Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction, 2024 ONSC 4555

CITATION: Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction, 2024 ONSC 4555

DIVISIONAL COURT FILE NO.: 177/23

DATE: 20240823

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Backhouse, D.L. Corbett and Charney JJ.

BETWEEN:

THE CORPORATION OF THE TOWN OF CALEDON Applicant

– and –

2220742 ONTARIO LTD. o/a BRONTE CONSTRUCTION Respondent

COUNSEL:

Graham Brown and Robyn Blumberg, for the Applicant

Rosamund Taylor, for the Respondent

HEARD at Toronto: Oct. 30, 2023

SUPPLEMENTARY WRITTEN SUBMISSIONS: June 7, 2024

REASONS FOR DECISION

D.L. Corbett J.

[1] The Applicant (“Caledon”) seeks judicial review of the determination of Adjudicator Paul Winfield granting the Respondent’s (“Bronte’s”) adjudication claim under the Construction Act, RSO 1990, c. C.30 (the “Act”).

Overview

[2] This application turns on transitional provisions in the Act. The Adjudicator found that he had jurisdiction on the basis that Caledon had not demonstrated that the transitional provisions exclude Bronte’s claims from adjudication.

[3] The Adjudicator erred in his application of the transitional provisions of the Act, and in particular, erred in failing to find that the Bronte Contract is in respect to two improvements, not one, and that different versions of the Act apply to claims arising from the two different improvements. The Adjudicator’s error is understandable, given the basis on which the jurisdictional issue was argued below: neither side addressed the issue of how to apply the Act’s transitional provisions where a contract is in respect to more than one improvement. As a consequence, the Adjudicator wrestled with the arguments made before him, but did not come to grips with the meaning of “improvement” in the Act, and the application of that definition to the jurisdictional issue in this case.

[4] In their factums and in oral argument, the parties made substantially the same arguments to this court that they made to the Adjudicator. After the case had been taken under reserve, this court directed the parties to provide supplementary submissions to address what has emerged as the central jurisdictional issue in this case.

[5] On the basis of the record, the parties’ supplementary submissions, and the law, I conclude that the Bronte Contract was in respect to two different improvements, one of which is excluded from adjudication by the transitional provisions of the Act, and the other of which is not. Therefore, for the reasons that follow, the application is allowed in part and the Adjudicator’s determination is varied to exclude claims in respect to one of the two improvements. The balance of the Adjudicator’s determination is upheld.

Jurisdiction of this Court

[6] An application for judicial review of an adjudicator’s decision lies to this court, with leave: Construction Act, s.13.18(1). Leave was granted on May 12, 2023: Caledon (Town of) v. 2220742 Ontario Ltd., 2023 ONSC 2724 (Div. Ct.).

The Act’s Transitional Provisions: Jurisdiction to Conduct Adjudication

(a) The Transitional Provisions and the Standard of Review in this Court

[7] This court has jurisdiction to intervene in respect to the Adjudicator’s determination pursuant to s. 13.18(5)3 of the Act, which provides:

The determination of an adjudicator may only be set aside on an application for judicial review if the applicant establishes one or more of the following grounds:

3. The determination was of a matter that may not be the subject of adjudication under this Part….

[8] The jurisdictional issue in this case turns on transitional provisions in s. 87.3 of the Act, which provide (emphasis added):

(1) This Act and the regulations, as they read on June 29, 2018, continue to apply with respect to an improvement if,

(a) a contract for the improvement was entered into before July 1, 2018;

(b) a procurement process for the improvement was commenced before July 1, 2018 by the owner of the premises; ….

(4) Parts I.1 and II.1 do not apply with respect to the following contracts and subcontracts:

1. A contract entered into before the day subsection 11(1) of the Construction Lien Amendment Act, 2017 came into force.

2. A contract entered into on or after the day subsection 11(1) of the Construction Lien Amendment Act, 2017 came into force, if a procurement process for the improvement that is the subject of the contract was commenced before that day by the owner of the premises. (Emphasis added)

The Construction Lien Amendment Act, 2017, s. 11(1), came into force on October 1, 2019.

