Ontario Court confirms Construction Act prompt payment and adjudication provisions

4 GERMAN minute read
03 Mai 2022

The importance of compliance with the prompt payment and adjudication provisions of the Construction Act, R.S.O. 1990, c. C.30 has been highlighted with the Ontario Divisional Court's recent decision in SOTA Dental Studio Inc. v. Andrid Group Ltd., 2022 ONSC 2254 ("SOTA"). In the SOTA case, the Court dismissed an application for judicial review of an adjudicator's determination under the prompt payment provisions of the Construction Act, without any consideration of its underlying merits, because the applicant failed to pay the amount ordered or obtain a stay of the adjudicator's determination.



Background

The applicant, SOTA, retained the respondent, Andrid Group, to perform work on the construction of a dental clinic in Vaughan. Andrid Group invoiced SOTA for its work. SOTA did not dispute the invoices within the prescribed time, making them due and payable pursuant to section 6.4 of the Construction Act. However, SOTA did not pay. An adjudication was held,and the adjudicator ordered SOTA to pay Andrid Group $38,454.55 for work performed. SOTA did not make payment in accordance with section 13.19(2) of the Construction Act, causing Andrid Group to pursue enforcement efforts, in which it obtained a nominal amount of the payment owed.

SOTA was granted leave to bring an application for judicial review of the adjudicator's determination. On September 24, 2021, three days after leave to bring the application was granted, a case conference was held before the Court to address the scheduling of steps required for the application. At this case conference, the issue of SOTA's failure to bring a motion to stay the determination of the adjudicator's decision was raised.

The Divisional Court decision

On April 14, 2022, the Court dismissed SOTA's application for judicial review.

The Court recognized that prompt payment is integral to the scheme of the Construction Act, which is further reinforced by the provisions related to appeals and reviews. There are no appeals from prompt payment adjudication determinations, but there may be judicial review of the decisions, only with leave of the Divisional Court.

SOTA argued that "there was no money" to make payment of the adjudicator's determination. In the Court's opinion, this admission reinforced its view that if an owner is insolvent, it should not be allowed to "run up costs and delays through recourse to litigation". In the SOTA decision, the Court determined that when leave is granted, the applicant is faced with two options: (1) obtain a motion to stay or (2) adhere to the prompt payment provisions of the Construction Act, failing which the court may dismiss the application on a motion to quash or at the hearing of the application.

Conclusion

The SOTA case illustrates the importance of understanding the processes surrounding adjudications in Ontario, as well as recognizing the required steps after receiving an adjudication determination. A party looking to set aside the determination of an adjudicator through an application for judicial review must adhere to the timelines set out under the Construction Act. Under section 13.18(2)a motion for leave to bring an application for judicial review of a determination of an adjudicator must be filed no later than 30 days after the determination is communicated to the parties.

Further, the SOTA decision has confirmed that a failure to pay in accordance with the prompt payment requirement of the Construction Act may lead the Court to refuse an application for leave. Alternatively, where leave is granted, an applicant must either obtain a stay of the adjudicator's determination, or make payment, failing which the Court may dismiss the application for judicial review altogether.


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