Prompt payment and dispute adjudication legislation is making its way across Canada. Although Ontario is the only province to have put new procedures in force, almost all other provinces are closing in on enactment.
Saskatchewan will likely be next. The province’s Builders’ Lien (Prompt Payment) Amendment Act, 2019 is scheduled to come into force on March 1, 2022. Alberta’s version may follow in the summer of 2022.
Although each province will customise its own approach, there will be certain commonalities when it comes to prompt payment. As Miller Thomson LLP construction lawyers Charles Bois, Emma Johnston and Matthew Wray write, these include schedules for progress payments, limitations on contracting parties setting alternative payment schedules and payment within a specified number of days after delivery of an invoice in proper form unless disputed by the payer.
Of particular interest regarding these upcoming Construction Act amendments are those that deal with dispute resolution mechanisms and adjudication. Adjudication is meant to provide a cost-effective and timely method to resolving disputes between contracted parties.
Ontario modelled its adjudication procedure largely after similar legislation that has been place in the United Kingdom for the past 25 years. However, not all provinces will mimic Ontario’s model but are expected to make their own important modifications.
Despite any differences between provincial adjudication regimes, there might be lessons to be learned from Ontario’s experience since its new dispute resolution mechanisms came into force in late 2019.
The Ontario Dispute Adjudication for Construction Contracts (ODACC) is the province’s sole Authorized Nominating Authority responsible for administering construction-related adjudications and for the training and certifying of adjudicators. The organization’s 2021 Annual Report summarizes the first full year of its operations.
Interestingly, across the entire province of Ontario, only 50 adjudications were commenced from August 2020 to the end of July 2021. While that might seem at first like a small number, those familiar with the new system are not entirely surprised.
Gowling WLG partner Sahil Shoor points out the adjudication mechanism can only be used in disputes relating to contracts made after the amendments were enacted in late 2019. This may have limited its application recently. He expects it will likely be used more often going forward.
“There hasn’t been a robust take up yet,” says Shoor’s associate, Tushar Anandasagar. “We are picking up steam, but people are looking at it as just one more tool in the tool chest. There is also some expectation that we will see more take-up from trades and suppliers than from general contractors against owners.”
The good news is the consensus among legal experts suggests adjudication is serving its designed purpose and that the number and distribution of approved adjudicators is adequate.
Jill Snelgrove of Goodmans LLP told the Daily Commercial News Ontario’s adjudication process does, in fact, allow “simple, straightforward, document-light issue disputes to be resolved quickly and efficiently.”
However, she adds “complex issues with more significant monetary values” may not find adjudication as effective, resulting in wasted costs and lost time, only to be followed by a traditional court-based hearing.
Snelgrove therefore suggests prior to initiating the process that an adjudicator with the appropriate background is selected and agreed to, that supporting documents are available within the process’s tight timeframes and that a prior decision be made as to whether or not one is willing to go to court if the adjudication resolution rendered is unfavourable.
Gowling’s Shoor concurs.
“I think it is really going to boil down to the underlying dispute that is going to adjudication.”
Yet while Shoor and Snelgrove agree smaller disputes are ideal for adjudication, this might change as more contracts fall within the post-October 2019 frame.
“I think we will start to see adjudication involving procurement,” says Shoor. “Those contracts are only just getting signed. We may see larger disputes and larger projects. Adjudication will become the new realm of dispute resolution in construction law. It’s just a matter of time.”
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to email@example.com.