On November 28, 2023, McCarthy Tétrault hosted a presentation reviewing the process, jurisdiction, timelines and procedures involved in Construction Act adjudication in Ontario. The presentation also covered risk management strategies to better prepare for adjudications' fast-moving timelines. Below are six key takeaways from the presentation.

1) Adjudication is meant to be "quick and informal". Organizations must be prepared to respond quickly to this fast-moving process.

Adjudication timelines are demanding. Once a Notice of Adjudication is delivered, the entire process is typically completed in six weeks or less.

  • The respondent has a mere four days to respond to the initial Notice of Adjudication.
  • An adjudicator is appointed on consent or seven days after a request that ODACC appoint one.
  • Documents are due to be delivered by the claimant five days after the adjudicator is appointed, or later by agreement.
  • After an adjudicator is appointed, the default deadline for an adjudicator's determination is 30 days after the claimant delivers the documents it intends to rely on. This deadline can only be extended with the consent of the parties and the adjudicator.

These short timelines typically favour claimants, who control when the statutory timelines begin to run. Respondents cannot assume that claimants will agree to extend deadlines, so they must be prepared to respond quickly.

2) Determinations from adjudications are difficult to set aside.

Adjudicators make determinations that are "interim binding" on parties, meaning that they are enforceable as court orders until overturned by a determination by the court, arbitrator or a written agreement by the parties. Adjudicators' determinations cannot be appealed. To challenge a determination, parties must first make any payments ordered by the adjudicator, then apply for leave to the court to have the determination judicially reviewed.

Judicial review is only available in the limited circumstances set out in the Act: legal incapacity, invalidity of the contract or subcontract, lack of jurisdiction, adjudication by someone other than an adjudicator, failure to abide by procedure that prejudiced a party's right to a fair adjudication, reasonable apprehension of bias, or fraud.

Given the narrow grounds to set aside an adjudicator's determination, parties should not treat adjudications lightly.

3) Adjudication is a growing trend that is here to stay.

The use of adjudication under the Construction Act is increasing across Ontario. According to the most recent annual report from the provincial nominating authority, Ontario Dispute Adjudication for Construction Contracts ("ODACC"), determinations have doubled year over year for the past three years. In 2023, there were a total of 161 determinations from 269 notices. This trend is expected to continue as adjudications become more readily accepted as a dispute resolution method on active construction projects.

4) Adjudication awards remain relatively modest

There is no monetary limit to claims under the adjudication regime in Ontario, but average amounts claimed and awarded remain modest. The total amount claimed under all adjudications in Ontario in ODACC's 2023 fiscal year was $68.87 million and the total amount awarded was $24.38 million. The average amounts claimed in individual adjudication notices across all industry sectors was $256,023.70, while the average amount required to be paid under those notices was $151,440.93.

5) Internal project management processes can assess and mitigate risk.

Particularly on distressed projects, it is important to assess and actively manage risk rather than reacting to disputes as they emerge. To remain ready, identify risks that may lead to adjudications. Do not take a wait and see approach. Consider ways to mitigate against any risks that can be identified.

A key aspect of risk mitigation is remaining organized. Maintain robust document management systems unique to each project and avoid comingling. When storing documents, be specific. For example, when logging photographs, ensure there is a description accompanying each image noting the project, time, location and what it shows. Have protocols in place to memorialize conversations and maintain a habit of confirming instructions in writing. Documentation can make or break an adjudication claim or response. Develop a system and use it consistently.

6) One of the best risk management strategies is to be proactive.

Construction Act adjudication has changed the dispute resolution landscape on construction projects in Ontario. One of the best ways to manage adjudication risk is to include an adjudication process agreement in construction contracts. By agreeing to the terms of an adjudication prior to a dispute arising, a respondent can have greater certainty over what the process will look like should it be triggered down the line.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.