Date: February 2024
Last week, the Divisional Court released what I believe to be the first decision setting aside an adjudicator’s determination on judicial review in Ontario.
The claimant, a subcontractor, was unsuccessful on an adjudication where it sought to enforce the prompt payment provisions of the Construction Act against a contractor due to a failure by the contractor to provide it with a notice of non-payment.
In its determination, the adjudicator did not order the contractor to pay the claimant’s invoices because the contractor’s invoices to the owner were not “proper invoices” (as defined by the Construction Act) and therefore did not engage the Construction Act’s prompt payment provisions.
However, none of the parties to the adjudication were given the opportunity to make submissions with respect to this issue during the adjudication. As a result, the Divisional Court found that the adjudicator’s decision breached procedural fairness and should be set aside under s. 13.18(5)5.
In its reasons, the Divisional Court made it clear that the right to be heard on the determinative issue is a central component of even more limited procedural protections. It found that it would be fundamentally unfair if the losing party had no opportunity to address the issue that has been determined to be decisive.
So, what was the remedy? Instead of engaging in its own analysis, the Divisional Court found it appropriate to remit the matter back the adjudicator for determination.
Couple thoughts:
– First, while I am not convinced that the adjudicator will reach a different conclusion upon review of the parties’ respective submissions, this decision is important to consider for parties and adjudicators when creating an adjudication process.
– Second, it’s ironic that the contractor will likely benefit from its failure to provide a “proper invoice” to the owner. This is certainly one of the well known drawbacks of the current prompt payment legislation if you’re a subcontractor.
Click here for a link to the decision.