[9] These transitional provisions establish three time periods:

(1) Where a “procurement process for the improvement” was commenced before July 1, 2018 by the owner of the premises”;

(2) Where a “procurement process for the improvement” was commenced on or after July 1, 2018 and before October 1, 2019; and

(3) Where a “procurement process for the improvement” was commenced on or after October 1, 2019 (emphasis added).

For cases falling into category (1), the Act, as it read on June 28, 2018, applies: the adjudication provisions were not part of the Act as of June 28, 2018. For cases falling into category (2), Parts I.1 and II.1 of the Act do not apply: these provisions include the adjudication provisions. For cases falling into category (3), the adjudication provisions apply. Using the language of s. 13.18(5)3 of the Act, cases falling into categories (1) and (2) are “matter[s] that may not be the subject of adjudication under this Part.”

[10] An adjudicator has no jurisdiction where none is granted by the Act. Adjudicators must be correct in finding a legal basis for their jurisdiction; their findings of fact in connection with their jurisdictional determinations are entitled to deference. See: Anatolia Tile & Stone Inc. v. Flow-Rite Inc., 2023 ONSC 1291 (Div. Ct.).

Background Facts

[11] Caledon entered into a contract with a company known as “WSP” for design, contract administration and site inspection services for the clean-up of its wastewater “Pond #7”. Caledon entered into a contract with a company known as “Matrix” for design, contract administration, and site inspection services for the clean-up of its wastewater “Pond #14”. Subsequently, Caledon entered into a contract with Bronte (the “Bronte Contract”) for construction works for the clean-up of Ponds #7 and #14 (based on the designs prepared by WSP for Pond #7 and Matrix for Pond #14).

[12] Bronte did work under the Bronte Contract until the contract was terminated by Caledon. The parties disagreed on what Bronte was owed to the date of termination, and Bronte delivered a notice of adjudication to Caledon, seeking payment of about $145,000.00. Caledon responded to the notice by challenging the jurisdiction of an adjudicator over the claim in light of the transition provisions in the Act, and in the alternative, disputing the claim on the merits.

[13] In a preliminary ruling (the “Jurisdiction Decision”), the Adjudicator found that he had jurisdiction over Bronte’s claims. Then in his final determination (the “Merits Decision” [ODACC File 5345][^1]), the Adjudicator awarded Bronte $93,445.92.

The Adjudicator’s Findings Regarding Caledon’s Procurement Processes

[14] Caledon issued a Request for Proposals on November 1, 2018 (“RFP 2018-80”) for design, contract administration and site inspection services, for clean-up work to be done on four stormwater ponds, including Pond #7. In response to this RFP, WSP provided a bid for the work that led to the “WSP Contract”. Accordingly, the “procurement process” in respect to the works to be done to Pond #7, which are part of the “subject matter” of the WSP Contract, commenced on November 1, 2018.

[15] Caledon issued a Request for Proposals on March 24, 2020 (“RFP 2020-51”) for design, contract administration and site inspection services for clean-up work to be done on three different stormwater ponds, including Pond #14. In response to this RFP, Matrix provided a bid for the work that led to the “Matrix Contract”. Thus, the “procurement process” in respect to works to be done to Pond #14, which are part of the “subject matter” of the Matrix Contract, commenced on March 24, 2020.

[16] The Adjudicator reasonably found that RFP 2018-80 (the RFP leading to the WSP Contract) applied to Pond #7 but not to Pond #14 (Jurisdiction Decision, paras. 5.13 to 5.15).

[17] In para. 9(6) of the Jurisdiction Decision, the Adjudicator found that (i) the procurement process for the WSP Contract also related to “improvements that were not the subject of the [Bronte] Contract”, namely, works on Ponds #8, #13 and #28, and (ii) the procurement process for the Matrix Contract also related to “improvements that were not the subject of the [Bronte] Contract, namely works on Ponds #9 and #15”. These findings are rooted in the record and are reasonable.

[18] In para. 9(7), the Adjudicator found:

Therefore, WSP and Matrix were not parties to the same “improvement”, there were lots of “improvements”, most of them were not the subject of the Bronte Contract.

This is a mixed finding of fact and law, discloses no extricable error of law, and is reasonable.

