Construction Act Adjudication in Ontario – Lessons from Sayers Foods

March 2026

Dylan Dilks

Ontario’s prompt payment and adjudication regime under the Construction Act continues to generate important guidance from the court. In Sayers Foods Ltd. v. Gay Company Ltd., 2026 ONSC 918, the Divisional Court addressed a variety of issues central to the operation of adjudication, including the scope of judicial review, the meaning and impact of a “written notice of lien,” the adjudication of multiple matters, procedural fairness, and the interaction between adjudication and lien proceedings.

The decision provides useful direction to parties, counsel, and adjudicators alike regarding both jurisdictional limits and procedural safeguards in Ontario’s adjudication regime.

Key takeaways

Judicial review is not a new hearing de novo; determinations are not appealable and can only be set aside on grounds of procedural fairness, bias, incapacity, or fraud as set out in s. 13.18(5).
If fresh evidence is admitted on an application for judicial review, the evidence may only be used to assess the argument at hand (i.e. procedural fairness) and not in a re-examination of the merits.
Complexity of a dispute does not oust an adjudicator’s jurisdiction. An adjudicator has jurisdiction to assess the “matters” subject to adjudication, limited by the Notice of Adjudication and the Construction Act.
Deciding the best procedure in the circumstances of a particular case is within an adjudicator’s discretion, and where an adjudicator determines that a respondent should make submissions first, the adjudicator’s decision is subject to deference.
Adjudicators are not required to record adjudication hearings and doing so is entirely in the adjudicator’s discretion, however, a record of the hearing is helpful to the Divisional Court when considering allegations of bias.
How orders for payment in an adjudication impact liens and the amount of security posted to vacate those liens are matters for determination by the court in the lien proceeding, not by the adjudicator or the Divisional Court.
There is no requirement to serve ODACC with a notice of motion for leave to apply for judicial review, however, if the leave motion is granted, the moving party should promptly serve ODACC with the order as a “proper party” to the application. ODACC may incorporate a requirement for parties to serve it with the notice of motion for leave by contract at a later date.

Judicial Review principles

The Divisional Court articulated principles for counsel and parties seeking judicial review of adjudication determinations, summarised below:

The starting point for the court’s analysis is the adjudicator’s determination itself. Judicial review is not a re-hearing of the dispute. The court reviews the adjudicator’s findings and reasoning rather than reconsidering the merits from the beginning.
Factums should cite to the determination of the adjudicator first. If a party disputes a factual finding, the citation to the finding in the determination and the basis of the disputed facts in the records should both be cited.
Re-argument of the merits is not appropriate or advisable on judicial review applications. Section 13.8 of the Construction Act sets out the limited grounds upon which a determination may be reviewed, and judicial review is not an opportunity to revisit the adjudicator’s substantive conclusions.
The record on JR should be the same as it was before the original decision maker. Fresh evidence will only be admitted in narrow circumstances, including where:
1. The evidence provides background/context for the determination
2. The evidence supports the argument that a key finding is unreasonable because it rests on a factual funding unsupported by any evidence; or
3. The evidence is in respect of natural justice, fairness, improper purpose, or fraud, and could not have been before the original decision maker.
Where fresh evidence is admitted because it relates to procedural fairness, the court emphasised that it cannot be used to reassess the merits. If procedural unfairness is established, the proper remedy is typically to set aside the determination and remit the matter for adjudication.
Judicial review is not a “treasure hunt for error”. Any alleged procedural defect must have a material impact on the outcome.

Written notice of a lien

Notice holdback is triggered when written notice of a lien is received.
Written notice of a lien now includes the prescribed form and the lien instrument.

The court also reviewed the purpose and operation of a “written notice of lien.”

Under the earlier version of the Construction Act, a “written notice of lien” allowed a lien claimant to provide notice to the owner in the prescribed form which would then require the owner/payer to withhold not just the 10% holdback, but enough to satisfy the lien, because it could make payment against a construct or subcontract. Importantly, the court confirmed that mere actual notice, such as an owner discovering a registered lien through a title search, did not satisfy this requirement.

This distinction allowed lien claimants to register a claim for lien to preserve their rights without necessarily triggering notice holdback obligations. In practical terms, a subcontractor could preserve its lien rights while allowing its contractor to pursue payment through the prompt payment and adjudication process without immediately engaging the notice holdback regime.

The court noted that this approach aligned with the policy underlying the prompt payment amendments and the recommendations in the report Striking the Balance, which sought to ensure that preserving lien rights would not undermine the effectiveness of adjudication.

