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Construction - Adjudicators. Blackstone Paving and Construction Ltd. v. Barrie (City of)
In Blackstone Paving and Construction Ltd. v. Barrie (City of) (Div Court, 2024) the Divisional Court dismissed a Construction Act JR of a 'prompt payment' adjudication.
Here the court declines to allow 'reply' submissions in an adjudication:(d) Declining to Receive Reply Submissions
[13] The Act does not provide for reply submissions. Both before Adjudicator Ardakani and Adjudicator Ainley, the parties agreed on a process for exchange of adjudication materials. No provision was made for reply submissions. Each Adjudicator received a written request from Blackstone seeking to make reply submissions, both said they would take the request under advisement, and both later advised that they did not need reply submissions to dispose of the adjudications. In so doing, the Adjudicators noted that many of the concerns grounding the request to make reply submissions were in respect to issues that were not properly before the Adjudicators for determination. See, for example, the reasons of Adjudicator Ardakani at p. 32.
[14] The Adjudicators’ decisions not to permit reply submissions are not inconsistent with the process prescribed by the Act or with the process agreed by the parties with the Adjudicators. Therefore, it follows, again, that Blackstone has not met the first branch of the conjunctive statutory test for procedural unfairness prescribed by s.13.18(5)5 of the Act. . Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction [transitional]
In Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction (Div Court, 2024) the Divisional Court considered a JR of a Construction Act adjudication, here regarding transitional provisions:The Act’s Transitional Provisions: Jurisdiction to Conduct Adjudication
(a) The Transitional Provisions and the Standard of Review in this Court
[7] This court has jurisdiction to intervene in respect to the Adjudicator’s determination pursuant to s. 13.18(5)3 of the Act, which provides:The determination of an adjudicator may only be set aside on an application for judicial review if the applicant establishes one or more of the following grounds:
... .
3. The determination was of a matter that may not be the subject of adjudication under this Part….
... . [8] The jurisdictional issue in this case turns on transitional provisions in s. 87.3 of the Act, which provide (emphasis added):(1) This Act and the regulations, as they read on June 29, 2018, continue to apply with respect to an improvement if,
(a) a contract for the improvement was entered into before July 1, 2018;
(b) a procurement process for the improvement was commenced before July 1, 2018 by the owner of the premises; ….
(4) Parts I.1 and II.1 do not apply with respect to the following contracts and subcontracts:
1. A contract entered into before the day subsection 11(1) of the Construction Lien Amendment Act, 2017 came into force.
2. A contract entered into on or after the day subsection 11(1) of the Construction Lien Amendment Act, 2017 came into force, if a procurement process for the improvement that is the subject of the contract was commenced before that day by the owner of the premises. (Emphasis added) The Construction Lien Amendment Act, 2017, s. 11(1), came into force on October 1, 2019.
[9] These transitional provisions establish three time periods:(1) Where a “procurement process for the improvement” was commenced before July 1, 2018 by the owner of the premises”;
(2) Where a “procurement process for the improvement” was commenced on or after July 1, 2018 and before October 1, 2019; and
(3) Where a “procurement process for the improvement” was commenced on or after October 1, 2019 (emphasis added). For cases falling into category (1), the Act, as it read on June 28, 2018, applies: the adjudication provisions were not part of the Act as of June 28, 2018. For cases falling into category (2), Parts I.1 and II.1 of the Act do not apply: these provisions include the adjudication provisions. For cases falling into category (3), the adjudication provisions apply. Using the language of s. 13.18(5)3 of the Act, cases falling into categories (1) and (2) are “matter[s] that may not be the subject of adjudication under this Part.”
[10] An adjudicator has no jurisdiction where none is granted by the Act. Adjudicators must be correct in finding a legal basis for their jurisdiction; their findings of fact in connection with their jurisdictional determinations are entitled to deference. See: Anatolia Tile & Stone Inc. v. Flow-Rite Inc., 2023 ONSC 1291 (Div. Ct.).
