In this series, we are discussing Bill 142, which is expected to pass into law in early 2018. The Construction Lien Amendment Act, 2017 is implementing mandatory adjudication for every contract signed after the bill becomes law. This is the second of two posts about proposed mandatory adjudication, and looks at the proposed adjudication process. Part one can be found here.

The proposed adjudication process under Bill 142

The process is intended to move very quickly. The party giving notice of adjudication will propose an adjudicator, who must be part of an approved list of decision-makers. If the parties do not agree or the requested adjudicator does not consent to conduct the adjudication, an adjudicator will be appointed by an “approval authority” to be designated by regulation within eleven days of notice being given.

Within five days, the moving party must provide all relevant documentation and other evidence to the adjudicator. The powers of the adjudicator in conducting the adjudication include:

• providing directions with regard to the conduct of the adjudication;
• ascertaining relevant facts and law;
• drawing inferences based on the conduct of the parties;
• conducting an on-site inspection of the project in question;
• obtaining the assistance of persons such as accountants or engineers to help them determine better any fact in question;
• making a determination in the adjudication; and,
• any other power that may be prescribed.

Decisions and orders made by adjudicators will require prompt attention. Payments ordered must be made within ten days, failing which the party entitled to payment may suspend further work. Any party that suspends work in accordance with an order made under the regime may also be entitled to compensation for reasonable start-up costs, if and when the project resumes.

Parties are generally expected to bear their own individual costs of adjudication, and to split the adjudicator’s fees. However, in addition to making orders with respect to matters in dispute, adjudicators have the discretion to require a party that has acted in bad faith, or engaged in frivolous or vexatious behaviour to pay some or all of the other party’s costs, a greater apportionment of the fee amount, or both.

Orders made following mandatory adjudication

Adjudication orders are final and enforceable by Court Order, unless the matter is subsequently referred to arbitration or litigation, at which point the adjudication findings are not binding. Additionally, a party may, within 30 days after the adjudicator’s determination is communicated, apply to the Court to have the determination set aside on any of the following grounds:

• a party to the adjudication was under a legal incapacity;
• the contract or subcontract is invalid or no longer exists;
• the determination dealt with a matter not properly the subject of adjudication or with a matter unrelated to the subject of the adjudication;
• the adjudication was not conducted by an adjudicator;
• proper adjudication procedures were not followed;
• there is a reasonable apprehension of bias on the part of the adjudicator; or,
• the determination was made as a result of fraud.

These new provisions and strict timelines for paying contractors and subcontractors are intended to create certainty with respect to the flow of funds and streamline the process for resolving disputes over non-payment. For owners and contractors, a review of internal documents, including standard purchase orders and invoices, and procedures for delivering payment may be required.

Kitchener-Waterloo construction lawyers advising construction industry clients

Bill 142 is making sweeping changes to the industry. The experienced construction lawyers at Duncan, Linton LLP can help clients take steps to prepare for new requirements. If you have questions about how this legislation could impact your business, contact us online or call 519-886-3340.