[19] In para. 9(4)(d), the Adjudicator found that the procurement process leading to the WSP Contract and the procurement process leading to the Matrix Contract were “two phases of the same procurement process”. In para. 9(5), the Adjudicator found that there were two procurement processes, not one “as specified in s. 87.3(4)2”. The Adjudicator did not reconcile his apparently conflicting findings in paras. 9(4)(d) and 9(5). The Adjudicator’s finding that the procurement processes for the WSP Contract and the Matrix Contract are part of the same procurement process is unsupported by the record and is unreasonable: these were distinct processes, leading to distinct contracts in respect to several distinct improvements.

[20] On May 6, 2021, Caledon issued a Request for Tenders (“RFT”) for construction work to be done on Ponds #7 and #14 that led to the “Bronte Contract”.

[21] In para. 9(4)(b), the Adjudicator finds that the subject matter of the Bronte Contract is Ponds #7 and #14. This is a finding of fact rooted in the record and is reasonable.

[22] In para 9(4)(c), the Adjudicator stated that “[t]he ‘improvement’ is related to both Ponds #7 and #14.” The Adjudicator did not address whether Ponds #7 and #14 are a single improvement or two improvements. On a plain reading of the reasons, the Adjudicator inferred that the works to Ponds #7 and #14 are a single “improvement” because they are both within the scope of the Bronte Contract. If this was his reasoning, it is inconsistent with his analysis of the WSP Contract and the Matrix Contract, his finding that there can be multiple “improvements” addressed in the same contract, and, as explained below, it is based on an error of law in respect to the meaning of “improvement” in the Construction Act.

[23] In para. 9(10), the Adjudicator found as follows:

I also agree with [Bronte’s] argument that the procurement processes described above are not the “procurement process” related to the Bronte Contract and using a procurement process (singular) for the improvement is in line with the narrowing of both s. 87.3(4) and the overall transition provisions of s. 87.3.

These statements reflected Bronte’s submissions to the Adjudicator. They have imbedded within them significant legal errors. As explained below, once the improvement, or improvements, that are the subject-matter of the Bronte Contract are identified, the question is whether “a” procurement process “for the improvement” commenced before the applicable date(s) (emphasis added).

Positions of the Parties

[24] Caledon submitted that the Bronte Contract is in respect to a single improvement. In the alternative, Caledon submitted that the transitional provisions provide that the earliest version of the Act that applies to a contract applies to the entire contract, to give proper effect to the transitional provisions.

[25] Bronte submitted that the Bronte Contract may be in respect to two improvements. It further submitted that where a contract is in respect to more than one improvement, the latest applicable version of the Act should apply to the entire contract to best achieve the remedial purpose of the Act.

Analysis

[26] As noted by Associate Justice Robinson in Crosslinx Transit Solutions Constructors v. Form & Build Supply (Toronto) Inc., 2021 ONSC 3396, and by Associate Justice Wiebe in DNR Restoration Inc. v. Trac Developments Inc., 2023 ONSC 1849, the transitional provisions have the effect of providing that contracts in respect to the same “improvement” are subject to the same version of the Act. The scheme of the Construction Act practically requires this result: Construction Act proceedings have been characterized as a distinct form of class proceeding where competing claims of different classes of claimants are adjudicated in respect to claims secured against specific lands (lien claims), specific funds (trust claims) and in respect to which specific remedies may be available (including appointment of a receiver). If a single contract in respect to multiple improvements requires a single claims process, this could have a cascading effect of grouping stakeholders in an over-broad process of unnecessary scope and complexity – all because an owner chose to let one contract for multiple improvements.

[27] In para. 9(8), the Adjudicator referenced the Crosslinx decision, which the Adjudicator considered to state the following proposition:

The intended effect of the language used in s. 87.3 is that the same legislative scheme for rights, obligations, and remedies provided in the Construction Act… applies to all persons involved in the same improvement.

This is a fair summary of a statement of principle stated by Robinson A.J. in Crosslinx and Weibe A.J. in DNR Restoration, and it is correct. Adjudication is conducted for claims made under “contracts” or “subcontracts”. Jurisdiction to conduct adjudication under the transitional provisions is determined on an improvement-by-improvement basis, so that all claims arising from an improvement are subject to the same version of the Act.

