Adjudication: Ontario Decision a Reminder that “Rough Justice” is Not Real Justice

With the introduction of prompt payment and adjudication into Ontario’s Construction Act, the pursuit of “rough justice” became a new tool in the tool-kit of project participants. In spite of its procedural and other frailties, adjudication arrived along with a legislated provision that “the determination and reasons of an adjudicator are admissible as evidence in a court.”[1]  The addition of this “admissibility” provision raises interesting questions. For example, once the adjudicator’s determination is in the hands of a judge, will courts concede that the adjudicator’s determination should be given deference? Or, will courts recognize adjudication for what it is: a process that lacks the rigor, depth, and scrutiny to determine legal rights of project participants.

In the case of Arad Incorporated v. Rejali et al, 2023 ONSC 3949 (CanLII), the reliance on the findings of an adjudicator was in issue. In Arad, a dispute arose in connection with the supply of services and materials by the plaintiff (the “Contractor”) to the defendant (the “Owner”). The Contractor registered a claim for lien against the property, which lien was subsequently vacated. Two adjudications were then commenced: one by the Contractor and one by the Owner.  The adjudicator dismissed the claim of the Contractor and dismissed the claim of the Owner as well. Leave to judicially review or stay the adjudicator’s determinations was not sought by any of the parties - but that was not the end of the story.

With the adjudicator’s determination in hand, the Owner then brought a motion for an order that the monies paid into court to vacate the lien be returned to the Owner. The motion came on before Justice Sutherland. In a nutshell, the issue before the court was whether the determination of the adjudicator (that no monies were owed to the Contractor) meant that the money paid into court to vacate the lien should be returned.

Justice Sutherland framed the questions before him as follows: (i) what is the nature of the adjudicator’s determination? and (ii) should the security be reduced or returned?