In the past year, several parties have brought applications for judicial review of an adjudicator's determination before the Ontario Divisional Court. We have written previously on this blog about some of these cases (see, for example, our previous blog posts on Ledore, as well as Caledon and Blackstone Paving.) This blog discusses another recent case.
In Jamrik v. 2688126 Ontario Inc. o/a Turnkey Construction,1 the Divisional Court addressed an application for judicial review which focused on an adjudicator's jurisdiction. The adjudicator found that the Applicant (Jamrik) was required to pay the Respondent, 2688126 Ont. Inc. o/a Turnkey Construction (Turnkey), $564,812.87. Jamrik challenged the adjudicator's jurisdiction, arguing that the adjudicator had no jurisdiction to make this finding because the underlying contract had been "completed", and the adjudicator had erred in concluding otherwise.
Background
Jamrik had retained Turnkey to perform construction work on a residential project, and a dispute over payment later arose. Turnkey commenced an adjudication seeking a determination for payment it alleged to be outstanding from Jamrik. The adjudicator found that the contract was not "completed" within the meaning of the Construction Act (the Act), because more than 1% of the contract price was owing and unpaid. Jamrik was ordered to pay the outstanding amount.
Jamrik sought judicial review of the adjudicator's determination, relying on section 13.5(3) of the Act, which expressly sets out that "[a]n adjudication may not be commenced if the notice of adjudication is given after the date the contract or subcontract is completed, unless the parties to the adjudication agree otherwise."2
Section 2(3) of the Construction Act: deemed 'completion'
Section 2(3) addresses deemed "completion" under the Act. It provides that a contract shall be deemed to be completed when the price of completion, correction of a known defect, or last supply is not more than the lesser of (a) 1% of the contract price and (b) $5,000. As noted by the Divisional Court, the "price of completion" in section 2(3) of the Act refers to the value of uncompleted work, and not the quantum of disputed payment claims.3
The Divisional Court's decision
The Divisional Court found the adjudicator was plainly wrong in law in finding jurisdiction on the basis that he had. The adjudicator had clearly misconstrued the plain meaning of the Act, had failed to apply settled and longstanding jurisprudence on the meaning of deemed "completion" under the Act, and had misconceived the scheme of the Act's prompt payment adjudication provisions. For these reasons, the matter was remitted for fresh adjudication.
The importance of seeking submissions from the parties
The Divisional Court noted that the adjudicator had not sought submissions from the parties on whether the contract was completed — the point on which the adjudicator determined the case. The Court noted that, while it is open to an adjudicator to decide a point on a basis not raised before him by the parties, as a matter of procedural fairness, the adjudicator should give the parties notice of their concerns and give the parties an opportunity to address them.4
The Divisional Court noted that, had the adjudicator done so in this case, the parties may well have persuaded the adjudicator that his proposed analysis was in error, as it was clearly contrary to established principles. Counsel for the parties would have been obliged to provide the adjudicator with the correct law for his consideration. In noting this, the Divisional Court has clearly signaled to adjudicators that, if they wish to decide a point on a basis not raised before them by the parties, they should be seeking submissions both as a matter of procedural fairness, and for their own benefit.5
The Divisional Court then went on to re-confirm that it is within an adjudicator's jurisdiction to decide whether a claim is properly before them under the Act. However, as noted in Caledon v, Bronte Construction, the standard of review requires that an adjudicator must be correct in law, and on jurisdictional issues (but will be afforded deference on findings of fact relating to their jurisdictional analysis).6
'Completion' under the Construction Act
With respect to the substance of the adjudicator's analysis of the jurisdictional issue, the Divisional Court noted that the adjudicator had wrongly determined that he had jurisdiction in this case because "the outstanding payment [was] much larger than 1% of the contract price".7 The Divisional Court again took the opportunity to note that, while it is a matter of discretion to address alternative theories of a point under a decision, it is often of service to the parties and to the administration of justice to make factual findings in respect of alternative arguments, so that a reviewing Court will have the necessary factual findings to assess and decide all available arguments. Here, had the adjudicator gone on to make the necessary findings of fact about whether any contract work remained for completion and/or its value, the Divisional Court might have been able to dispose of the application for judicial review on a final basis, rather than remitting it back for a fresh determination.8
Instead, the Divisional Court noted that the adjudicator had misapprehended the test for "completion" under section 2(3) of the Act, and the matter had to be remitted back to an adjudication for a fresh determination before a new adjudicator. In so doing, the Divisional Court noted that it is trite law that the concept of "completion" under the Act relates to the status of performance of contract work, and not the state of accounts between contracting parties.
Adjudicators well advised to follow Superior Court decisions
Turnkey suggested to the Divisional Court that the adjudicator was not bound by case law because it was not decided in the context of an adjudication, and/or because requiring adjudicators to seek guidance from caselaw would frustrate the goal of timely adjudication — an argument which the Divisional Court firmly rejected. The Divisional Court expressly noted that "adjudicators are bound to follow decisions of the Divisional Court and the Court of Appeal, and would be well advised to consider persuasive authorities, including decisions of Justices and Associate Justices of the Superior Court."9 The Divisional Court noted that any concerns about properly stating and applying the law in the context of an adjudication should be attenuated considerably by the adjudicator seeking submissions from the parties on any legal issues that may arise.
Conclusion
This decision offers guidance on the determination of contract "completion" under the Act for the purposes of establishing an adjudicator's jurisdiction and, importantly, clarifies that adjudicators must follow established caselaw. The decision also reinforces that, as a matter of procedural fairness, and to ensure the adjudicator has the benefit of the parties' submissions, adjudicators should give all parties notice of any concerns, and give the parties an opportunity to address them if an adjudicator determines it may decide a point on a basis not initially raised and/or addressed by the parties.
Footnotes
1. Jamrik v. 2688126 Ontario Inc. o/a Turnkey Construction, 2024 ONSC 2854 [Jamrik].
2. Ibid., at para. 9.
3. Ibid., at para. 3.
4. Ibid., at para. 5.
5. Ibid., at paras. 5 – 6.
6. Ibid., at paras. 7 – 8.
7. Ibid., at para. 10.
8. Ibid., at paras. 9 – 14.
9. Ibid., at para. 18.
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