Ontario's Construction Act ("the Act")1 has been significantly amended by Bill 216: Building Ontario For You Act (Budget Measures). While not yet in force, the amendments fall under three categories: payment of holdback, adjudication and administrative matters. This article's focus is on the expanded availability and scope of adjudication to resolve construction disputes in Ontario. For a look at the amendments relating to holdback, please read our post here.
Key Takeaways
- Construction Act adjudications in Ontario will no longer be constrained to limited enumerated grounds in the Act. Whether parties take up the call to refer more matters to adjudication remains to be seen, but adjudicators will now have broader jurisdiction to resolve disputes arising from construction contracts in Ontario.
- The stakes of adjudications have been raised. Jurisdictional objections must be raised immediately or may not be available to parties to later set aside adjudicators' determinations. Notices of adjudication will also have to include copies of any prior adjudicators' determinations under the contract.
- The Act will provide for the public release of adjudication determinations that will be anonymized through the removal of parties' names. Adjudication determinations will be available to the public to establish precedent for the conduct of adjudications in Ontario.
Background
Previous amendments to the current prompt payment and adjudication rules came into force and effect on October 1, 2019. That first round of amendments created a fast-track dispute resolution process, entitling parties to refer the following matters to adjudication:
- Valuation of services or materials provided under the contract
- Payment, including with respect to change orders or proposed change orders
- Lien or Trustee set-off amounts
- Payment or non-payment of a holdback
- Any other matter agreed upon by the parties
The Ontario Dispute Adjudication for Construction Contracts ("ODACC") is responsible for administering construction-related adjudications. According to the ODACC Annual Report, the 2024 Fiscal Year saw 277 adjudications commenced and 151 determinations rendered. There has been a steady increase in the use of adjudication to address construction disputes year over year.
Consultation Process Pre-Amendment
In May 2024, the Ministry of the Attorney General ("MAG") tasked Duncan W. Glaholt with conducting an independent review of the Act. A "Consultation Paper" outlining substantive proposals for amending the Act was released in 2024, with the Final Report, entitled 2024 Independent Review: Updating the Construction Act, released October 30, 2024 ("Final Report").
The Final Report indicated parties to construction contracts want adjudication available at all levels, for all disputes. Consultees expressed frustration with the slow uptake of adjudication in Ontario, unclear informal procedures as well as ODACC's fee structure. To facilitate more adjudication in the Province, the Final Report emphasized party autonomy in tailoring the adjudication process to increase confidence in the process.
While the Final Report did recognize that increased adjudication would burden large institutional and municipal owners, the relative transaction cost of multiple adjudications as compared to a single litigation proceeding or arbitration was seen to favour adjudication.
Following the release of the Consultation Paper, the amendments to the Act quickly received Royal Assent and significantly reformed the availability and scope of adjudication in Ontario.
New Adjudication Provisions
Jurisdictional limits removed: Prior jurisdictional limits on the availability of adjudication under ss. 13.5(1)-(3) have been repealed and replaced.2 Before the amendments, only statutorily enumerated matters were capable of adjudication. The amendments permit parties to refer disputes on any prescribed matter or any matter agreed to by the parties to adjudication. Prior to the amendments, parties were already entitled to adjudicate a broad array of disputes respecting, "Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order." However, the removal of jurisdictional limits can be expected to embolden adjudicators to resolve dispute that comes before them, without exceeding their jurisdiction and risking their determination being set aside on judicial review.
Jurisdictional objections must be made immediately: Any objection that the matter is outside an adjudicator's jurisdiction must now be made by a party when it first makes submissions in the adjudication.3 Any object that the adjudicator has exceeded jurisdiction must be made "as soon as the matter allegedly beyond the adjudicator's jurisdiction is raised in the adjudication."4 Adjudicators can make determinations as to their own jurisdiction. The adjudicator may extend the time for making jurisdictional objections, however, parties engaged in adjudication should ensure they are prepared to argue jurisdictional issues at the outset of proceedings to avoid running afoul of the new provisions.
Increased availability of adjudication: The Act's amendments extend the availability of adjudication after the completion of a contract.5 Under the current adjudication provisions, notice of adjudication must be given before the date the contract is completed. The amendments to the Act will permit notice to be given no more than 90 days after the date on which the contract is completed, abandoned or terminated, unless the parties agree otherwise. For subcontracts, the notice requirements are in relation to the earliest of 90 days after contract completion (including abandonment or termination), the certification of completion, or last supply of services or materials. Payment of adjudication awards has been extended from 10 days to 15 days from the date the determination is communicated to the parties.
