When Construction Contracts Go Awry: Ontario’s New Construction Contract Adjudication Regime

Sabrina Saltmarsh, B.A. (Hons), J.D.Commercial Litigation, Construction | Builders, Construction Equipment & Machinery, Construction Liens, Construction Litigation, Contract Disputes, Cottage Litigation, Professional Liability, Recreational Property Litigation0 Comments

Construction contracts come with expectations and potential risks to property owners and contractors. Property owners can face issues related to quality of workmanship, delays, and incomplete or abandoned work. Contractors (including sub-contractors) can deal with a myriad of problems which delay or hinder payment, including issues with other sub-trades, the general contractor, or the owner. Whether you are a property owner undertaking construction or renovations, or a contractor (or sub contract) who has been engaged on a project, if things don’t go as planned it’s important to know what your options for recourse may be. A newly established cost-effective adjudication regime has become an important option to consider.

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With the Ontario Legislature’s ratification of the new Construction Act, prompt payment and adjudication came into effect on October 1, 2019. The new legislation implements a complete regime to deal with contractor disputes and has given rise to Ontario Dispute Adjudication for Construction Contracts (ODACC). This new adjudication regime gives parties to a construction contract a cost effective and quick mechanism to resolve any dispute. Rulings (referred to as “Determinations”) made by an ODACC adjudicator can be enforced in the same manner as an order of the court and are considered to be final determinations unless the ruling does not finally resolve the dispute and parties decide to move on to arbitration or court proceedings, in which case it would be considered an interim order.

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The types of disputes that ODACC can assist in resolving include but are not limited to: Determining the proper valuation of services or materials provided under the contract; payment under the contract in relation to a change order; disputes arising from non-payment; amounts retained as set off by trustee or for a lien; holdback disputes.

What’s appealing about ODACC’s adjudication process is that an ODACC adjudicator renders a decision in the matter within thirty (30) days of all supporting documentation being filed by the claimant and if any party is ordered to pay another party, the payment must be made within ten (10) days of the issuance of the determination. Further, adjudication through ODACC is available as of right which means the parties do not have to consent to the process, one party may simply file their claim. The regime makes dispute resolution more accessible than other options such as arbitration or court proceedings as adjudication fees are geared to the value of the contract in dispute and split between the parties. There is no cost to file a claim with ODACC for contracts valued less than $50,000 and is $500 for contracts greater than that amount.

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Perhaps one of the most realized benefits of submitting a claim to ODACC is that it gets the parties talking and often results in a resolution before a determination is rendered. This is illustrated by the fact that in 2020 thirty-two (32) adjudications were submitted to ODACC and only three (3) resulted in the rendering of a determination. Fourteen (14) were withdrawn because the parties resolved the dispute and three (3) resolved by full payment under the contract in question. Notably, of the 32 adjudications submitted, twenty-two related to residential property construction contracts.

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Although a lawyer is not needed to file a claim with ODACC, it is important to be succinct, well-organized, and present your case as clearly as possible. Adjudicators often provide strict restrictions on how submissions can be made, the length of such submissions, and they are not required to hold an oral hearing. Further, once a claim has been commenced there are strict timelines to adhere to, as the process moves extremely quickly. For all of these reason’s parties may benefit greatly from having a lawyer provide representation or assist with their case. It should be noted however that the recovery of legal fees is not specifically contemplated within the ODACC regime.

The lawyers at Gilbertson Davis LLP have experience dealing with construction contract disputes. If you are involved in such a dispute or having problems related to a construction contract, contact us for an initial consultation.

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About the Author

Sabrina Saltmarsh, B.A. (Hons), J.D.

Practitioner in a broad range of business and civil litigation matters including commercial, real estate and condo disputes. Experienced at all levels of Ontario Courts. Bio | Contact

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