Similar to many different areas of law, in Construction Law there is a mechanism for alternative dispute resolution, namely interim adjudication. Using adjudication as an alternative can be an effective way to resolve the issues more efficiently and at a lower cost. This is particularly valuable in the construction industry where disputes could grind a project to a halt, impacting all manner of tradespeople and suppliers who depend on precise scheduling to complete the project.

The Construction Act (the “Act”) currently enables the adjudication process to be binding with regard to certain issues, which are listed in section 13.5(1).¹  However, Bill 126 (the “Bill”) made several changes to the Act, among which was an expansion of what can be adjudicated.² The Bill received Royal Assent on November 6, 2024, but the changes it introduced still remain to come into effect. These changes enable the parties to refer to adjudication of all matters disputed which are prescribed in the regulations, along with any matters agreed upon between the parties (as was also previously permitted).³ This change, combined with additional changes such as the ability to use a private adjudicator⁴ will make it easier to use the adjudication process as an alternative to courts once the changes come into force.

To start the adjudication process, one party will serve the other with a Notice of Adjudication. Currently, the Act only allows for the adjudication to commence if the notice is given to the other party prior to the completion of the contract at issue. The notice must include the names and addresses of the parties, the nature and a brief description of the dispute, the nature of the redress sought, and the name of the proposed adjudicator to conduct the adjudication. However, among the changes made by the Bill is the new (not yet enacted) section 13.5(3) of the Act which will allow the adjudication to commence if the notice is provided within 90 days after the completion of the contract. This provides a longer window of time to begin the adjudication, further enabling the use of this dispute resolution method. It will also presumably allow for a wider range of disputes to be put before adjudication, namely those that more often arise after contract completion. Similar to the current state of the Act, after making all necessary arrangements with the adjudicator, they will make a decision within 30 days of receiving all the necessary documents. In some instances, and subject to the consent from relevant parties, the adjudicator may also perform on-site inspections prior to the making of their decision.

It is important to note that while the decisions made by an adjudicator are binding, they do not prohibit any party from relying on other methods such as arbitration or taking the matter to the courts. At the same time, if a court case or arbitration is ongoing, that does not prohibit the parties from starting an adjudication process as long as a decision has not already been made. Therefore, the adjudication process enables the parties to rely on it as an efficient way to reach a resolution in instances where they are relying on other methods and have not reached a resolution in a timely manner or to use it as a first resort to resolve issues. At the same time, the parties are not precluded from revisiting the dispute before the courts or arbitration and possibly overriding the interim adjudication. This can sometimes still be preferred given the lengthier pre-trial procedures and discovery rights available there, though of course, it may be questionable whether relief granted in the interim adjudication can be effectively undone months or years later.

Given the principle of Judicial Review, the Act also makes it possible for the adjudicator’s decision to be reviewed by a judge with leave of the Divisional Court.

The adjudication process is an effective way to resolve disputes quickly without limiting future litigation and the new changes to the Act make it more broadly accessible. While it is not perfectly suited for all disputes on every project, it remains an underused tool in a field where parties are sometimes only too ready to issue a Statement of Claim and escalate the dispute. It is certainly the legislature’s desire that adjudication be more widely adopted and that the Bill is an attempt to widen its potential scope and make accessing it easier for stakeholders. Still, whether parties so used to classic litigation will become persuaded to try it out remains to be seen.

Note: The above is not legal advice and is not intended to be used as a guide to navigate the adjudication process. For the most updated procedures please refer to the relevant statutes and regulations.

1. Construction Act, RSO 1990, c C.30
2. Bill 216, Building Ontario For You Act (Budget Measures), 2024
3. S.12(1) which is not enacted at the time of writing this article
4. S. 13.1, the updated definition of “adjudicator” which remains to be enacted.