Dispute resolution and adjudication are a major part of Ontario’s Construction Lien Act Review process and were a key topic of discussion by a panel of experts at an educational session entitled Proposed Changes to the Construction Lien Act: Implications for the Industry, hosted by Gowling WLG recently.
Prompted by the report Striking the Balance: Expert Review of Ontario’s Construction Lien Act, Gowling hosted a one-day session at its downtown Toronto office.
Louis-Pierre Gregoire, a partner at Gowling WLG Ottawa, Daniel Wood and Paul Green, partners at Gowling WLG Birmingham (U.K.) participated in the discussion outlining the pros and cons of adjudication and the difference between what is being proposed in Ontario and the process that has had long-term traction in the U.K.
According to the report authored by Bruce Reynolds and Sharon Vogel, adjudication is a swift and flexible mechanism of dispute resolution for projects gridlocked by disputes.
The report makes numerous recommendations on how the adjudication system will work, Gregoire explained, beginning with what they refer to as the "targeted interim binding dispute resolution method."
"In essence, this will be mandatory on all construction projects public and private," said Gregoire. "It’ll be interim, quick and cheap, so there’s definitely big pressure to achieve this in a short time frame. It will be binding, so if you get a decision that let’s say the owner is to pay, you can go and enforce that decision."
In terms of who the adjudicators will be, the recommendation is that, at first, the ministries in charge of administering the regime will appoint a first tranche of qualified people that will be found in key cities including Ottawa, Toronto, London and Windsor.
Adjudicators will be members in good standing of a self-governing profession — engineers, accountants, lawyers and quantity surveyors — with a minimum of seven years’ experience in the industry and they’ll have to complete a standardized training course to be certified.
Gregoire also went through what the process will look like from start to finish. The party on the construction contract with the issue or dispute will deliver a notice of adjudication to the party with whom they have a contract containing a brief description of the dispute, the proposed adjudicator, when the dispute arose, the nature of redress sought and the name and address of the parties to contact.
"The party receiving this notice of adjudication has two days to say whether or not they agree with the proposed adjudicator," Gregoire explained. "If they say ‘yes,’ the matter gets brought to the attention of the adjudicator who will confirm he will have no conflicts and after five days there would be a referral notice, a notice of adjudication and back-up documents from the claimant to be provided to the adjudicator… Ideally within 30 days he delivers a written decision."
If the recipient party does not accept the adjudicator, then the matter gets referred to a body who will appoint an adjudicator from the pool that the ministries will have identified at the beginning of this process as the first tranche, said Gregoire.
"This is significantly different from what you will experience today," said Mark Crane, a partner at Gowling WLG Toronto and moderator of the panel, adding it often takes months for disputes to be resolved currently. "And for those of you who think adjudication is a novel beast, you’ll take some comfort in knowing that it’s been going on for about 20 years in the U.K. and some other jurisdictions."
Wood said the process in the U.K. has a number of benefits but it is not flawless. The fact that the adjudication process merely exists appears to help condition the party’s behaviour, he noted.
"Our experience in the past 20 years is that a small number of cases go from adjudication to litigation or arbitration," said Wood.
"In our experience, every adjudication is done in a non-adversarial way. The legislation in the U.K. is very similar to what is being proposed here with some differences."
According to Gregoire, the main advantage of adjudication is that it unlocks contractual gridlock.
However, there are disadvantages to the proposed regime as well, he said.
"Because this is happening so fast, some people will feel that their rights will not be fully advanced, they will not be able to develop the evidence and present the witnesses they need to in order to have their full story told before the adjudicator," said Gregoire.
In the report references to adjudication regimes like those in the U.K. are "unrestricted warfare" and "rough justice," said Crane, asking the lawyers from the U.K. if that’s a fair comment.
"We do have an unfettered right in the U.K. to adjudicate any dispute under construction contracts so in theory it is possible to give rise to unrestricted warfare," explained Wood.
The proposed regime in Ontario is very much tied to the delivery of a proper invoice which constrains the nature of the disputes that could be resolved by an adjudicator, Gregoire noted.
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