Adjudication in Ontario: Striking the Right Balance Between Process and Substance

When Ontario amended the Construction Act to include adjudication, the goal was clear: faster, binding resolution of payment disputes to keep projects moving. Adjudication was always intended to be a streamlined alternative to litigation and arbitration; in practice, however, many in the industry have raised concerns that the process is becoming increasingly weighed down by procedural complexity, often driven by over-lawyering.

This tension between timely justice and rigorous procedure is not unique to adjudication. The challenge is finding the appropriate balance, and understanding how parties, their counsel, and adjudicators can work together to preserve it.

Key takeaways

• Ontario’s Construction Act adjudication regime was designed to deliver fast, binding decisions on payment disputes, but procedural complexity is increasingly undermining that goal.
• Industry participants have raised concerns about over-lawyering, with some adjudications evolving into quasi-arbitrations complete with live evidence and expert witnesses.
• Counsel plays an important role in protecting client rights, including for judicial review purposes, but that obligation does not require turning every adjudication into a mini-trial.
• Recent amendments to the Construction Act take meaningful steps to curb strategic jurisdictional objections by requiring parties to raise them promptly.
• Adjudicators, parties, and counsel each have a role to play in preserving the efficiency and integrity of the adjudication regime.

How the process works

An adjudication begins when a party delivers a Notice of Adjudication. The Notice functions more like a summary pleading than a legal brief, and ODACC imposes a character limit to encourage brevity. Nevertheless, some parties have circumvented this by attaching lengthy briefs and legal argument as attachments, undermining the spirit of the process from the outset.

Once an adjudicator is appointed, the parties typically meet to discuss procedure. ODACC offers four pre-designed processes and the option of a customized process. While the adjudicator has full discretion to set the procedure, the parties have meaningful input at this stage. This early procedural meeting is the first real opportunity for counsel and clients to set the right tone.

From there, documents are exchanged, submissions are made, and the adjudicator delivers a determination within 30 days of receiving the required materials. The determination is binding and payment must follow within 15 days, even if a party seeks judicial review.

Where things go wrong

The flexibility built into the adjudication regime, and particularly the ability to design a custom process, is both its strength and its vulnerability. Some adjudications have evolved into quasi-arbitrations featuring affidavit evidence, live cross-examinations, and expert witnesses. This is not what the legislature envisioned. For most disputes, which typically involve non-payment or valuation of services and materials, written submissions should suffice. When adjudications balloon into full hearings, costs rise, timelines extend, and the regime’s core value of providing timely dispute resolution is lost.

Jurisdictional objections have historically been another source of abuse. Under the prior version of the Act, a party could raise a jurisdictional challenge at virtually any time, often for strategic rather than substantive reasons, and without consequence. Recent amendments require jurisdictional objections to be raised promptly, either when a party first makes submissions or as soon as it forms the view that the adjudicator has exceeded jurisdiction. Delayed objections will only be permitted where the delay is “justified,” though the courts have yet to interpret what that standard might be. Nevertheless, the change is welcome.

Consolidation is a further pressure point. When a contractor facing a supplier’s adjudication turns around and consolidates it with a separate dispute against the owner, the supplier who often simply wants to be paid is suddenly thrust into a far more complex proceeding. While consolidation can be necessary, the near-unilateral ability of one party to force it on another creates real potential for abuse and procedural unfairness.

Practical steps for striking the balance

Improving the balance between form and substance is a shared responsibility.

Adjudicators should consider the most efficient process available, use additional procedural powers proportionately, and hold firm to determination timelines. The adjudicator sets the tone and has the authority to resist unnecessary complexity. Adjudicators should be empowered to craft processes that are appropriate and resist expansive procedure where not absolutely necessary.

Parties should disclose only the documents genuinely necessary for the dispute, keep arguments focused on the matter actually in issue, and avoid adjudication by ambush. The regime works best when participants engage in good faith.

Counsel carries a particular responsibility. Lawyers must preserve and protect their clients’ rights, including for the purposes of potential judicial review. But that obligation does not require transforming every adjudication into a miniature trial. Narrowing the issues, raising jurisdictional objections early, understanding the true scope of judicial review, and avoiding consolidation for its own sake are all ways counsel can serve clients well while respecting the purpose of adjudication.

Adjudication was designed to get contractors and suppliers paid faster, keep projects moving, and resolve disputes efficiently. With the right approach from all participants, it still can.

Dylan Dilks regularly advises owners, contractors, suppliers, and consultants across all stages of a construction project, including contract negotiation and project advice, and adjudication and dispute resolution. For more information on how Beale & Co’s Toronto office can support your next project or help resolve an existing dispute, please contact Dylan Dilks.