Adjudication – Coming Soon to “…a Contract Near You!”
Posted on: March 18th, 2018 by

The Construction Lien Amendment Act of Ontario (Bill 142) was given Royal Assent in December 2017. Among its many changes, it will introduce an adjudication process. The effective date of the necessary regulations allowing adjudication is currently set for late 2019. By that time, whether your contract includes adjudication procedures or not, these procedures will prevail.

In the 1990’s the Province of Ontario experimented with mandatory mediation as part of the Court process. It was a good thing. These days it is common for lawyers handling construction disputes, sooner or later, to find their way to a mediator to help the clients explore settlement possibilities.

This new Construction Act will introduce “prompt payment” provisions. From my perspective as a Construction Litigation lawyer, the single most significant of those changes will be the Adjudication process.

Part II of the new Act describes it as a Construction Dispute Interim Adjudication. In less than 30 days it will produce in an interim decision rendered upon a single issue in dispute, by an experienced construction adjudicator. Disputes that can be referred to these adjudicators include: payment disputes; disputes over change orders whether issued and approved or not; disputes over the release of holdbacks or other payments subjected to back-charge. The disputes may only be referred to adjudication if the contract under which the dispute arises has not been completed. Issues referred to adjudication must be dealt with on a stand-alone basis. Multiple issues cannot be referred as one dispute. Notwithstanding these rules, the parties and the adjudicator have some discretion to agree to adapt things to achieve a timely cost effective process.

Adjudicators will be vetted for their skills and training by a Ministry Authorized Nominating Authority, which will create and manage a roster from which parties may choose their adjudicator. They will either be chosen from the roster by agreement of the parties, or will be appointed by the Nominating Authority, upon the request of a party.

The Adjudication process will be expedited. Within 5 days of accepting an appointment to adjudicate the party demanding adjudication is to have submitted their supporting documentation to the adjudicator. The process thereafter is under the control of the adjudicator who is to ensure it is conducted fairly and impartially – rendering their final decision no later than 30 days from receipt of the applicant’s documents. The adjudicator may attend at the site, interview witnesses, hire experts, and has other broad powers to investigate so as to be able to render a decision with reasons in support on or before the 30th day. A late decision will be unenforceable.

An adjudicator’s decision must be acted upon by the parties within 10 days of the determination, failing which a party may suspend further work under the contract. Although it must be acted upon, the decision may be disputed by either party through subsequent litigation or arbitration. The written decision of the adjudicator will be admissible in that trailing litigation.

Together with the prompt payment provisions which require a notice of non-payment detailing all the reasons for a backcharge, the new ability to demand adjudication is going to dramatically change the payment process for our construction industry.

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