The term “procedural fairness” during the adjudication process is being heard these days as a number of cases are sent to court for reversals or rehearing.
It could beg the question, “are adjudicators going astray?”
In fact, the issue is more nuanced than that, Ed Lynde, partner with Fasken Martineau DuMoulin LLP and associate Vlad Muresan, told the Daily Commercial News.
“There remains an ongoing interplay between the legislature, which drafted the adjudication provisions implemented into the Construction Act, and the judiciary which interprets the adjudication provisions within the context of each specific matter brought before the court.”
Lynde offers three recent case examples to make this point.
In Ledore Investments v Dixin Construction, procedural fairness was breached where determinations were made on issues not raised by any party in the adjudication.
Ledore sought payment from Dixin for three invoices related to its subcontracted supply of services and materials.
Dixin not only failed to pay the invoices but also failed to deliver a Notice of non-payment to Ledore in accordance with Part I.1 of the act. The adjudicator concluded Dixin was not required to pay Ledore for the invoices, deeming them not to be “proper invoices” under the act.
This matter was never raised by either Ledore or Dixin, causing Ledore to apply to the court. The court then sent the matter back to the adjudicator for further consideration on the basis that the conduct of the adjudication amounted to a breach of procedural fairness.
The court’s decision in Turnkey Construction v Stephen Jamrik was not procedural fairness per se, said Lynde, but was related to jurisdictional issues. The adjudicator’s determination was clearly and plainly wrong in law regarding the completion of the contract.
As associates Simren Sihota and Jacob Lokash of Margie Strub Construction Law wrote, “The adjudicator failed to request submissions on jurisdiction, and failed to make any factual determination with respect to whether any contract work remained for completion and, if so, its value.”
In Blackstone Paving and Construction v The City of Barrie, it was a matter of procedural technicalities.
Blackstone had requested a judicial review of its adjudication on the basis of three issues, Lynde and Muresan explained.
First, Blackstone claimed the city’s notices of non-payment were spoiled by numerous typographical errors. Second, it claimed the city had raised issues and arguments in its written submission improperly, and was required to identify all the reasons for refusing payment to Blackstone. And third, Blackstone claimed procedural unfairness when it was refused the opportunity to deliver reply submissions to new issues raised by the city.
All three claims were dismissed by the court.
Putting the three case examples in a fairness context, Lynde and Muresan said, “While Ledore provides insight into what the courts will likely consider to be breaches of procedural fairness, Blackstone is indicative of what the courts will likely not consider to be such breaches. In this regard, procedural fairness will be breached where determinations are made upon issues not raised by any party in an adjudication.”
However, minor procedural technicalities don’t reach the threshold of breaching procedural fairness and are insufficiently persuasive to the court for them to interfere with an adjudicator’s determination.
Lynde and Muresan also pointed out that no unsuccessful party is ever pleased with an unfavourable outcome. Raising issues of procedural fairness might be a Hail Mary strategy.
Yet, adjudication rulings are only interim, they added. Parties may revisit the dispute and seek a determination on a binding basis if they are unhappy.
“Adjudication remains in its relative infancy,” concluded Lynde and Muresan, “but we are starting to build up a critical mass of decisions from the court interpreting adjudication, including what does and does not constitute breaches of procedural fairness.”
At the same time, it should be kept in mind that the intention of adjudication in the Construction Act is to create a timely and cost effective, interim binding path forward for the parties.
John Bleasby is a freelance writer. Send comments and Legal Notes column ideas to editor@dailycommercialnews.com.
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