[28] What happens, then, when a “contract” or a “subcontract” is in respect to more than one improvement? There are three practical options when this arises:

(i) The earliest version of the Act that applies to any aspect of the contract or subcontract applies to the entire contract or subcontract;

(ii) The latest version of the Act that applies to any aspect of the contract or subcontract applies to the entire contract or subcontract; or

(iii) The contract may be subject to different versions of the Act in respect to different improvements.

There is no “deeming provision” in the Act to direct which of these three options should prevail. This is in contrast to other provisions of the Act, where the Legislature included deeming provisions to address contracts in respect to more than one improvement: (i) determining substantial completion of the contract (Act, s. 2(4), discussed below), and (ii) determining which lands may be encumbered with lien claims arising from a contract in respect to more than one improvement (Act, s. 20).

[29] Options 1 and 2 would derogate from the Legislature’s choice that one version of the Act should apply to all claims related to the same improvement, as explained in Crosslinx. Option 1 would also enable owners to shield themselves from adjudication for many years through the expedient of bundling later projects with earlier ones. Option 2 conflicts with the language of s. 87.3 of the Act. Option 3 may create some complications in adjudicating claims, but as is reflected in the Adjudicator’s Merits Decision, these complications may be rather inconsequential, and owners that do not wish to face even these complications can avoid them by letting separate contracts for separate improvements.

Analysis on the Facts of this Case

(a) No Jurisdiction for Adjudication of Disputes Respecting Work on Pond #7

[30] The Bronte contract was entered into after October 1, 2019. Therefore, the jurisdictional question before the Adjudicator was whether “a procurement process for the improvement that is the subject of the contract was commenced before” October 1, 2019. The question is not whether the procurement process for the Bronte Contract was commenced before October 1, 2019, but whether “a procurement process” was commenced before October 1, 2019 that was “for the improvement that is the subject of” the Bronte contract.

[31] An “improvement” is defined in the Act as follows:

in respect of any land,

(a) any alteration, addition or capital repair to the land,

(b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or

(c) the complete or partial demolition or removal of any building, structure or works on the land; (emphasis added)

[32] First, it should be noted that the concept of an “improvement” is tied to land. The definition is “in respect of any land.” The WSP works and the Bronte works in respect to Pond #7 are in respect to the same land.

[33] The next question is whether the WSP works and the Bronte works in respect to Pond #7 were in respect to the same “alteration, addition or capital repair to the land” (subpara. (a)) or were in respect to the same “construction, erection or installation on the land” (subpara. (b)). “Improvement” is not co-extensive with “contract”. This is a trite statement in construction law, but it bears stating since, obviously, the Act contemplates that different persons will undertake different work under different contracts on the same “improvement”. Contracts are not in respect to distinct improvements because the works described in the contracts are distinct – the question is whether the works are in respect to the same improvement to the same lands.

[34] In respect to the works on Pond #7, it is clear, on the record, that the works are in respect to the same improvement: the clean out of Pond #7. WSP contracted for the design, contract administration and site inspection of the clean out of Pond #7, and Bronte contracted to do the clean out work. This was “a repair to the land” within the meaning of subpara. (a) of the definition of “improvement” and the Arbitrator’s failure to so conclude was based on a misapprehension of the meaning of the word “improvement” in the Act and their consequent failure to ask themselves the correct question.

[35] The procurement process for the WSP Contract was commenced before October 1, 2019, and is not subject to the adjudication provisions of the Act by operation of s. 87.3(4)2 of the Act. Therefore, the Bronte Contract, in respect to the works done on Pond #7, is not subject to the adjudication provisions of the Act.

(b) Jurisdiction to Adjudicate Claims Respecting Pond #14

[36] As noted above, the “procurement process” in respect to “the improvement” that is Pond #14, which is a “subject matter” of the Matrix contract, commenced on March 24, 2020. The portion of the Bronte Contract that is in respect to Pond #14 is in respect to the same improvement that is a subject matter of the Matrix contract. That improvement – the works in connection with Pond #14 – are not a “subject matter” of the WSP contract, as found by the Adjudicator. The adjudication provisions of the Act do not preclude adjudication of claims in respect to Pond #14, including such claims arising under the Bronte Contract.

