The Ontario Superior Court of Justice (the “Court”) confirmed in Anatolia Tile & Stone Inc v Flow-Rite Inc., 2023 ONSC 1291, (“Anatolia Tile”) that when bringing a motion for leave to commence an application for judicial review of an adjudicator’s decision, the moving party is required to meet a threshold test analogous to the test for leave to appeal an interlocutory order of a judge.
STATUTORY ADJUDICATION AND THE JUDICIAL REVIEW OF AN ADJUDICATOR’S DECISION
The statutory adjudication provisions were introduced as part of the changes to the Construction Act (“Act”), and came into effect on October 1, 2019.
Statutory adjudication provides the parties with an interim binding decision on disputed issues during the course of the project and permits either or both parties to revisit any substantive issues in litigation or other dispute resolution proceedings at a later date. Accordingly, parties are required to comply with any adjudication decisions issued during the project unless such decision has been set aside on an application for judicial review.
While a moving party is required by the Act to seek leave to bring an application for judicial review, no prior guidance had been provided by the Courts with respect to the threshold required to be met on the motion for leave.
ANATOLIA TILE & STONE INC. V FLOW-RITE INC., 2023 ONSC 1291
The parties in Anatolia Tile adjudicated a payment dispute during the course of a project. Following the adjudicator’s determination, Anatolia Tile brought a motion to stay the adjudicator’s order and sought leave to bring an application for judicial review of the adjudicator’s decision.
Although the Court does not normally provide reasons on a leave motion, the Court did so in order to clearly establish the test that parties must satisfy to obtain leave for a judicial review of an adjudicator’s decision.
The Court determined that the threshold test on a motion for leave to commence an application for judicial review is analogous to the test for leave to appeal an interlocutory order of a judge, and requires that the moving party establish:
- 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.
And either 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 importance to the prompt payment 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 clarified that adjudicators do have the jurisdiction to determine whether a claim is properly brought under the Act. This includes claims related to the lienable nature of services or materials provided, whether a lien is timely, or that a contract is invalid or has ceased to exist, and it was noted that the Court would only intervene if the adjudicator’s decision was “unreasonable.”
The Court’s decision in Anatolia Tile clearly indicates that the Court is not inclined to review or intervene in an adjudicator’s decision absent a clear and compelling reason to do so. Where a party is dissatisfied with an adjudicator’s decision, such party will be bound by the decision on an interim basis, but can revisit the substantive issues through litigation or other dispute resolution mechanisms at a later date.