You are contacted by a client who is owed money on a construction project and wants to commence a statutory adjudication under the Construction Act, R.S.O. 1990, c. C.30 (the "Act"). Before filing a notice of adjudication, the client wants to know what the costs of the adjudication will be, exclusive of legal fees. So, how much will this thing cost?
Like many things, this very much depends. The cost of the statutory adjudication will depend on, amongst other things, the value and complexity of the claim. Unexpectedly to some practitioners, the overall cost of the adjudication will also depend on the type of adjudication procedure you select.
The Ontario Dispute Adjudication for Construction Contracts ("ODACC"), the authorized nominating authority for adjudicators under the Act, claims that in order to reduce costs, it has made available four pre-designed adjudication processes that the parties can choose from, which will govern how their claim will proceed. The four pre-designed processes follow a typical pattern and, importantly, have pre-determined adjudication costs that are set out on ODACC's website. Cost clarity is particularly helpful to practitioners and clients alike as each stakeholder has a clear understanding as to how much their adjudication is going to cost.
Apart from the four pre-designed processes, ODACC also allows parties to select a "customized process" to govern their adjudication. A customized process may be helpful to parties depending on factors such as the value of the claim, the complexity of the subject matter, the number of parties involved, whether site visits are required, etc. Unfortunately, cost clarity is lost when the parties elect to implement a customized adjudication process, as ODACC provides little guidance on the costs of this process for end users. It will likely be a combination of an hourly rate for the adjudicator, plus a fee payable to ODACC. Whatever it is, the cost clarity associated with the pre-determined processes is regrettably lost.
When commencing a statutory adjudication, practitioners and clients alike need to be aware that the costs involved in either electing or consenting to a customized process are not set and may represent a significant front-end cost, which is not recoverable from the losing party at the conclusion of the adjudication.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
