue an adjudication where a court action has been commenced prior to, or on the same day as, the adjudication referral.

[11] Ibid at 26. Note: section 33.6(5) currently does not require an appointed arbitrator to have made an award in the arbitration-related exception and also includes an additional exception in cases where a party applies for judicial review of a decision under section 33.7.

[12] Ibid

[13] Ibid at 27

[14] 2nd Reading, supra note 5

[15] Bill 30, supra note 8, s. 3,at 28

[16] Ibid at 29

[17] Ibid

[18] Ibid at 30-31. Note: as currently worded, the PWA allows the Crown to seek payment of a contract penalty through security required under the contract or by withholding moneys payable, or both.

[19] Ibid at 31

[20] Ibid at 32

[21] Ibid

[22] Ibid

[23] Ibid at 33

[24] Ibid at 34-36

[25] Ibid at 34-35

[26] See Court of Justice Civil Procedure Regulation, Alta Reg 176/2018, s. 2. However, a party can proceed with adjudication if they are willing to abandon the claimed amount which is in excess of this maximum amount (i.e. the portion above $100,000).

[27] Bill 30, supra note 8, s. 3 at 37

[28] Ibid at 38

[29] Ibid at 30

[30] Ibid at 37-38

[31] Ibid at 38