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Analysis
[26] As noted by Associate Justice Robinson in Crosslinx Transit Solutions Constructors v. Form & Build Supply (Toronto) Inc., 2021 ONSC 3396, and by Associate Justice Wiebe in DNR Restoration Inc. v. Trac Developments Inc., 2023 ONSC 1849, the transitional provisions have the effect of providing that contracts in respect to the same “improvement” are subject to the same version of the Act. The scheme of the Construction Act practically requires this result: Construction Act proceedings have been characterized as a distinct form of class proceeding where competing claims of different classes of claimants are adjudicated in respect to claims secured against specific lands (lien claims), specific funds (trust claims) and in respect to which specific remedies may be available (including appointment of a receiver). If a single contract in respect to multiple improvements requires a single claims process, this could have a cascading effect of grouping stakeholders in an over-broad process of unnecessary scope and complexity – all because an owner chose to let one contract for multiple improvements.
....
[27] In para. 9(8), the Adjudicator referenced the Crosslinx decision, which the Adjudicator considered to state the following proposition:The intended effect of the language used in s. 87.3 is that the same legislative scheme for rights, obligations, and remedies provided in the Construction Act… applies to all persons involved in the same improvement.
This is a fair summary of a statement of principle stated by Robinson A.J. in Crosslinx and Weibe A.J. in DNR Restoration, and it is correct. Adjudication is conducted for claims made under “contracts” or “subcontracts”. Jurisdiction to conduct adjudication under the transitional provisions is determined on an improvement-by-improvement basis, so that all claims arising from an improvement are subject to the same version of the Act. [28] What happens, then, when a “contract” or a “subcontract” is in respect to more than one improvement? There are three practical options when this arises:(i) The earliest version of the Act that applies to any aspect of the contract or subcontract applies to the entire contract or subcontract;
(ii) The latest version of the Act that applies to any aspect of the contract or subcontract applies to the entire contract or subcontract; or
(iii) The contract may be subject to different versions of the Act in respect to different improvements. There is no “deeming provision” in the Act to direct which of these three options should prevail. This is in contrast to other provisions of the Act, where the Legislature included deeming provisions to address contracts in respect to more than one improvement: (i) determining substantial completion of the contract (Act, s. 2(4), discussed below), and (ii) determining which lands may be encumbered with lien claims arising from a contract in respect to more than one improvement (Act, s. 20).
[29] Options 1 and 2 would derogate from the Legislature’s choice that one version of the Act should apply to all claims related to the same improvement, as explained in Crosslinx. Option 1 would also enable owners to shield themselves from adjudication for many years through the expedient of bundling later projects with earlier ones. Option 2 conflicts with the language of s. 87.3 of the Act. Option 3 may create some complications in adjudicating claims, but as is reflected in the Adjudicator’s Merits Decision, these complications may be rather inconsequential, and owners that do not wish to face even these complications can avoid them by letting separate contracts for separate improvements. . Jamrik v. 2688126 Ont. Inc.
In Jamrik v. 2688126 Ont. Inc. (Div Court, 2024) the Divisional Court allowed a JR against a Construction Act adjudicator's 'prompt payment' decision that "the contract was not “completed” within the meaning of the Construction Act".
Here the court canvasses a CA adjudicator's jurisdiction:[8] As stated by this court in Anatolia Tile & Stone Inc. v. Flow-Rite Inc., 2023 ONSC 1291, para. 7 (Div. Ct.):It is in the jurisdiction of an adjudicator to decide whether a claim is properly brought under the Construction Act. Thus, for example, an argument that services or materials provided by a claimant are not lienable (because, for example, they do not constitute an “improvement” to “premises”), that a claim for lien is out of time, or that the contract in issue “is invalid” or has “ceased to exist”, are within the jurisdiction of an adjudicator to decide, and an adjudicator’s decision on these issues is reviewed in this court on a standard of reasonableness. An adjudicator does not “lose jurisdiction” if they “err” on these points: only where an adjudicator’s decision is “unreasonable” would this court intervene. An adjudicator must be correct, in law, on jurisdictional issues, but will be afforded deference on findings of fact related to their jurisdictional analysis: see also Caledon v. Bronte Construction, 2024 ONSC 3739.
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