(c) A Contract May be Subject to Different Versions of the Act

[37] My analysis requires a factual finding (not addressed by the Adjudicator) that Pond #7 and Pond #14 are on different lands. Since this factual issue was not decided below and had not been addressed by the parties, the court gave the parties the opportunity to provide written submissions on the following basis:

The court requests supplementary written submissions from the parties on the following points:

1. Do the parties agree that (a) Pond #7 is located at Castelli Court, Bolton; (b) Pond #14 is located between Landsbridge Street and Albion-Vaughan Rd., Bolton; (c) Pond #7 and Pond #14 are located on different lands; and (d) Pond #7 and Pond #14 are about five kilometers apart?

2. If the answers to question 1 are substantially in the affirmative, do the parties agree that the works on Pond #7 and the works on Pond #14 are in respect to different "improvements" within the meaning of the Construction Act?

3. If the answer to question 2 is in the affirmative, is there any reason, in law, that works in relation to Pond #7 and works in relation to Pond #14, in the Bronte Contract, could not be subject to different versions of the Construction Act on the basis of the transition provisions?

Question 1: Pond #7 and Pond #14 are on Different Lands

[38] Based on the record, Pond #7 and Pond #14 are on different lands. Pond #7 is located at Castelli Court, Bolton (and is referenced at pp. 000453 – 000454 of the Application Record [CaseLines A681 – A682]). Pond #14 is the “Bolton Southhill Pond” and is located between Landsbridge Street and Albion Vaughan Road, Bolton (and is referenced at pp. 000176 and 000188 of the Application Record). Although diagrams of the location of Pond #14 are referenced as attachments to documents contained in the Application Record, it appears that those diagrams were not, themselves, included in the Application Record. On the basis of the record, it is clear that Ponds #7 and #14, while both in Bolton, are several kilometers apart, separated by roads and privately-owned properties, and are obviously not located on the same or contiguous lands.

[39] In its supplementary submissions, Caledon states in respect to Question 1 that it “agrees with this factual statement as to the location and distance between the ponds.”

[40] Bronte accepts the facts set out in question 1 but submits that no title documents were filed below to establish that the lands are “different lands” and are not contiguous. Bronte acknowledges that the lands are “probably” different lands in light of the facts to which it can agree.

[41] I see four ways that this question could be approached for the purposes of this review:

(1) Caledon raised the preliminary issue of jurisdiction and bore the onus to establish that the transition provisions apply to preclude adjudication. Caledon has satisfied this burden in respect to the works done on Pond #7. If the work done on Pond #14 is in respect to the same improvement as the work done on Pond #7, then the entire contract is not subject to adjudication: the first “procurement process” in respect to the improvement – if there is only one improvement – was on November 1, 2018, and consequently the adjudication provisions do not apply. However, Caledon has not met its burden to establish that the work on Pond #7 and the work on Pond #14 are part of the same improvement.

(2) In its supplementary submissions, Caledon has admitted facts that establish that Pond #7 and Pond #14 are not located on the same lands.

(3) On the record below, and on the submissions of the parties, it is clear, on a balance of probabilities, that Pond #7 and Pond #14 are on different, non-contiguous lands.

(4) The question whether Pond #7 and Pond #14 are on different non-contiguous lands is a factual issue, undetermined by the Adjudicator, and should be remitted for determination below.

[42] I am satisfied that there is no arguable basis that Ponds #7 and #14 are on the same lands. Both sides were given a chance to address this issue before this court, and neither raised any basis for concluding that a fresh process should be convened below to decide this point. In my view, no good purpose would be served by sending the case back to an adjudicator to decide the question. On the basis of the positions taken by the parties in their supplementary submissions, and the evidence in the record, I conclude that the facts stated in question 1 are established.

Question 2: the Works on Pond #7 and on Pond #14 Are Different Improvements

[43] Caledon argues that, as a matter of first principles, the default assumption is that a contract is in respect to the same improvement – unless the contract expressly provides otherwise. In making this argument, Caledon does not once refer to the statutory definition of “improvement”. Instead, Caledon relies on s. 2(4) of the Act for the proposition that “[w]here there is no express contractual provision stating that there are multiple improvements, the default assumption of a single improvement applies.” This statement is wrong in law and finds no support in the language of s. 2 of the Act, which reads as follows:

Contracts, substantial performance of a contract

When contract substantially performed

(1) For the purposes of this Act, a contract is substantially performed,

(a) when the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purposes intended; and

(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,

(i) 3 per cent of the first $1,000,000 of the contract price,

(ii) 2 per cent of the next $1,000,000 of the contract price, and

(iii) 1 per cent of the balance of the contract price.

