Adjudication and Ontario’s Construction Lien Act
As you are likely aware, the first wave of amendments to Ontario’s Construction Lien Act go into effect in July 2018 and the second wave debut October 2019. We’ve released several blog posts and a whitepaper on the amendments, which can be read here, and in today’s post we are going to continue the discussion on adjudication.
What is Adjudication? Like Arbitration… Only Different
Alike, yet different. Adjudication and arbitration are similar, in that the disputing parties agree to seek resolution from an impartial third party. But, there are some differences.
One difference? Time. Arbitration can go on for quite some time, but adjudication has strict time provisions.
According to an article by Sahil Shoor and Neil S. Abbott of Gowling WLG, the adjudicator has 30 days from receipt of necessary documentation to render a decision. If, after 30 days, the adjudicator needs more time, an additional 14 days can be granted to the adjudicator by the Authority.
“Within five days of the selection of the adjudicator the party who started the adjudication must provide a copy of the contract in question, and any documents the party intends to rely on to the adjudicator. The adjudicator must release his/her written decision within 30 days of receiving the documents. The adjudicator can request up to 14 additional days, but the adjudicator’s request can be refused by either party.”
Not only are the timing provisions strict, the decision made through adjudication is enforceable by the courts. If adjudication has been requested, it will extend the lien deadline to whichever is later, the standard lien filing period or 45 days from the date the required documentation is provided to the adjudicator.
The Powers that Be
In an earlier post we reviewed who can be an adjudicator but didn’t go into much detail on the powers held by the adjudicator. In their article, Shoor and Abbott, provide a healthy list of powers, though last on the list pretty much sums it up:
- Make directions respecting the conduct of the adjudication.
- Take the initiative in ascertaining the relevant facts and law.
- Draw inferences based on the conduct of the parties to adjudication.
- Conduct an onsite inspection.
- Obtain the assistance of a merchant accountant, actuary, building contractor, architect, engineer, or other person in such a way as the adjudicator considers fit to enable him or her to determine better any matter of fact in question. The adjudicator may fix the remuneration of the expert and who will pay it.
- Make a determination of the adjudication.
- Any other power that may be prescribed.
What Can be Adjudicated?
The legislation defines the matters that may be adjudicated as the valuation of services or materials provided under the contract, payment under the contract including proposed change order(s), disputes that are the subject of a notice of non-payment, retainage/holdback, and any other matter that the parties to the adjudication agree to or that may be prescribed.
It’s important to note, only one issue can be adjudicated at a time. However, if a party wishes to consolidate two or more issues under one adjudication, the party can submit the consolidation request via notification to all parties involved, including the adjudicator.
Much like the mechanic’s lien process, there are steps to commencing adjudication. Shoor and Abbott advise adjudication can only take place between parties within direct contract of one another, adjudication must start prior to contract completion, and the party requesting adjudication must provide notice to other parties.
What should be included in the notice? According to Shoor and Abbott, the notice should include: “names and addresses of the parties; nature and a brief description of the dispute, including details respecting when and how it arose; nature of the redress sought; and name of a proposed adjudicator to conduct the adjudication.”
In addition to notifying other parties, the requesting party should also “provide a copy of the notice in electronic format to the Authority.” – Adjudications Under Part II.1 of the Act, O Reg 306/18
Can You Say Adjudication Three Times Fast?
Shew — I don’t know that I’ve used so many variations of “adjudicate” in one post! But, it’s necessary because adjudication is an important aspect of the amendments to Ontario’s Construction Lien Act. Adjudication will be an option for contracts entered on or after October 1, 2019.
If all goes to plan, adjudication should prove to be a quick, beneficial dispute resolution process!
Compliance with Article 9 of the Uniform Commercial Code is critical to perfect your security interest. But, what happens if you comply with Article 9 and take the proper steps to perfect your security interest, only to have the Secretary of State incorrectly index your filing? Errors and mistakes happen. Click here to learn more.
NCS Webinars & Events
Here’s a glance at our upcoming webinars!
- Equipment UCC Filings (7/10 @ 1:00 pm)
- Bond Claims & Public Construction (7/24 @ 1:00 pm)
- Understanding the Mechanic’s Lien Process for States with Notices of Non-Payment (7/31 @ 1:00 pm)