Ontario Court refuses to stay lien action despite non-payment of adjudicator’s determination

July 2025

Dylan Dilks

Overview

In Feldt Electric Ltd. v. Gorbern Mechanical Contractors Limited, the court was asked whether a subcontractor’s lien action should be stayed in the face of ongoing non-payment of an adjudicator’s determination.

Background

Gorbern Mechanical Contractors (“Gorbern”), a general contractor, hired Feldt Electric Ltd. (“Feldt”) as subcontractor to perform electrical work at an elementary school in Toronto.

A dispute arose about the scope of the subcontract work. Gorbern engaged a replacement contractor and commenced an adjudication to seek repayment of the costs of the replacement contractor from Feldt. The adjudicator ordered Feldt to pay approximately $94,000. The adjudicator’s order was filed with the court and is enforceable as a court order.

Feldt did not pay the adjudicator’s order, nor did Feldt seek leave for judicial review of the determination. Instead, Feldt preserved a lien and commenced a lien action.

Gorbern brought a motion under s. 47 of the Construction Act to stay the Feldt action and return the lien security for Feldt’s failure to pay the adjudicator’s order.

The decision

Gorbern argued that a lien claimant who fails to pay an adjudicator’s order should not be permitted to pursue its lien rights until it has done so. Gorbern relied on Rules 2.1.01, 57.03, and 60.12 of the Rules of Civil Procedure in support of its arguments.

Feldt argued that the adjudication process was procedurally unfair and that the adjudicator exceeded his jurisdiction.

In response, Gorbern argued that it would be inappropriate to determine whether the adjudicator had jurisdiction or ran a fair process given that these are functions of the Divisional Court on a judicial review application.

The court agreed but held that it may consider Feldt’s concerns about unfairness and jurisdiction as a factor in deciding whether to stay the lien action without usurping the Divisional Court’s statutory function.

Ultimately the court found (without deciding) that the adjudicator did exceed his statutory jurisdiction and that Feldt’s arguments about procedural fairness have merit. In light of these circumstances, the court held that it would be unjust to Feldt to stay its lien action in the face of an adjudication determination about which the court has serious concerns, and that staying the lien action would be disproportionate to the nature of Feldt’s breach of its mandatory statutory obligation to pay the adjudicator’s determination.

Key takeaways

The Construction Act makes payment of adjudication determinations mandatory. Unpaid determinations can be enforced as court orders.
Despite Feldt’s non-compliance and refusal to pursue judicial review, the court declined to stay its lien action.
The only consequence to Feldt was the denial of costs.
The court characterised its decision as a “significant indulgence,” raising concerns about the deterrent value of adjudication determination enforcement.
In future cases the court may be reluctant to enforce adjudication determinations where procedural fairness is questioned, even in the absence of judicial review.

Analysis

The obligation to pay an adjudicator’s determination is mandatory. If an adjudicator’s determination is unpaid, the enforcing party can file the determination with the court as if it were a court order and access enforcement mechanisms under the Rules of Civil Procedure.

Despite the mandatory obligation to pay an adjudicator’s determination, there is little consequence to Feldt in this case for its failure to do so. The court declined to order costs in favour of Feldt despite its success on the motion, and Feldt is permitted to pursue its litigation while also deliberately ignoring a court order.

The court described its refusal to grant the motion as a “significant indulgence” to Feldt. This sort of “significant indulgence,” if implemented in other such cases, runs the risk of undermining the effectiveness of adjudication determinations under the Construction Act.

If a party feels an adjudication was not conducted fairly, or the adjudicator did not have jurisdiction to make the determination, that party can avail itself of the judicial review procedure set out in s. 13.18. A party can bring a motion for leave, and if successful, the party will have the opportunity to present its arguments about procedural unfairness and jurisdiction to a panel of the Divisional Court.

If a party is permitted to ignore an adjudicator’s determination and the party refuses to avail itself of the procedures set out in the Construction Act, the party should not be able to later rely on arguments about procedural unfairness to resist alternative relief sought by the defendant.

