Court File and Parties

CITATION: SOTA Dental Studio Inc. v. Andrid Group Ltd., 2022 ONSC 2254

DIVISIONAL COURT FILE NO.: 483/21

DATE: 20220414

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: SOTA Dental Studio Inc. v. Andrid Group Ltd.

BEFORE: Richetti R.S.J. and D.L. Corbett and Sutherland JJ.

HEARD: March 2, 2022, by ZOOM videoconference, at Toronto

COUNSEL: Krista Chayton and Yusha Pirzada, for the Applicant SOTA Dental Studio Inc. Joshua Srub and Jaspal Sangha, for the Respondent Andrid Group Ltd.

REASONS FOR DECISION

The Court:

[1] This is an application for judicial review of Adjudicator Kopach’s decision under the prompt payment provisions of the Construction Act, brought with leave from this court granted on September 21, 2021 (2021 ONSC 6254).

[2] It emerged that the applicant had neither complied with the decision of the Adjudicator nor obtained a stay of the Adjudicator’s decision pending determination of this application.

[3] In applying for judicial review, the applicant asks this court to invoke equity on its behalf. At the hearing of the appeal, we concluded that the applicant’s non-compliance with the impugned order, in the absence of a stay of that order pending the hearing, undercuts the scheme of the prompt payment provisions of the Construction Act and that we should invoke equity to decline to hear the application. We so advised the parties that the application is dismissed, with these reasons to follow.

[4] The applicant, SOTA, retained the respondent, Andrid, to build a dental clinic on premises on Highway 7, in Vaughan. Andrid did work and sent invoices to SOTA. SOTA did not dispute the invoices within 14 days of receipt, making those invoices due and payable. SOTA did not pay, and so Andrid invoked adjudication under the prompt payment provisions of the Construction Act. Adjudicator Kopach was selected to adjudicate the dispute. The parties exchanged written submissions, and the Adjudicator ordered, on May 21, 2021, that SOTA pay Andrid $38,454.55.

[5] Andrid did not pay the amount ordered by the Adjudicator, Andrid pursued enforcement efforts and obtained $6,711.04 by notice of garnishment to SOTA’s bank, leaving a balance outstanding of $31,743.51.

[6] Subsection 13.18(7) of the Construction Act provides that an application for judicial review does not operate to stay the adjudicator’s decision “unless the Divisional Court orders otherwise”.

[7] On September 24, 2021, three days after leave to bring this application was granted, a case management teleconference was held before D.L. Corbett J., to schedule the steps required for the application. Paragraph 1 from the case conference endorsement states:

An application for judicial review does not have the effect of staying the decision below. If the applicant seeks a stay pending the application to which the respondent does not consent then a motion will have to be brought for a stay. I am seized of any motion brought for a stay.

[8] No stay motion was brought.

[9] This is not the case for this court to analyse and expound in detail upon the prompt payment provisions of the Construction Act. One observation respecting this scheme is necessary for the purposes of this endorsement. The whole point of these provisions is to require prompt payment to avoid the consequences of disruptions to construction projects of brinksmanship over disputes that arise. The prompt payment provisions are based on similar provisions introduced in the United Kingdom more than a decade ago. They provide for a quick and relatively informal adjudication, by an adjudicator experienced in construction law disputes. The decision is without prejudice to the parties contesting issues between them at the end of the project. It triggers an obligation on the part of the payee to make its payments to its subcontractors, suppliers and workers. Effective implementation of these provisions is intended to reduce terminations (by payors) and work cessations (by payees) in the midst of construction, either of which can cause cascading losses down the construction pyramid. The obligation to pay, and to pay promptly, when ordered to do so, is fundamental to the scheme of the prompt payment provisions.

[10] Prompt payment is reinforced by the provisions related to appeals and reviews. There are no appeals from prompt payment decisions. There may be judicial review, but only with leave from this court. Where leave is granted and an application is brought, that does not serve to stay the prompt payment order unless this court orders otherwise.

[11] Counsel for the applicant argued that, like other orders for the payment of money, the respondent was entitled to take enforcement steps. It did that. The absence of a stay did no more than enable the respondent to continue enforcement steps – it should not preclude an application for judicial review where an applicant has met the high bar for leave.

[12] We do not accept this argument. So that there is no misunderstanding in future cases, we suggest the following principles to be borne in mind.

(a) prompt payment is integral to the scheme of the Construction Act.

(b) failure to pay in accordance with the prompt payment requirements of the Act may lead this court to refuse leave. Where leave is granted, an applicant must obtain a stay or must make payment, failing which this court may dismiss the application on motion to quash or at the hearing of the application.

[13] The court gave the parties notice in advance of the hearing that it was concerned about this issue, so that the parties could be prepared to address the point at the start of argument. In providing this notice, it also gave the applicant an opportunity to make payment of the balance owed. During argument, counsel for the applicant advised that “there was no money” to make the payment. No evidence was filed to establish this point, but we accept it for the purposes of this decision. It reinforces our view. If the owner is insolvent, as appears to be the case, it should not be permitted to run up costs and delays through recourse to litigation in the face of the order below and the prompt payment provisions of the Act. If there are circumstances that should lead the court to grant a stay, in all of these circumstances, these must be established on proper evidence in the context of a motion for a stay.

[14] For these reasons we dismissed the application without considering the underlying merits of the application. Costs from the applicant to the respondent are fixed at $10,000, inclusive.

“Richetti R.S.J.”

“D.L. Corbett J.”

“Sutherland J.”

April 14, 2022