Same

(2) For the purposes of this Act, where the improvement or a substantial part thereof is ready for use or is being used for the purposes intended and the owner and the contractor agree not to complete the improvement expeditiously, the price of the services or materials remaining to be supplied and required to complete the improvement shall be deducted from the contract price in determining substantial performance.

Adjudication Amounts

(2.1) For the purposes of this Act, if an adjudicator makes a determination under Part II.1 in relation to a contract before the certification or declaration of the substantial performance of the contract under section 32,

(a) any amount determined by the adjudicator to be payable by a party to the contract shall be added to the contract price in determining substantial performance; and

(b) any amount determined by the adjudicator to have been overpaid by a party to the contract shall be deducted from the contract price in determining substantial performance.

Same

(2.2) Subsection (2.1) ceases to apply if,

(a) the adjudicator’s determination ceases to be binding on the parties to the adjudication under section 3.15; or

(b) the determination of the adjudicator is set aside on judicial review.

When contract deemed completed

(3) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of,

(a) 1 per cent of the contract price; and

(b) $5,000.

Multiple improvements under a contract

(4) If more than one improvement is to be made under a contract and each of the improvements is to lands that are not contiguous, then, if the contract so provides, each improvement is deemed for the purposes of this section to be under a separate contract.

Subsection 2(4) presupposes that more than one improvement may be the subject matter of a contract. It does not state, or imply, that a contract is presumed to be in respect to a single improvement. Nor does it state, or imply, that there is such a presumption unless it is displaced by contract. Unlike all the other subsections of this provision, it does not apply “for the purposes of this Act” but rather “for the purposes of this section” and addresses a particular problem that arises where a contract is in respect to more than one improvement: establishing the date of substantial completion of the contract. In this subsection, the Legislature has provided that substantial completion will arise on an improvement-by-improvement basis if the parties to the contract have so agreed by their contract – and by necessary implication, substantial completion of the contract will be determined by reference to all improvements that are the subject of the contract if the parties have not agreed to the contrary in the contract. The provision does not change or modify the nature of what an “improvement” is under the Act, and it does not provide that “improvement” is co-extensive with “contract”.

[44] Caledon argues that its position is further supported by the language of the transition provisions, specifically s. 87.3(4)2 of the Act, which contains the phrase “the improvement that is the subject matter of the contract.” Caledon argues from this language that “the transition provisions generally assume that a contract is part of a single improvement.”

[45] Caledon argues that the “single improvement” assumption is necessary to determine (i) substantial performance, (ii) deemed completion, (iii) claims for prompt payment, and (iv) lien rights (“which are calculated on the work as a whole”). I cannot accept these arguments. Substantial performance and deemed completion – where there is more than one improvement governed by a single contract – are dealt with expressly in s. 2(4) and do not require an assumption of a “single improvement” per contract. Claims for prompt payment are based on contracts – and only where the transitional provisions come into play would it matter whether the contract was in respect to more than one improvement – as is reflected in this very case. Lien rights are based on the value of services and materials “provided to the improvement” and do not require a “single improvement assumption” to operate. Where lien rights are asserted under a contract respecting more than one improvement, s. 20 of the Act provides that the claimant may lien all lands on which contract work was done – a provision that would not be required if those lands were all “assumed” to be a single improvement because they were addressed in a single contract. Indeed, the language of s. 20 reflects the Legislature’s understanding that a contract may be in respect to more than one improvement: it applies where “an owner enters into a single contract for improvements on more than one premises….”

[46] Caledon’s argument runs counter to the definition of “improvement” in the Act, is unsupported by a single case authority, and is not a necessary implication arising from the transitional provisions of the Act. Those provisions are intended to have temporary effect, to determine which version of the Act shall apply during the period of implementation of the changes made to the Act in 2017: they should not be read to introduce a profound change to the understanding of what an “improvement” is for the purposes of the Act.

