Court File and Parties

2024 ONSC 3722 DIVISIONAL COURT FILE NO.: 310/24 DATE: 20240628

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

B E T W E E N:

ACCURATE RAILROAD CONSTRUCTION LTD., Applicant

-and-

SIERRA INFRASTRUCTURE INC., Respondent

BEFORE: FL Myers J

COUNSEL: Jay Nathwani and Simren Sihota, for the moving party/appellant Robert Kennaley, for the respondent

HEARD at Toronto (by videoconference): June 27, 2024

Endorsement

[1] The applicant moves for leave to bring an application for judicial review of a statutory adjudication under the Construction Act. The statute allows few grounds for review of these kinds of adjudication proceedings.

[2] The court is authorized to review a decision if it was obtained by fraud.

[3] In the decision in issue, the adjudicator required the applicant to repay over $288,000 to the respondent. There is no stay pending an application for judicial review. In fact, cases have recognized that failing to pay (without obtaining a stay order) may itself be a ground to refuse an application for leave to seek judicial review.

[4] Here, the applicant submits in its brief that the respondent misled the adjudicator by filing a summary chart that contained errors. The applicant submits that the line-item entries are so precisely mixed and matched that it is apparent from the face of the chart that the misrepresentation had to have been deliberately made.

[5] The applicant seeks a stay of the requirement to pay pending the hearing of its leave motion. In its leave motion it seeks a further stay until the date of hearing of the judicial review. So, the issue before me is how to deal with an interim stay just from now until the leave application is heard in writing by a panel of this court.

[6] In directions provided to the parties previously, Matheson J. advised that the court prefers to expedite a leave application if doing so can avoid the expense and delay of a stay motion.

[7] The applicant has proposed an “expedited” schedule that would involve cross-examinations and a hearing no sooner than the end of September. That is not an expedited schedule. An expedited schedule would have the motion for leave to bring a judicial review and a stay within a few weeks.

[8] The applicant is content to move more quickly or to hive off its motion for an interim stay to have it heard more quickly than the leave motion.

[9] As this matter involves allegations of fraud a possible desire for cross-examination at least on the stay motion, I am very hesitant. The assessment of evidence to support allegations of fraud and to consider the relative financial strength of the parties to try to assess irreparable harm and the balance of convenience could snowball into a months-long process with refusals and meta-motions.

[10] A leave motion would not generally involve cross-examinations. A party can always request cross-examinations in its motion material and the panel that reads the leave motion is able to give directions to that end if so inclined. So, it is the motion for a stay that is the possible source of mischief.

[11] But there is a simpler answer. The respondent does not contest a stay of the adjudicator’s order if the applicant secures the amount in issue. In Anatolia Tile & Stone Inc. v. Flow-Rite Inc., 2023 ONSC 1291, this court held:

[11] The court provides the following additional guidance on this issue for future cases:

(a) It is in the discretion of a case management judge to stipulate whether a stay motion shall be argued (i) before the leave motion is decided, (ii) together with the leave motion, in writing, or (iii) by way of a separately argued motion after the leave motion is decided (if leave is granted). If the case management judge directs that the stay motion be heard in writing by the leave panel, then the leave panel may decide the stay motion in writing or give directions respecting how the stay motion will be heard.

(b) It is in the discretion of a case management judge to direct payment into court as a condition precedent to permitting a stay motion and/or a leave motion to be brought while the moving party is in breach of the payment order.

[12] We wish to be clear that a stay will not be granted as a matter of course when leave to apply for judicial review is granted and that where a stay is granted, securing the disputed payment will be a common term of a stay order. The Legislature’s goal is, clearly, “prompt payment” and not just “prompt adjudication”.

[12] I accept the court’s guidance. I agree that prompt payment is part of the statutory system for good reason. Mr. Kennaley argues, with much force, that there is a wide gulf between an error in a summary chart and an overt, intentional act of deceit or fraud. On the other hand, it does not lie especially well in a litigant’s mouth to argue that it should get to keep money that is not due to it because it “just” made a mistake in a chart presented to an adjudicator.

[13] I do not know if there is a mistake in the chart. I do not know if any mistake that may exist was intentionally made. I do not know how a panel of this court or a higher court will interpret the fraud requirement in the statute. Will it require knowing deceit or might something less amount to fraud for the purposes of this regime? Mr. Kennaley submits that adjudicators’ rulings are akin to interim awards. The parties remain entitled to go to court to obtain a full accounting in which any errors in statutory adjudication can be corrected. On this basis, the fraud ground may well be strictly construed because there is another way for a victim of an error to get its money back other than by judicial review.

[14] At this stage, I know very little except that I am very reluctant to start these parties down a lengthy road of legal battles on an interim order pending a leave motion in which the stay will be reconsidered. The road to justice in this case starts with getting the leave motion heard as soon as is practically possible.

[15] In my view, the just and expeditious outcome is to take advantage of the respondent’s lack of opposition to a stay provided the claim amount is paid into court. Absent a motion on a better evidentiary record, I will neither put money in the respondent’s hands in face of the allegations of fraud nor allow the applicant a way around the pay-as-you-play regime. Providing for funds to be secured is consistent with the statutory goal that adjudicators’ decisions be paid to keep the chain of commerce intact with funds flowing.

[16] The applicant shall pay into court the sum of $288,493.07 to be held for this application pending further order of the court. As soon as the applicant provides a copy of the receipt of the Accountant to the respondent’s counsel, the respondent is prohibited from taking further steps to enforce the adjudicator’s order as filed with the Superior Court.

[17] The applicant says it can have its motion record for leave and a further stay ready for July 5, 2024. The respondent will then have to July 19, 2024 to respond. The applicant may deliver reply evidence, if any, by July 26, 2024. The applicant’s factum will be delivered on or before August 2, 2024. The respondent’s factum will be due on or before August 9, 2024.

[18] I direct the Registrar to add the motion for leave to seek judicial review and for a further stay to the panel list for the week of August 19, 2024.

[19] There will be no cross-examination pending the hearing before the panel. As noted above, requests for cross-examination or any other process step may be made in the written material to be filed with the panel. It may be that with the funds secured, the need for any further discussion of a stay will be obviated.

FL Myers J

Date: June 28, 2024