In the past year, there have been several decisions of the Ontario Divisional Court which address applications for judicial review of an adjudicator's determination. The first of these, released in January 2024 by the Ontario Divisional Court (Ledore Investments v. Dixin Construction),1 set the stage and provided guidance on the circumstances in which judicial review of adjudication determinations may be successful. See our blog published on April 16, 2024 about Ledore: Judicial review of adjudicator's determination granted by Ontario Divisional Court.
In Ledore, the Ontario Divisional Court found that procedural fairness is a valid ground for judicial review and confirmed that this includes the right of any party to an adjudication to be heard on the determinative issues in that adjudication. In the months that followed, there have been several more cases released by the Ontario Divisional Court that have provided further guidance. This blog post discusses two of these cases.
Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction
In Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction,2 Caledon entered into a contract with WSP for design, contract administration and site inspection services relating to the clean-up of wastewater pond (#7), and a second, similar contract with Matrix for another wastewater pond (#14). Caledon subsequently entered into a contract with Bronte for construction works for the clean-up of wastewater ponds #7 and #14. Bronte performed work under its contract with Caledon until the contract was terminated by Caledon. The parties disagreed on what Bronte was owed up to the date of termination, and Bronte delivered a notice of adjudication to Caledon seeking $145,000.3
Caledon responded to the notice of adjudication by challenging the jurisdiction of the adjudicator based on transitional provisions in the Construction Act4(the Act), and, in the alternative, disputing the claim on the merits. In a preliminary jurisdictional ruling (i.e., the jurisdiction decision), the adjudicator found he had jurisdiction over the claims, and in a final determination (i.e., the merits decision), the adjudicator awarded Bronte $93,445.92.55
Caledon sought judicial review of that determination on the basis that the adjudicator lacked jurisdiction to address the claim because the transitional provisions under the Act excluded the improvement at issue from adjudication. Section 87.3 of the Act dictates which version of construction legislation applies to a dispute: the new Act or its predecessor, the Construction Lien Act. These are known as the transitional provisions. The adjudication provisions of the Act, which grant adjudicators jurisdiction, only apply where "a procurement process for the improvement (emphasis added) that is the subject of the contract was commenced after October 1, 2019.6
The Divisional Court's decision
The Divisional Court confirmed that, under the transitional provisions of the Act, jurisdiction to conduct an adjudication is determined on an improvement-by-improvement basis so that all claims arising from an improvement are subject to the same version of the Act.7 When a "contract" or "subcontract" is in respect to more than one improvement (as was the case here), however, the Divisional Court held that the "contract" or "subcontract" may be subject to different versions of the Act, with respect to different improvements.8
The Divisional Court noted that the contract between Bronte and Caledon was entered into after October 1, 2019, but the central question was whether a procurement process for the contract's subject matter (i.e., the work relating to wastewater ponds #7 and #14, respectively) was commenced before that date.9 The Court found that, under the Act, the concept of "improvement" is tied to the land. Improvement and contract are not co-extensive, as different persons can undertake different work under different contracts, for the same improvement.10 The question is whether the works are in respect to the same improvement to the same lands.
Accordingly, the Divisional Court found that the procurement process for the contract relating to wastewater pond #7 was commenced before October 1, 2019, and was not subject to the adjudication provisions of the Actby operation of the transition provisions. With respect to pond #14, the Divisional Court concluded that the procurement process for the contract commenced on March 24, 2020. The portion of the contract relating to wastewater pond #14 was in respect to the same improvement, and therefore the adjudication provisions of the Act did not preclude adjudication of any claims in respect of wastewater pond #14.11
This decision illustrates the significance of dates of procurement processes as it relates to the application of adjudication under the transition provisions under the Act and underscores the importance of correctly interpreting how that could apply when a "contract" or "subcontract" is in respect of more than one "improvement".
Blackstone Paving and Construction Ltd. v. Barrie (City of)
In Blackstone Paving and Construction Ltd. v. Barrie (City of),12 Blackstone applied for judicial review of two adjudication determinations on the basis that the City of Barrie had failed to comply with section 6.4(2) of the Act (relating to the issuance of Notices of Non-Payment (NONP").
