SAC calls for prompt payment legislative consistency and insolvency payment assurances

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Steve Ness

Ontario Construction News staff writer

Canada’s surety industry believes impending federal prompt payment legislation needs to address the risk of project contractor insolvency on payments to subcontractors and suppliers down the construction supply chain.

“There can be no prompt payment without first ensuring certainty of payment, and payment contractor insolvency is the most serious impediment to that certainty,” Steven Ness, president of the Surety Association of Canada (SAC), told a Senate standing committee reviewing the federal legislation in mid-May.

The federal law, largely modelled on new Ontario’s Construction Act, is included in omnibus legislation Bill C-97 that was tabled in Parliament on March 19 and passed second reading on April 30.

SAC says two simultaneous standing committee sessions were held on May 16, with the first to the Standing Senate Committee on Banking, Trade and Commerce; and the second to the Standing Committee on Finance (FINA).

Frank Faieta, national-vice president at the Guarantee Company of North America, represented SAC at the first session. At the second session, Ness was joined by Pierre Cadieux, SAC’s business develop manager – Quebec, who were provided an opportunity to deliver a short presentation on the importance of prompt payment in the constitution industry and how surety bonds can address the risk of contractor insolvency.

SAC says both of its presentations drew on references to changes recently implemented through Ontario’s new Construction Act, which addresses insolvency risk through provisions requiring surety bonds on public work.

SAC’s proposed changes to the draft federal legislation will “mean consistency in prompt payment regimes across the country, aligning the legislation with the new Construction Act of Ontario,” Ness said.

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