A U.K. adjudicator, who has been on the job during his nation’s full 20-year history of construction dispute adjudication, says Ontario’s new adjudication system is well-designed but do expect early hiccups.
There were numerous problems in the first years after the U.K.’s went into effect in 1998 as parties adjusted to the new “rough justice” that construction adjudication metes out, said Dr. Cyril Chern after a mock adjudication session held in Toronto April 30 as part of an Osgoode Professional Development conference.
“It was chaos,” said Chern. “No one knew what was going to happen. It developed early on, the court said, this is a fast, quick process, this is rough justice…basically the court held, early on, the adjudicator, once there is jurisdiction, can be wrong on the law and the facts and they are going to uphold it. You wanted it, you got it, it is rough justice, they said.”
The new adjudication system is one of three pillars of the new Construction Act in Ontario, with lien modernization provisions having taken effect on July 1, 2018 and prompt payment and adjudication regimes set to come on-stream next Oct. 1.
Adjudicators are to be experts with extensive experience in the construction industry. A private body known as an Authorized Nominating Authority (ANA) will develop and oversee training and qualifications for the roster of adjudicators. As of the date of the Osgoode session, the participants were told, the ANA had yet to be formally established, though most steps in the legislated founding process had been undertaken as prescribed.
The thing you need to iron out is the ANA, you can’t have a single ANA
— Dr. Cyril Chern
Dispute Board Federation
Chern, a lawyer, architect, arbitrator, author and secretary of the international Dispute Board Federation based in Geneva, walked five participants in the mock adjudication session through a complex set of imagined project disputes and offered insights gained from his decades in the sector.
The single ANA is a mistake, Chern commented later.
“The thing you need to iron out is the ANA, you can’t have a single ANA,” said Chern.
“The civil engineering society could have their own ANA, the architects, everybody should, because it opens it up. Everyone knows who to go to, and you should be able to put the name of the adjudicator in the contract.”
The speed of the adjudication period — legislation requires an adjudicator to make a decision within 30 days of receiving documents from the parties in dispute — should work well in most circumstances, Chern said, and the parties can agree to an extension in more complex cases, he noted.
“The time frame is OK, for smaller matters,” he said. “It is 28 days in the U.K. and the one side bringing the claim can extend that, but most times the parties will agree to extend that because they want it done right.
“It is a trade-off but what the parties really want, they don’t want to get cheated, they want it done right. If you’re so sure your claim is right, what if it takes five more days, or if you want a fast answer, you’ll lose. Which would you choose?”
Chern identified three main problems that he foresees will create inefficiencies in the early days of the system or frustrate participants — improper jurisdiction, perceived bias and poor case management by the new adjudicators.
The most frequent issue, he said, “will always be jurisdiction. ‘Do you have jurisdiction,’ it will come up 20 times.”
During the session, Chern said, “Asking an adjudicator if they have jurisdiction is like asking a barber if you need a haircut.”
As for case scheduling, Chern said in the beginning the new adjudicators may find themselves stressed by the one-month deadline.
“The adjudicator was just too busy, took too much on and all of a sudden on day 29 they’d say, ‘I quit,’ ” he said. “That was a problem early on but it has been cut back.”
Among the reasons an adjudicated decision can be appealed in Ontario is a failure of natural justice, but Chern believes that won’t happen often even though adjudicators will come from all corners of the sector, including architects, engineers and contractors, in addition to lawyers.
“The adjudicator tries to (follow the rules of natural justice),” he said. “The adjudicator is someone who knows construction, who knows the law and is looking for the answer. ‘What happened here?’ What is the right thing to do, I always say. ‘You built the building, is it wrong? Well let’s adjudicate how wrong it was.’ You are trying to focus on what the problem is and get it resolved.”