Ontario has more than two years under its belt using adjudication as a dispute resolution process under Bill 142 of Ontario’s Construction Act.
Some feel the take-up of adjudication has been slower than anticipated. In its first year, the Ontario Dispute Adjudication for Construction Contracts (ODACC) reported just 27 adjudications, increasing to 40 by October 2020. In its second annual report for the year ending July 31, 2021, ODACC says the number had grown to 50.
Chad Kopach is more surprised by the nature of the take-up than he is by the low volume.
Kopach is in a unique position to make that observation. He’s a partner with Blaney McMurtry LLP specializing in construction law. He’s also a registered dispute adjudicator with ODACC. This dual perspective has given Kopach special insight regarding the rollout of the adjudication process and its overall acceptance across Ontario.
“I had assumed, and it turns out wrongly, that 90 per cent of adjudications during the first four or five years would follow the pattern of, proper invoice sent from contractor to owner, owner fails to deliver a notice of non-payment, the matter goes to adjudication,” Kopach told the Daily Commercial News. “Super straightforward. But as it turns out, that’s not as prevalent.
“Adjudication is being used simply to resolve disputes,” he says. “That’s totally legitimate, and those types of disputes do fall under the type of matters that can be adjudicated. I’m just surprised that simple payment issues don’t make up more.”
Certainly education of the industry is a major factor and the legal community needs to do more to correct that, Kopach says. Some litigants don’t understand the basics.
“Parties are not focussing on the prompt payment ‘proper invoice’ issue. When you look at some of the invoices that people feel are ‘proper,’ you see that parts are missing.”
The standard invoice of the past doesn’t make the grade, he says. A proper invoice must include six key elements. In addition to the date of the invoice itself, the period during which the services or materials were supplied must be shown. There must also be information identifying the authority, whether in the contract or otherwise, under which the services or materials were supplied. Finally, the name, title, telephone number and mailing address of the person to whom payment is to be sent must be indicated.
There’s speculation that COVID has slowed the growth of adjudication. However, Kopach has a different outlook on the pandemic’s impact. It relates to the speed, efficiency and economy of the adjudication process.
“Adjudication was uniquely positioned for COVID because the timelines don’t really allow for oral discoveries, waiting for a transcript and moving on undertakings. You don’t have that court-like procedure. You just can’t fit all that within 30 days like you can with the appointment of the adjudicator and the determination. And not every case requires oral submissions. Adjudication can be done on a paper record, especially issues regarding contractual interpretation regarding matters of scope and extra payments.”
So aside from education and the proper invoice, what other explanations can there be for the slower-than-expected adoption of adjudications?
One could be that more settlements are being reached outside of any process.
“The adjudication process itself requires some dealings between counsels if the parties are represented,” says Kopach. “It presents the opportunity to first pick up the phone to discuss what procedure is going to be used. ‘Do we need an oral hearing? Oh, and by the way, do you want to talk settlement?’ I think those conversations are happening.”
Another explanation could be the strategic inclusion of liens.
“If you look at the new timelines, it’s now 60 days to preserve and 90 days to perfect a lien. In some circumstances, some might choose to put a lien on in that first 60 days. Then they’ve got a 90-day window to decide whether to also begin an adjudication. That might put pressure on the other party.”
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to firstname.lastname@example.org