The reasons for non-payment of the determination, while relevant, should not overwhelm the fact that non-payment is admittedly wilful and deliberate, particularly where the non-paying party fails to avail itself of the procedures available to rectify its concerns about procedural fairness and jurisdiction. One party’s concerns about the fairness of a process that resulted in a court order should not be given more weight than the order itself by a court without jurisdiction.

What message does this send to other parties in breach of the obligation to pay adjudication determinations? There is a risk that parties may feel that they do not have to expend time, money, and energy on judicial review proceedings; instead, the party can ignore the determination until it may be in that party’s own interests to raise its concerns. The party may run the risk of having the counter party enforce the adjudicator’s determination, but a party who is effectively judgment-proof suffers no consequence.

While granting the relief sought under s.47 for a party’s failure to pay an adjudicator’s determination was not mandatory, the refusal to grant such relief solely on the basis that the court decided without deciding that the adjudicator’s determination exceeded his jurisdiction is problematic. The court did not have jurisdiction to decide whether the adjudicator’s determination was within the adjudicator’s jurisdiction or whether the adjudication process was fair. The court even acknowledged that this power is reserved to the Divisional Court. However, without deciding in fact that the adjudicator’s determination exceeded his jurisdiction or that the process was fair, the court accepted those arguments put forward by Feldt as a basis to decline to exercise judicial discretion. It is not apparent that any other factor was considered.

An alternative option to granting the relief sought or dismissing the motion altogether was to require the plaintiff to pay the adjudication determination into court as a condition to lifting the stay of proceedings in the lien action and making the release of funds contingent on a settlement or further court order. That result would have balanced the seriousness of the plaintiff’s breach of the mandatory obligation to pay with the court’s concerns about the fairness of the adjudication process. That result would have balanced the interim and binding nature of the determination with the plaintiff’s failure to avail itself of the procedures available to contest adjudication determinations before the Divisional Court.

Instead, the “significant indulgence” granted to Feldt undermines the very design and intent of adjudications under the Construction Act.

In SOTA Dental Studio Inc. v Andrid Group Ltd., 2022 ONSC 2254, the Divisional Court held that leave to judicially review an adjudicator’s determination does not serve as a stay of that determination. The court suggested two principles be borne in mind for future cases of non-payment of an adjudicator’s determination:

that prompt payment is integral to the scheme of the Construction Act, and
that failure to pay may lead the court to refuse leave. Where leave is granted, the applicant must obtain a stay or make payment, failing which the court may dismiss the application for judicial review.

In other words, payment in accordance with the Construction Act is mandatory; breach of that obligation may not be without risk or consequence. Despite this guidance, Feldt faces no meaningful consequence for its deliberate and admitted non-compliance. The lien action is allowed to proceed, forcing Gorbern to incur further legal costs pursuing other enforcement options to be paid the adjudicator’s determination.

This outcome has the potential to undermine the authority of adjudicators’ determinations and weaken the effectiveness of the Construction Act’s adjudication regime. Rather than promoting adjudication as an effective dispute resolution tool, and one with real consequences, the decision may deter parties from relying on it – especially where compliance with determinations is neither immediate nor assured.

Siloing a party’s right to pursue a lien action from its obligation to pay an adjudication determination creates a hierarchy of relief under the Construction Act, particularly where the court refuses to enforce the obligation to pay adjudication determinations. If payment or a stay order is required to pursue judicial review of the determination, payment or a stay order should be necessary to pursue other relief under the Construction Act. The adjudication regime cannot achieve its intended goals – to resolve disputes quickly in an interim but binding fashion while easing the burden of disputes on the court – if it is treated like a secondary form of relief to the lien action.

Parties to adjudications and lien proceedings should be aware of this decision. Parties are reminded that the obligation to pay is mandatory, and this decision should not serve as licence to disregard an adjudicator’s determination. As noted by the court, not granting the relief sought by Gorbern was a “significant indulgence” in favour of Feldt, and judicial discretion may not favour similarly situated claimants in future cases.

Beale & Co is excited to have opened a new office in Toronto, supporting our Canadian and international clients with their construction and infrastructure project needs. Owners, contractors, and suppliers requiring assistance navigating the dispute resolution options available under the Construction Act should contact Dylan Dilks.

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