The application arose in the context of an ongoing payment dispute between Blackstone and the City of Barrie. Blackstone argued that the City was required to identify all of its reasons for non-payment in its NONP pursuant to section 6.4(2) of the Act. Blackstone further argued that its non-compliance with this provision of the Act was procedurally unfair, because when Blackstone sought to address what it argued were new issues raised by the City in its responding materials, both adjudicators refused to permit Blackstone the opportunity to deliver reply submissions.13
The Divisional Court's decision
The Divisional Court dismissed the application, finding the threshold question for procedural fairness (i.e., whether the procedures followed in the adjudication accorded with the procedures to which the adjudication was subject under the Act) had not been met under the statutory test for judicial review.
The Divisional Court confirmed that the standard of review for questions of procedural fairness is "fairness" or "correctness". Findings of fact are reviewed on a standard of reasonableness and, while this principle applies to factual findings related to procedural fairness issues, the requirements of procedural fairness, considering the facts, as found, is to be assessed on a "correctness" or "fairness" standard, applying the test set out in section 13.18(5)5 of the Act.14
First, the Divisional Court found no error with the adjudicators' determination that any alleged "typographical errors" in the City's NONP (which Blackstone had argued vitiated the NONP) did not amount to noncompliance with section 6.4(2) of the Act. Further, even if they had, Blackstone had established no prejudice arising from this non-compliance, and the Divisional Court therefore gave no effect to this argument.15
Second, the Divisional Court found no error with the adjudicators' reasoning relating to the alleged failure to identify all reasons for non-payment in the NONP at issue. The City claimed that it had merely elaborated on the reasons given in its NONP, which the Divisional Court found that the adjudicators had implicitly accepted. The Divisional Court was satisfied that this implicit finding was available on the record before each of the adjudicators in this case. As a result, the Divisional Court deferred to the adjudicators' findings that there was no breach of section 6.4(2) of the Act, and it therefore followed that Blackstone had not met the first branch of the conjunctive statutory test for procedural unfairness under section 13.18(5)5 of the Act.16
Third, the Divisional Court found no error with the adjudicators' decision to not permit reply submissions in the adjudications. All parties had agreed on a process for the exchange of materials, and no provision was made in that process for reply submissions. The adjudicators had indicated they did not require reply submissions from Blackstone to dispose of the adjudications, and noted that many of the concerns behind the request for reply submissions were in respect to issues that were not properly before them. The Divisional Court held that the adjudicators' decisions in this regard were not inconsistent with the processes prescribed by the Act, or the process agreed to by the parties themselves.17
This decision emphasizes that parties to an adjudication do not have an absolute right to reply submissions under the Act. If parties wish to strengthen the ability to argue they should be permitted to deliver reply submissions, they may wish to make express the requirement that they be permitted to do so in any procedures and/or processes addressed in their contracts relating to the conduct of an adjudication.
Takeaways
These decisions highlight the challenges that parties may face as they continue to navigate the right to seek judicial review of adjudication determinations. The decisions suggest the Divisional Court is not seeking to broaden the right to judicial review. Parties must establish valid grounds and meet the statutory requirements before they will gain access to the courts and an opportunity to revisit any adjudication determination.
With that said, the decisions also serve as a reminder to adjudicators of the limits of their jurisdiction and the requirement to ensure they adhere to principles of procedural fairness. Adjudicators are not permitted to ignore caselaw, nor the parties' right to be heard on material issues before them. It remains to be seen how the Divisional Court will continue to address future applications for judicial review but, in the meantime, parties would be wise to incorporate these lessons as they move forward.
This blog post is an excerpt from an article published in the Canadian College of Construction Lawyers Legal Update #169 on December 20, 2024.
Footnotes
1. Ledore Investments v. Dixin Construction, 2024 ONSC 598.
2. Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction, 2024 ONSC 4555 [Caledon].
3. Caledon, at para 12.
4. Construction Act, RSO 1990, c C.30.
5. Caledon, at paras 12-13.
6. Ibid., at paras 8-9.
7. Caledon, at para 51.
8. Ibid., at paras 27-29.
9. Ibid., at para 30.
10. Ibid., at para 33.
11. Ibid., at para 36.
12. Blackstone Paving and Construction Ltd. v. Barrie (City of), 2024 ONSC 4556 [Blackstone].
13. Blackstone, at paras 5-6.
14. Ibid., at para 4.
15. Ibid., at para 7.
16. Ibid., at paras 9-12.
17. Ibid., at paras 13-15.
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.
