COCA Urges Change to Federal Prompt Payment Act

EIN 22 CS COCA bill97 400

May 22, 2019

As reported in the Council of Ontario Construction Associations’ May newsletter, the organization has advised the federal government that a proposed prompt payment amendment to the Construction Act is flawed. The amendment involves “pay when paid” clauses, and appears in Bill C97, the federal government’s budget bill.

In a submission to the Standing Committee on Finance, which is reviewing C97, COCA’s Prompt Payment Task Force Chair, Ted Dreyer wrote that “COCA supports the pay when paid principle. The problem with the contractual pay when paid clauses that are now commonplace is that they tend to delay the resolution of the disputes that disrupt the flow of funds. Since a contractor with a pay when paid clause in its subcontract has no obligation to pay its subcontractors, the contractor is not particularly motivated to resolve its underlying dispute with the owner that is delaying payment. Since the subcontractor does not have privity of contract with the owner, it is powerless to bring the dispute between the contractor and owner that is delaying payment to a head. Contractual pay when paid clauses are one of the main reasons for the industry wide trend of slow payment.

Dreyer’s submission notes that Ontario’s Construction Act takes a different approach, combining the pay when paid principle with a mechanism to ensure that disputes that disrupt the flow of funds are promptly resolved: 

  • Section 6.5(5)(a)(iii) requires a general contractor serving a notice of non-payment upon a subcontractor to give an undertaking to refer its dispute with the owner to adjudication within 21 days
  • Subsection 6.6(6)(a)(iii) imposes the same obligation on subcontractors who deliver notices of non-payment to their sub-subcontractors.

“The flaw in the proposed federal amendment,” says the COCA submission, “is that it adopts the pay when paid principle without making it conditional upon the timely resolution of disputes. There is no equivalent to subsections 6.5(5)(a)(iii) and 6.6(6)(a)(iii) in the proposed Act. A general contractor who serves a notice of non-payment to its subcontractor has no obligation to refer its dispute with the federal government to adjudication… A general contractor served with a notice of adjudication by a subcontractor will simply point to subsection 10(3) and say that it has no obligation to pay the subcontractor because it was not paid by the government.”

The submission agrees that prompt payment legislation is needed to make sure that contractors and subcontractors are paid on time for their work, but “unless the proposed act is amended, it will make the problem that the government is trying to solve even worse.”

Source

Related Articles


Latest Articles

  • Ottawa Day 2026: EFC Members Engage with Parliamentarians on Canada’s Electricity Future

    Ottawa Day 2026: EFC Members Engage with Parliamentarians on Canada’s Electricity Future

    March 16, 2026 By Electro-Federation Canada Following EFC’s recent update on our 2026 Ottawa Day, we are pleased to share photo highlights from two days of engagement on Parliament Hill, where members met with federal decision-makers to discuss the future of Canada’s electricity system. More than 40 EFC member leaders and Government Relations representatives travelled Read More…

  • Industrial Construction Intentions Drive Increase in Non-Residential Sector in January

    Industrial Construction Intentions Drive Increase in Non-Residential Sector in January

    March 13, 2026 In January, the total value of building permits issued in Canada increased $607.0 million (+4.8%) to $13.3 billion. The increase was led by the non-residential sector (+$464.0 million) and supported by the residential sector (+$143.0 million). On a constant dollar basis (2023=100), the total value of building permits issued in January rose 4.3% from the previous month Read More…

  • Multi-Unit Construction Drives Growth in December Residential Construction Investment, 2025 Review

    Multi-Unit Construction Drives Growth in December Residential Construction Investment, 2025 Review

    March 13, 2026 The total value of investment in building construction increased $442.9 million (+1.9%) to $23.7 billion in December. The residential sector grew 2.4%, while the non-residential sector edged up 0.6%. Year over year, investment in building construction grew 12.2% in December. On a constant dollar basis (2023=100), the total value of investment in building construction in December rose 1.7% Read More…

  • 5 Strategic Reasons to Attend the Lumen Exhibition

    5 Strategic Reasons to Attend the Lumen Exhibition

    March 13, 2026 In a market where deadlines are tight and projects are increasingly complex, staying competitive is no longer just about technical skills. It also depends on having the right tools, the right information, and the right partners by your side. The Lumen Exhibition is more than just an event—it’s a strategic lever designed to Read More…


Changing Scene

  • A New Guillevin.com, Designed to Simplify Your Purchasing Experience

    A New Guillevin.com, Designed to Simplify Your Purchasing Experience

    March 16, 2026 Guillevin.com was built as a digital working tool, designed to support the way their customers plan, search for, and purchase products today. The goal is simple: to offer a fast, reliable, and intuitive online platform capable of supporting real-world operations; both on the job site and in the office. A platform built around Read More…

  • Nova Scotia Strengthens Housing Legislation to Accelerate Supply

    Nova Scotia Strengthens Housing Legislation to Accelerate Supply

    March 13, 2026 Amendments to existing legislation will mean more housing, improved efficiency in the sector and better alignment of related agencies. The changes extend the Executive Panel on Housing in the Halifax Regional Municipality and give the Minister of Housing new authority to ensure housing projects aren’t delayed. “We are strengthening how we plan, Read More…

  • Sonepar Company Opens a New Automated Distribution Center in Las Vegas

    Sonepar Company Opens a New Automated Distribution Center in Las Vegas

    March 13, 2026 Codale Electric Supply, a Sonepar company, is transforming electrical distribution with the launch of its central distribution center located just off the Las Vegas Strip, in October 2025. The site features a highly automated setup designed to improve speed, accuracy, and customer convenience. At the heart of the facility is an advanced Read More…

  • BC Introduces Public Sector Construction Projects Procurement Act

    BC Introduces Public Sector Construction Projects Procurement Act

    March 13, 2026 Kiel Giddens, MLA for Prince George-Mackenzie and Critic for Labour, has introduced the Public Sector Construction Projects Procurement Act, legislation aimed at ensuring publicly funded construction contracts are awarded through labour-neutral, merit-based procurement. “Here’s the simple question: if labour shortages are driving cost overruns, why would government limit who can work on public projects?” Read More…