[47] The Adjudicator found that the works on different Ponds under the WSP Contract and the Matrix Contract were in respect to different improvements and that there were “many improvements” addressed in those contracts. As stated above, those findings are reasonable, and there is no reason, in principle, why the same logic should not be applied to assessing the Bronte Contract. I conclude that the works on Pond #7 and Pond #14 are in respect to different improvements, located on different non-contiguous lands.

Question 3: Any Reasons Why Different Versions of the Act Should Not Apply to the Claims in Respect to Pond #7 and Pond #14

[48] Caledon essentially raises two arguments why different versions of the Act should not apply to works in respect to Ponds #7 and #14 if these works are distinct improvements.

[49] First, Caledon argues that Bronte has conceded that there is only one improvement and that only one version of the Act applies. It supports this argument with positions taken by Bronte throughout these proceedings, and the manner in which contract work was structured, costed and performed. It is apparent that Bronte’s position was premised on an error of law, and jurisdiction may not be conferred by consent or error.

[50] Second, Caledon again relies on the language of s. 87.3(4)2 of the Act – which refers to “the improvement that is the subject matter of the contract” to argue that the Legislature intended that a contract be subject to only one version of the Act, rather than two or more versions. From this analysis Caledon submits that “[i]t is clear from the deliberate statutory wording that the Act intends to treat the work on ponds 7 and 14 as being part of the same improvement, and not as multiple separate improvements.” I do not accept this argument. It is directly contrary to the correct principle stated by Robinson A.J. in Crosslinx and is inconsistent with the plain language of s. 87.3(4) of the Act: the Legislature chose to have the same version of the Act apply on an improvement-by-improvement basis.

[51] I accept that the phrase “the improvement that is the subject matter of the contract” could be used to draw an inference that a contract may only be in respect to one improvement. But the phrase must be read within the context of the entire Act. If the Legislature had used the phrase “an improvement…” rather than “the improvement…” then the plain meaning of the provision would have been that if any improvement in a contract is not subject to adjudication, then the entire contract is excluded from adjudication. The Legislature chose not to use that language – which leads me to conclude that the Legislature chose not to permit owners to bundle newer improvements with older improvements and thereby extend the reach of the transitional provisions of the Act. The Legislature chose not to include a deeming provision to provide for what should happen if a contract is in respect to more than one improvement. The policy of the transitional provisions, reflected in its plain language, and explained by Robinson A.J. in Crosslinx, is that the same version of the Act shall apply on an improvement-by-improvement basis.

[52] Caledon argues that the transitional provisions are concerned with “contracts and procurement processes, not improvements” and cites s. 87.3(4) of the Act in support of this argument. I would reject this argument. Subsection 87.3(4) is concerned with “contracts” and “procurement processes for the improvement”. If the provision was restricted to the procurement process for the contract – in this case, the Bronte Contract – there would be no issue that the entire contract was subject to the adjudication provisions of the Act.

[53] If Caledon had let separate contracts for the works on Ponds #7 and #14, this would have been a straightforward case. The contract in respect to Pond #7 would not have been subject to adjudication and the contract in respect to Pond #14 would have been subject to adjudication. It was Caledon’s choice to structure its tendering and contracting for these works in a single contract.

[54] Bronte argues that where there is more than one improvement addressed by a single contract, the transitional provisions should be applied to make adjudication available for all claims under the contract, provided one of the claims is eligible for adjudication. This argument flies against the “improvement-by-improvement” policy reflected in the language of the provision as explained in Crosslinx.

[55] Finally, I note that neither party made an argument that there are insurmountable difficulties if different versions of the Act apply to works done respecting two or more improvements under the same contract. As I explain below, there is no great difficulty using such an approach in this case. Further, it was Caledon’s choice to bundle work on Ponds #7 and #14 in a single contract – if it is concerned that this bundling of multiple improvements will create difficulties for it in future, it can tender its contracts in a manner that avoids this difficulty.

(d) Adjudicator’s Decision Reasonable Respecting Amount to be Paid for Pond #14

Limited Jurisdiction of this Court

[56] As noted by this court in SOTA Dental Studio Inc. v. Andrid Group, 2022 ONSC 2254, para. 9 (Div. Ct.):

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.

