Construction dispute resolution in Ontario

September 3, 2020 | Michael Farace

The Canadian Construction Documents Committee (“CCDC”) forms of contract provide for a dispute resolution process that is generally contained in Part 8 of the contract.

Generally, the CCDC forms of contract provide for a phased format of dispute resolution that is outside of the court process. In the first phase, the parties make reasonable efforts to resolve their dispute by amicable negotiations and provide without prejudice, frank, candid and timely disclosure of relevant facts, information and documents that facilitate the negotiations.

If a dispute is not resolved in the first phase, then it moves to the second phase, which permits resolution by the findings of a construction manager, general contractor or consultant.

If the dispute cannot be resolved in the second phase, then the general contractor or construction manager will opine on the necessary or proper steps to be taken, notwithstanding the dispute, for the performance of the work to proceed and prevent delays. Thereafter, the parties to the dispute will take immediate action to perform and not have their position put at risk with respect to the dispute. If it is later found that the decision to proceed was not proper, then there will be an adjustment as to payment for such work between the parties.

The third phase of the resolution process provides for the appointment of a project mediator. A party in this third phase is to provide notice in writing to the other party stating the particulars of the matters in dispute. The responding party is to provide its reply to the notice in writing within 10 working days of receiving the notice. The project mediator will assist the parties in negotiations and conduct the mediation in accordance with the Mediation and Arbitration of Construction Disputes as provided in form CCDC 40.

If the dispute has not been resolved by mediation, the project mediator shall terminate the mediation and give a notice in writing to the parties. Once the mediator provides this notice, either party may refer the dispute to final arbitration.

None of what is set out in Part 8 negates a party’s right to any statutory rights of lien under the Construction Act R.S.O. 1990 c. C. 30 (“Act”).

The CCDC Part 8 dispute resolution process can result in lengthy delays to the project‘s progress, owing to the many phases involved that are not time restricted.

Section 13 under part 2 of the Act, Construction Dispute Interim Adjudication, provides for construction disputes to be adjudicated. This section applies to all contracts entered into on or after October 1, 2019. The types of disputes that can be adjudicated include valuation of services/materials provided, payments, disputes from notices of non-payment, set off claims, payment/non-payment of holdback and any other matters to which the parties agree. This process is available to Owners, General Contractors, Construction Managers and subcontractors.

The adjudication process sets out the duties and powers of  the adjudicator to be appointed as well as the manner in which the parties are to proceed through the process. Section 13 of the Act permits the adjudicator to give directions as to the manner in which the adjudication is to take place. The adjudication is started by a party issuing a notice of adjudication to refer a dispute to an adjudicator and serving the notice on the other party.  The notice sets out the nature and a brief description of the dispute, including details respecting how the dispute arose, the redress sought and the name of the proposed adjudicator.

Within five days after the adjudicator is appointed, the party seeking adjudication must provide the adjudicator with a copy of its notice of adjudication, a copy of the contract and documents to be relied on during the adjudication.

The adjudicator has broad powers that include issuing directions on how to conduct the adjudication, visiting the project site and conducting an investigation, obtaining the assistance of experts and other powers that may be granted by regulations.

The adjudicator must issue a determination within 30 days of receiving documents from the parties. The determination is binding on the parties until there is a decision of a court or an arbitrator, and the adjudicator’s determination can be filed with the Court and enforced as a Court order. There is limited ability for judicial review as a determination can only be reviewed where there has been a fraud committed or bias exists. If the determination requires a party to make payment, the payment must be made within 10 days after the determination is made. Otherwise, the payee can suspend the work until payment is made; and if the payee is a General Contractor or subcontractor, it will be entitled to the costs of suspending and resuming the work.

The adjudication process to the Act is an excellent means for parties to expedite the resolution of disputes and minimize disruptions to a construction project within a relatively short period of time.

The Act’s adjudication process is far more efficient and timely than the resolution process in Part 8 of the CCDC form of contract.


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