Roughly 30 adjudications of construction contracts under the Construction Act have commenced with two determinations issued since the Ontario Ministry of the Attorney General named Toronto-based dispute resolution firm ADR Chambers as the authorized nominating authority (ANA) in July 2019.
ADR Chambers’ Carina Reider, project manager of the ANA, which is known as the Ontario Dispute Adjudication for Construction Contracts (ODACC), told a webinar audience recently that one of the benefits to the new process is that decisions are determined quickly, typically in 39 to 46 days.
Reider covered the types of disputes for adjudication, their timelines and costs at a session at the Managing Risk in Construction Contracts and Projects conference presented by the Canadian Institute.
She said the dispute resolution mechanism uses one adjudicator to make a determination under the Construction Act, which can be enforceable in court. Parties rarely go to arbitration or litigation after a case has been adjudicated.
The adjudication costs are “relatively inexpensive,” but payments are required within 10 days, which helps to keep cash flowing in the industry, Reider said. Along with paying an adjudication fee, the cost includes a $500 referral fee for amounts in dispute of $50,000 or more. A $100 certification fee might also be required on disputes over $50,000.
The ODACC will set adjudication fees when both parties can’t agree on the amount in dispute, she told the webinar.
Typical disputes adjudicated include: the valuation of services and materials; notices of non-payment, including the value of change orders or disputed change orders; and payment or non-payment of holdbacks or any other matter that both parties agree to adjudicate or are prescribed, she said.
The parties have four days to agree on an adjudicator or the claimant will need to make a request for the ODACC to appoint an adjudicator within seven days.
The claimant and respondent can suggest the adjudication be in writing or an oral submission, Reider added, noting the process allows for termination of the adjudication process, if parties settle. The adjudication can be extended under some circumstances.
She said amounts ordered to be paid must be paid in 10 days.
For anyone interested in becoming an adjudicator, the ODACC has two-day training in late July and in October.
Applicants will need at least 10 years of construction experience, Reider pointed out.
In another conference session dealing with managing contract risk in an era of prompt payment, Neil Abbott, a partner at Gowling WLG, identified some of the contract risks and looked at who bears the burden between owners and contractors.
Abbott also spoke about the capacity issues consultants could face from multiple project invoices that could result as projects halted or slowed from COVID-19 get into gear, which, he said, will become “a huge issue.”
For consultants spread too thin, hiring help, charging premiums or giving preference to certain clients might be required.
“They are going to have to manage this new world where they have all these unforeseen risks and unforeseen parties dealing with disputes…and reviewed very quickly, unlike the old days,” he said.