When Parliament introduced Bill 142, the Construction Lien Act Amendment Act, 2017, it introduced two new legal regimes, prompt payment rules, and mandatory adjudication to deal with contractor payment disputes.
The new adjudication regime was designed to give parties to a construction contract a quick dispute resolution mechanism to ensure that cash continues to flow down the chain so that work on the construction project continues.
You can’t appeal an adjudicator’s decision as of right. Section 13(18) Construction Act requires parties to apply to the Divisional Court for leave to judicially review the adjudicator’s decision, and the grounds for a successful judicial review of an adjudicator’s decision are very narrow.
The fact that the adjudicator’s decision is binding in the interim can lead to some interesting problems when you consider that a claimant who commences an adjudication can still commence lien proceedings, even before any decision has been made by the adjudicator.
For example, a claimant who loses an adjudication can still lien the property anyways, effectively bringing the project back to square one. In the reverse, a claimant who wins at adjudication, but then loses in court will probably have spent most of the funds paid on the decision of the adjudication.
Given that the prompt payment and adjudication regime in Ontario is still in its settling-in period under the new Construction Act, it will be interesting to see how courts address the various competing issues and concerns of owners and contractors alike going forwards.
Max Shin, Associate Lawyer