Michael Lewis
Special to Ontario Construction News
Ontario has passed Construction Act amendments that broaden access to adjudication so that more project owners, contractors and suppliers can resolve payment and other disputes without burdening the province’s over-crowded court system.
Included in omnibus legislation that received Royal Ascent on Nov. 6, one week after the Building Ontario for You Act bill was tabled in the Legislature, the series of amendments focuses on three priority areas as highlighted by construction law firm founder Duncan Glaholt in an October report to the Solicitor General.
Along with adjudication the amendments require owners to release holdback amounts annually and establishes an updated list of information that must be included in a proper invoice.
Other stories in this special report include:
- The evolution of adjudication: Perspectives from ODACC and CanDACC the nominating and adjudicator authorities in Ontario and federally across Canada
- Fitting the forum to the fuss: A case for subject-matter expert arbitration
- What you need to know about construction adjudication (and what you are doing wrong)
- HCRA complaints process – What builders should know
The Construction Act states that an owner has 14 days to dispute a proper invoice that must otherwise be paid within 28 days.
It’s a regime that has left some owners struggling to meet timelines and the requirements of a proper invoice including data such as materials supplied while still conducting complete due diligence.
In this context the latest amendments establish an updated list of information that must be included in a proper invoice and also provides that if an invoice fails to include all the prescribed information it will still be deemed proper unless the owner notifies the contractor in writing of the deficiency and what is required to address it no later than seven days after receiving the invoice.
The aim is to grant relief to contractors by limiting the burden of administrative errors, but the amendment also puts greater pressures on owners, forcing them to process invoices diligently and expeditiously.
Most provisions of the bill are in effect with its passage.
Changes to the adjudication process follow input from stakeholders who “agreed that a more comprehensive statutory adjudication scheme would allow adjudication to fulfill its promise more fully here in Ontario, as it has done elsewhere,” Glaholt says in the report that considered submissions from 33 stakeholders including trade unions.
While some of the final regulations have yet to be released, they are expected to expand the range of issues that can be referred to adjudication beyond payment related disputes while also allowing adjudication after a contract has been completed.
The Act as amended says any party can now require consolidation of multiple “mini-related” adjudications and permits parties to opt for a private adjudicator rather than being obliged to select from a registry provided by Ontario Dispute Adjudication for Construction Contracts (ODACC).
ODACC is the authority that administers adjudication of construction disputes in Ontario while also selecting and training adjudicators drawn from professions including law and accounting and who have at least 10 years of construction experience.
The prompt payment adjudication process, among alternative dispute resolution platforms such as mediation and arbitration, came into effect in October 2019 after the Ontario Construction Lien Act became the Construction Act the year before.
The new Construction Act introduced measures including a requirement that contractors be paid promptly, provisions that modernize lien and holdback processes and an adjudication scheme for quick resolution.
After originating in the U.K., prompt payment and adjudication frameworks for construction disputes have been introduced in provinces across Canada with a federal framework pending.
“The streamlined nature of adjudication as a fast-paced process has proven to be useful for disputing parties,” ODACC director Elise Teitler said in the organization’s 2024 annual report.
“Contractors, subcontractors, businesses and other individuals have elected to use adjudication, resulting in timely, efficient and cost-effective dispute resolution. Once parties participate in their first adjudication and realize the benefits, they tend to choose adjudication if they have future disputes.”
She said adjudication allows businesses, contractors, and subcontractors to resolve their disputes while continuing to provide their services to construction projects, without incurring significant delay and costs. Small disputes within large projects can be adjudicated without bringing the entire project to a standstill.
“The disputes are resolved quickly, and the project can continue unabated,” she said, noting that during the 2024 fiscal year 277 adjudications were commenced at ODACC and 135 determinations were rendered in industry sectors led by residential with a median amount claimed of $183,958.
The ODACC Custom System allows parties, representatives, and adjudicators to work online through the system portal to set the adjudication process, file documents and provide supporting evidence.
Contractors start at the website’s top right log in to create an account to initiate a proceeding with a step-by-step video on the site to walk users through the process. The adjudication does not require cross examination, and a lawyer is typically not needed.
Material is reviewed by an independent third-party adjudicator for a decision which must be issued within thirty days of the claimant submitting supporting documents.
The timeframe can be extended in more complex cases if the parties agree, while the adjudicator can request an extension of no more than 14 days.
If the adjudicator orders payment it must be made within ten days after the decision is issued.
Adjudicator decisions are enforceable as if they were a court order at least in the interim though they could be overturned if parties are dissatisfied with the adjudicator’s decision and choose to commence litigation or arbitration.
The adjudication process might include a video conference or in person hearing, a site visit — or parties may only be required to submit documents such as construction contracts, invoices, and images. The adjudicator and the parties can negotiate fees for the adjudication that are typically split 50/50 between the claimant and respondent or submit to ODACC set costs based on factors including the number of pages of documents submitted.
A party to a construction contract can commence an adjudication without the other party’s consent, with adjudication process set by the adjudicator, as opposed to the process being guided by a pre-determined set of rules.
The parties can suggest a process to the adjudicator for consideration, as outlined at the Adjudication Process page of the OCADD website https://odacc.ca/en/.
If the respondent has not created a Response to Notice of Adjudication five days after the case was initiated in the ODACC Custom System, the claimant may ask ODACC to proceed with the adjudication. ODACC will appoint an adjudicator within seven days of receiving the request to proceed.