Experience is being gained with the adjudication process introduced to Ontario in 2019. Determining the correct route for vacating a writ of enforcement issued in connection with an adjudicator’s determination is yet another new wrinkle to be resolved.
A case first outlined here 18 months ago brings this matter into clearer focus.
A dispute between fixed-price contractor MGW and client Mr. Pasqualino caused MGW to put a lien on Pasqualino’s home for about $170,000, followed by a statement of claim.
Pasqualino posted a $211,000 security with the Ontario Superior Court, which vacated the lien. He then issued a statement of defence and counterclaim. MGW then filed for adjudication. The adjudicator ruled Pasqualino must pay MGW nearly $120,000.
However, Pasqualino did not pay. Instead, he sought leave for judicial review of the determination. This was denied by the Superior Court.
MGW then obtained a writ of enforcement for the adjudicator’s determination and filed the determination with the Court, within the statutory deadline.
However, as James Little, partner with Singleton Reynolds LLP, and associate Nicholas Reynolds describe, MGW committed a critical oversight.
“MGW failed to give notice of the filing to Mr. Pasqualino, as required under section 13.20(3) of the Construction Act.”
Pasqualino leapt on this and was successful with a motion that MGW’s “failure to give notice of filing the adjudicator’s determination with the court was fatal to the writ.”
In addition to vacating the writ, the motions judge ordered MGW, “be barred from re-filing any writs of execution or taking any other enforcement steps in connection with the adjudicator’s order.”
MGW was ordered to pay costs of $5,000 to Pasqualino.
MGW appealed, perfecting it with both the Divisional Court and the Ontario Court of Appeal. By agreement, the Court of Appeal chose to focus to the correct route of the appeal, not the details of the dispute itself.
MGW relied on two case law precedents where the Court had previously interpreted “judgment” broadly. As a result, it argued their appeal should be heard by the Divisional Court.
On the other hand, Pasqualino brought up whether the order vacating the writ of enforcement fell within the definition of a “judgment” under section 71 of the Construction Act. If it did, then the Court of Appeal would be the correct venue.
The Court disagreed with Pasqualino. It wrote his proposed interpretation of two cited portions of the act were not only contrary to previous case law but would undermine the purpose of efficiency, which is the goal of the new adjudication process. Therefore, Divisional Court was ruled the correct route for appeal.
What are the lessons to be learned from this decision?
First, this chapter of the MGW-Pasqualino story came about due to the matter of notice.
“When a party decides to file an adjudicator’s determination with the court so as to obtain enforceability as if it were a court order, caution must be taken such that notice is provided to all other parties to the adjudication in advance of filing the determination with the court,” write Sahil Shoor, partner with Gowling WLG, and associate Kathy Jiang.
They add adjudications themselves cannot be appealed. Judicial reviews of adjudication can only be made with leave of the Divisional Court.
Little and Reynolds bring attention to what they term the “undefined” nature of “judgment” under the Construction Act.
In support of the Court of Appeal’s ruling, they write interpreting “judgment” broadly, “avoids the confusion that might arise from different appeal routes for different procedures under the Construction Act. This is equally true of the underlying goal of efficiency shared by statutory adjudication and the Construction Act more broadly.”
Both the Gowling and Singleton Reynolds lawyers agree rulings such as this are important, given the lack of statutory adjudication case law in Ontario.
“As more adjudication cases occur year-over-year, it becomes increasingly important to understand the Court’s interpretation of the enforceability of an adjudicator’s determination,” conclude Shoor and Jiang.
John Bleasby is a freelance writer. Send comments and Legal Notes column ideas to editor@dailycommercialnews.com.
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