Casual legal: Prompt Payment and Construction Lien Act
DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.
By Justine Fay
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
The Prompt Payment and Construction Lien Act (the “PPCLA”) has fast, short, and strict timelines for paying invoices. Failure to dispute the invoice in the proper form, within the applicable timeframe, means that your municipality may be on the hook to pay the entire amount – even if you have legitimate reasons to dispute the invoice.
When the Alberta legislature debated the PPCLA back in 2020, the members made it clear that the intent of the legislation is to ensure payments flow in a timely manner (see Hansard, October 27, 2020, p. 2774-2779).
As such, when an owner receives a proper invoice from a contractor, the owner “must pay the amount” no later than 28 days after receiving the invoice, unless the owner issues a notice of dispute in the prescribed form no later than 14 days after receiving the invoice. See section 32.2. of the PPCLA.
The 14-day timeline is strict. If the municipality fails to dispute the invoice before the 14 days are up, the contractor is entitled to immediate payment of the entire amount, even if you have compelling reasons to believe that the amount is inflated or incorrect.
The contractor can then use the adjudication mechanisms in the PPCLA to enforce payment of the invoice in 1-2 months. While the municipality can later bring the matter before the court for a full determination of the amount owing, the municipality will be required to transfer the payment to the contractor in the interim. As a result, the municipality may be out of pocket for years while the court resolves the dispute.
Therefore, it is critically important to keep a close eye on invoices coming into the municipality on ongoing construction projects. You should note the date that the invoice is received and have multiple reminders, to the attention of multiple people, of the 14-day deadline for disputing the invoice.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
