The Construction Act was amended effective 2019 to include “prompt payment” requirements and a regime for the interim resolution of payment disputes that may arise during a project through a fast and informal “interim adjudication” process. An adjudicator’s determination is binding on the parties and can be issued and entered and enforced like a court order, but it is not final – the parties may revisit their substantive disagreements in litigation or private arbitration.
An adjudicator’s determination cannot be appealed but a party may apply for leave for judicial review to the Divisional Court within 30 days of receipt of the determination.
The standard of review is reasonableness and the Construction Act provides seven grounds upon which a determination may be set aside on an application for judicial review.
However, prior to the decision in Anatolia Tile & Stone Inc. v. Flow-Rite Inc. (“Anatolia”), courts had provided no guidance on the test for leave to apply for judicial review of an adjudicator’s decision. In Anatolia, the Divisional Court dismissed the moving party’s motion for leave and provided reasons intended as guidance for future cases, advising litigants that leave for judicial review of an adjudication determination “will be granted rarely” and that the moving party must meet a “high bar.”
Specifically, the Court writes that the test for leave is analogous to the test for leave to appeal an interlocutory order of a judge, requiring that either:
- There is good reason to doubt that the impugned decision is reasonable; or
- There is good reason to believe that the process followed by the adjudicator was unfair in a manner that probably affected the outcome below;
- That the impact of the unreasonableness or the procedural unfairness probably cannot be remedied in other litigation or arbitration between the parties; or
- The proposed application raises issues of principle important to prompt payment legislation and arbitration provisions of the Construction Act that transcend the interest of the parties in the immediate case, such that the issues ought to be settled by the Divisional Court.
The Court also reminded future litigants that an adjudication determination is not subject to an automatic stay and that:
- a moving party/applicant must obtain a stay or must make payment if so directed by an adjudicator failing which the court may dismiss a motion for leave or application for judicial review;
- a case management judge has discretion to stipulate how a stay motion may be brought, to stipulate the order in which a stay motion and a leave motion will be made, and to direct payment into court as a condition of permitting a stay motion and/or a leave motion to be brought while the moving party is in breach of a determination for payment; and
- a stay will not be granted as a matter of course when leave to apply for judicial review is granted and that where a stay is granted, securing the disputed payment will be a common term of a stay order.