Additional notice of adjudication requirements: Parties should note that written notice of adjudication requirements under the amendments now require disclosing the date, nature and substance of any previous adjudication under the contract or subcontract, as well as including a copy of any previous adjudication decisions.6 Additional notice requirements are subject to yet unreleased regulations. Practically speaking, if parties have adjudicated a dispute under the contract or subcontract before, they must be prepared for any subsequent adjudicator to be provided a copy of the determination from any prior adjudication. This places enhanced importance on the first adjudication between parties to a contract and the impressions set by the resulting determination.
Increased ability to require consolidation: If parties are involved in multiple adjudications with respect to the same contract, even where the parties do not agree to consolidation, any party can "require" consolidation subject to the agreement of the adjudicators of the separate adjudications, in accordance with the regulations.7 Although intended to streamline dispute resolution in multi-party disputes, this may also prove difficult to implement for complex contracts with a variety of interrelated issues between the parties.
Introduction of private adjudicators: While ODACC remains the legislated authority for qualifying adjudicators, parties are no longer required to use an adjudicator registered on ODACC's system.8 Parties may agree to a private adjudicator to resolve their dispute instead. This will create two types of adjudicators: registry adjudicators and private adjudicators. Private adjudicators must still be "qualified" by ODACC and the Act's amendments contemplate ODACC delivering training programs to those private adjudicators. Further details on the differences between these two classes of adjudicators remains to be seen.
Ability to correct determinations: The amendments also provide adjudicators a new ability to correct determinations "no later than five days" after communicating that determination to parties. Corrections may be made for typographical, calculation errors or similar errors, or amend the determination altogether to "correct an injustice caused by an oversight on the adjudicator's part".9 The scope of what constitutes an "injustice" has yet to be considered in this context.
Adjudications no longer influence lien expiry: Adjudications no longer extend the lien expiry period, eliminating a source of potential confusion and inconsistency on projects.10
Anonymized adjudication determinations made public: The Act amendments will require ODACC to make adjudication determinations "publicly available, subject to the removal of identifying information".11 This should result in a database of determinations available for parties to refer to as precedent in both procedural and substantive construction matters.
Closing remarks
The amendments expand the availability of adjudication for construction disputes in the province, while making it more difficult for parties to raise jurisdictional arguments to set aside determinations after the fact.
Construction stakeholders await the coming into force of the amendments and accompanying regulations to see how these changes are implemented in practice. For now, it remains unclear whether the changes will result in a substantial or incremental impact on the uptake of adjudication as an alternative to arbitration or civil litigation. All parties to adjudications would be wise to familiarize themselves with these changes to avoid being caught off guard.
Footnotes
2. Bill 216, Schedule 4, s.12(1) repeals and replaces the current ss.13.5(1)-(3).
3. Bill 216, Schedule 4, s.18 adds s. 13.12.1(a) regarding objections on jurisdictional grounds.
4. Bill 216, Schedule 4, s.18 adds s. 13.12.1(b) regarding objections on an adjudicator's excess of jurisdiction.
5. Bill 216, Schedule 4, s.12(1) repeals and replaces the current ss.13.5(1)-(3), the expiry of the adjudication period for contracts is under 13.5(3), s.13.5(3.1) for subcontracts.
6. Bill 216, Schedule 4, s. 13(1) amends the current s.13.7(1) and adds subsection (e) which details the additional notice requirements.
7. Bill 216, Schedule 4, s. 14 repeals the current s. 13.8(2) and substitutes the new provision on consolidated adjudication.
8. Bill 216, Schedule 4, s. 15(1) amends the current s. 13.9(1), s.15(2) repeals the current s.13.9(2) and replaces it with the registry and private adjudicator provisions: s.13.9(2), 13.9(2.1), 13.9(4).
9. Bill 216, Schedule 4, s. 21 adds s.13.17.1 to address correcting determination.
10. Bill 216, Schedule 4, s. 27 repeals the current s. 31(2)-(7) and substitutes new provisions on lien expiry.
11. Bill 216, Schedule 4, s. 32(5) adds s.88(1)(j.1).
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.
