Skip to Content

New Brunswick introduces prompt payment and adjudication legislation

By Conor O’Neil and Maria Cummings

On May 9, 2023, two bills were introduced in the New Brunswick Legislature that could have material affects on the construction industry. Bills 41 and 42, of the current session, if passed, would amend the Construction Remedies Act, and introduce a new companion act which would establish mandatory prompt payment and adjudication for construction projects. As of the writing of this article, both bills are working through the legislature and will not become law unless passed in this session.

Bill 41, an Act respecting holdback trust accounts

Bill 41, if passed, will amend the Construction Remedies Act to repeal the requirement for an owner to maintain a holdback trust account for each improvement with a joint trustee. The requirement to maintain holdback by an owner will remain but the practical effect will be to return to the practice under the historical Mechanics’ Lien Act whereby an owner is not required to deposit the holdback into a separate trust account.

Bill 42, Construction Prompt Payment and Adjudication Act

Bill 42, if passed, will introduce a completely new act, the Construction Prompt Payment and Adjudication Act (the “Act”). The application of the Act is defined almost identically to the Construction Remedies Act. In other words, it will apply to almost any construction contract, although there is potentially broad authority to exempt certain classes of improvements, persons or contracts in the regulations. Its effect will be to introduce a new regime including prompt payment and adjudication.

Prompt payment legislation is aimed at the perception of systemic slow or non-payment in the construction industry. The first Canadian prompt payment bill was introduced in Ontario in 2017. Since then prompt payment and adjudication legislation has been considered in a majority of provinces, and federally, many of which have introduced and passed their own bills, although it is not in force in every jurisdiction in which a bill has been introduced.

The prompt payment portion of the Act prescribes time periods in which payment must flow through the construction pyramid. After the delivery of a “proper invoice” by a contractor to an owner, the owner has 28 days in which it must pay the proper invoice. The owner may dispute the proper invoice by issuing a notice of non-payment within 14 days of receipt of the proper invoice. Even if a notice of non-payment is issued, the owner must pay the undisputed portion of the proper invoice within the same 28-day window.

The time period for payment cascades down the construction pyramid through direct contracting parties. For example, upon receipt of payment on the 28th day by the contractor, that contractor then has 7 days in which to provide payment to its subcontractor(s) (i.e. by day 35). Similarly, upon receipt of payment by a subcontractor it must pay its sub-subcontractors or suppliers within 7 days (i.e. by day 42).

Adjudication provides the teeth to enforce prompt payment. A common criticism of traditional dispute resolution processes, like litigation or arbitration, is that they are too slow and disputes choke off the cash flow necessary for projects to continue on to completion. Adjudication provides a new option that has been described as an interim-binding dispute resolution.

The Act provides that much of the actual process for adjudication will be set out in the regulations, or by the adjudicator nominating authority. However, in other jurisdictions the intent has been that where there is a dispute as to payment that dispute may be referred to a third-party adjudicator and a decision on the dispute may be rendered in as little as 39 to 60 days. The concept is that the decision of the adjudicator is only binding on the parties to a dispute until the project is substantially performed. In theory, this increases cash flow and provides an interim mechanism for the parties to complete the project. Parties that are unhappy with the result of an adjudication are free to litigate or arbitrate after the fact.

Other provinces have taken varied approaches to the appointment of an adjudicator nominating authority and the training and certification of adjudicators. The regime as a whole has been met with mixed reviews on its success. Prompt payment and adjudication is still in its infancy across Canada and it remains to be seen how this could be effectively implemented in New Brunswick.


This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact the authors.

Click here to subscribe to Stewart McKelvey Thought Leadership.

Archive

DeVenne v. DeVenne (Part III): Liability and Remedies

BY Tipper McEwan

By Tipper McEwan In Part One of this three-part series on a recent case involving a power of attorney lawsuit in Nova Scotia, DeVenne v. DeVenne, 2026 NSSC 61 (CanLII),…

Read More

DeVenne v. DeVenne (Part II): Breach of Duty

BY Tipper McEwan

By Tipper McEwan This is Part Two of a series discussing a recent case, DeVenne v. DeVenne, 2026 NSSC 61 (CanLII), involving a power of attorney lawsuit in Nova Scotia….

Read More

DeVenne v. DeVenne (Part I): Capacity and Validity

BY Tipper McEwan

By Tipper McEwan The Nova Scotia Supreme Court recently dealt with a case involving the use of a power of attorney in DeVenne v. DeVenne, 2026 NSSC 61 (CanLII).  The…

Read More

Energy Watch 2026

Atlantic Canada’s energy transition is gaining real momentum. From large-scale wind projects and hydrogen development to new regulatory frameworks and grid investments, each province is playing a distinct role in…

Read More

Confirming the coverage analysis: Emond v Trillium Mutual Insurance Co.

By Tipper McEwan, Shelley Wood, K.C., and Jennifer Taylor In an important case for property insurers and their counsel, the Supreme Court of Canada (“SCC”) recently reviewed the principles of…

Read More

Changes and restrictions to New Brunswick’s Atlantic Immigration Program

BY Chiara Nannucci

By Chiara Nannucci New Brunswick has introduced several updates and restrictions to applications under the Atlantic Immigration Program (“AIP”), effective February 3, 2026. These changes affect employers’ participation, applicants’ eligibility,…

Read More

Canada’s new Defence Industrial Strategy

BY Erin Best (she/her) & Robert Bradley

By Erin Best & Robert Bradley On February 17, 2026, the Government of Canada released its Defence Industrial Strategy (the “Strategy”). This follows a series of announcements highlighting the Government’s…

Read More

Timing is not everything – Alberta Human Rights Tribunal finds that termination during medical leave did not amount to discrimination

BY Jacob Zelman

By Jacob Zelman An employer has succeeded before Alberta’s Human Rights Tribunal (the “Tribunal”) in a case arising from the termination of an employee shortly after he requested medical leave,…

Read More

Outlook for 2026 proxy season

BY Andrew Burke & Colleen Keyes, K.C. & David Slipp

By Andrew V. Burke, Colleen P. Keyes, David F. Slipp and Logan G. Walters With proxy season on the horizon, many public companies are once again preparing their annual disclosure documents and shareholder materials for…

Read More

Key trends to watch in workplace investigations in 2026

BY Sheila Mecking & John Morse

By Sheila Mecking and John Morse Upcoming Webinar: Evolving Practices in Workplace Investigations: Key Insights for 2026Join us on February 19, 2026 at 10:00 AM AST for a forward-looking discussion…

Read More

Search Archive