Interestingly, recent amendments to the Construction Act have eliminated the distinction between the prescribed form of a written notice of lien and the registered lien instrument. The definition of “written notice of a lien” now includes a copy of a registered claim for lien. While the benefit described by the Divisional Court remains available to optimistic and collaborative subcontractors, the written notice of lien is an infrequently used tool to exert pressure productively before a lien is registered. Instead it is often delivered in conjunction with a registered lien, and the lien is ultimately bonded off by the contractor.

Adjudicating complex matters

Complexity of a defence is no good reason to usurp an adjudicator’s jurisdiction.

The Divisional Court also addressed whether the presence of multiple disputes and complex defences removes a matter from the adjudication regime.

The adjudication involved two invoice disputes that had been consolidated by agreement of the parties and the adjudicator. The responding party argued that the dispute fell outside the adjudication regime because it involved numerous defences and set-off claims.

The court rejected that argument.

The adjudicator correctly characterised the two unpaid invoices as the “matters” before him. The respondent’s various defences and set-off claims were simply disputes arising within those matters.

Importantly, the court emphasised that complexity alone does not deprive an adjudicator of jurisdiction. If resolving complex is necessary to determine the matter referred to adjudication, the adjudicator has jurisdiction to decide them. This jurisdiction is strengthened in light of recent changes to the Construction Act which allow adjudicators to decide matters necessary to resolve a dispute like the scope of work, requests for change in price, and requests for extension of time.

Procedural fairness

The adjudicator controls the process.
A procedural agreement is binding.
Respondents may be required to make submissions first.
Adjudicators are not required to record or maintain adjudication hearings, but they help.

The court also addressed several allegations of procedural unfairness.

The adjudicator required the responding party to make submissions first. The Divisional Court held that there was no unfairness in this approach, emphasising that adjudicators retain discretion to determine the most appropriate procedure for a particular dispute. Similarly, the adjudicator’s decision to implement the schedule previously agreed upon by the parties could not give rise to procedural unfairness.

The court rejected arguments that the adjudicator should have applied the irreparable harm and balance of convenience tests commonly associated with injunctions. Adjudication is statutory process designed to deliver rapid interim determinations on payment disputes so that funds continue to flow through the construction pyramid. The court emphasised that adjudication determinations are made on a balance of probabilities and are without prejudice to the parties’ rights in subsequent litigation or arbitration.

The Divisional Court also addressed the issue of recording adjudication hearings. It confirmed that adjudicators are not required to record oral argument. Whether to record proceedings, retain any recording, or release it to the parties is entirely within the adjudicator’s discretion. Accordingly, no inference of bias arises where an adjudicator declines to release a recording. The court did observe, however, that from the perspective of a reviewing court, a record of the proceedings can be helpful when allegations of procedural unfairness are raised.

Interactions between adjudications and lien proceedings

The impact of an adjudication order on a lien proceeding is best determined by the lien court, not the adjudicator or the Divisional Court.
The court also clarified the relationship between adjudication and construction lien proceedings.

Adjudicators have jurisdiction to determine basic and notice holdback obligations as part of an adjudication. However, questions regarding the impact of an adjudication payment on the quantum of subsisting liens or the amount of lien security fall within the jurisdiction of the court in the lien action.

The Divisional Court emphasised that adjudication and prompt payment should not be delayed while those issues are sorted out in lien proceedings. If payment of an adjudication determination alters the value of existing lien claims, the parties may seek adjustments to lien security within the lien action itself.

The court also cautioned against attempts to involve the Divisional Court in managing the interaction between the two processes. In this case, the court concluded that earlier efforts to address potential over-security had unnecessarily delayed prompt payment and complicated the lien proceedings.

Procedural guidance for leave motions and judicial review

Serve the Attorney General and ODACC with your application for judicial review materials.

Finally, the court addressed several procedural issues related to judicial review applications.

There is no requirement to serve the Attorney General with a motion for leave to apply for judicial review of an adjudication determination. However, if leave is granted, the moving party should promptly serve the Attorney General and incorporate the Attorney General into the timetable for the application so that it may determine whether to take a position and not delay the application.

Similarly, there is no statutory requirement to serve ODACC with the leave motion. However, the Divisional Court concluded that ODACC should be served with the judicial review application so that it may exercise its right to participate as a proper party if appropriate.

Concluding thoughts

Taken together, the decision underscores the objective of maintaining a fast, practical, and interim dispute resolution process that keeps funds flowing through the construction pyramid while preserving the parties’ rights to litigate the merits later. For contractors, owners, and subcontractors alike, the case provides helpful guidance on both the jurisdictional limits of adjudication and the procedural expectations that govern it.

For parties involved in Ontario construction projects, understanding how adjudication determinations are made and how they may be challenged is increasingly important. If you have questions about prompt payment, adjudication strategy, or the interaction between adjudication and construction lien proceedings, please contact Dylan Dilks.

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