[57] The bases on which the court may intervene on an application for judicial review reflects the nature of the award made by an adjudicator: it is an interim award, without prejudice to the parties, and is to be made swiftly following a prescribed prompt process. The court affords a high degree of deference to an adjudicator’s decision and will intervene only in limited circumstances.

[58] The complete text of s. 13.18(5) of the Act states:

The determination of an adjudicator may only be set aside on an application for judicial review if the applicant establishes one or more of the following grounds:

1. The applicant participated in the adjudication while under a legal incapacity.

2. The contract or subcontract is invalid or has ceased to exist.

3. The determination was of a matter that may not be the subject of adjudication under this Part, or of a matter entirely unrelated to the subject of the adjudication.

4. The adjudication was conducted by someone other than an adjudicator.

5. The procedures followed in the adjudication did not accord with the procedures to which the adjudication was subject under this Part, and the failure to accord prejudiced the applicant’s right to a fair adjudication.

6. There is a reasonable apprehension of bias on the part of the adjudicator.

7. The determination was made as a result of fraud.

[59] Subparagraphs 13.18(5)1, 2, 4, 6 and 7 are not raised by Caledon as bases to interfere with the Merits Decision. Most of the arguments under s. 13.18(5)3 have already been addressed in the sections of this decision addressing jurisdiction. The remaining jurisdictional arguments are addressed below, following which the procedural fairness arguments are addressed.

Jurisdictional Arguments

[60] Caledon argues that the Adjudicator exceeded his jurisdiction in making findings that:

(a) Caledon improperly terminated the Bronte Contract;

(b) Caledon and its contract administrator (Matrix) improperly administered the Bronte Contract and unreasonably rejected Bronte’s claim;

(c) Caledon delayed the project.

[61] I do not find it necessary to assess whether any of these findings was necessary to the Adjudicator’s analysis of the positions of the parties respecting Bronte’s claims to payment (which was the subject matter of the adjudication). Caledon’s position on this issue, at its highest, is that these findings by the Adjudicator were unnecessary to his determination, were obiter dicta, on subjects outside the scope of the adjudication. These findings are not binding on the parties in future litigation, and they are not embodied in a direction from the Adjudicator. To the extent that the Adjudicator’s reasons include obiter dicta, that does not undercut the Adjudicator’s jurisdiction to make the decision reflected in the Merits Decision.

Procedural Fairness Arguments

[62] Caledon’s arguments respecting procedural fairness are premised on a common law understanding of the requirements of procedural fairness (Factum, para. 107, relying on Ball v. Audette, 2019 ONSC 3775 (Div. Ct.). The Act sets out a statutory test for procedural unfairness in s. 13.18(5)5. The first prong of the test requires an applicant to establish that “the adjudication did not accord with the procedures to which the adjudication was subject under this Part.” Caledon does not identify any procedure stipulated under the Act that was not followed by the Adjudicator in this case. Further, the gravamen of Caledon’s argument is that the Adjudicator’s decision was substantively unreasonable because it did not accord with the evidence, and the Adjudicator failed to explain his conclusion. Caledon and its contract administrator, Matrix, rejected Bronte’s claims on the basis that it had not established that it had done work entitling it to payment. The Adjudicator – reviewing the same documents – concluded that “the Claimant [Bronte] did the work it says it did.” As noted by Caledon, this is a conclusory factual finding.

[63] Caledon’s argument is not a procedural fairness argument. It is an argument that the Adjudicator’s decision is substantively unreasonable. This is not a basis for this court to intervene pursuant to s.13.18(5) of the Act. This court will not recharacterize non-procedural arguments as procedural arguments to expand the scope of judicial review prescribed in s.13.18(5).

Other Arguments

[64] Caledon’s other arguments are, in substance, that the Adjudicator’s substantive decision was unreasonable – even in light of its interim status and the procedural informality and expedition directed by the Act. The Adjudicator accepted that Bronte’s recourse to the contract claims process satisfied the invoice requirement in the Act. The Adjudicator accepted Bronte’s evidence that it had performed contract work, even though that evidence had not satisfied Caledon or its contract administrator. These are all arguments that the substantive determination was not reasonable substantively – a ground of review that is not included in s. 13.18(5) of the Act.

[65] No constitutional challenge was made to the restricted scope of judicial review prescribed by s. 13.18(5) of the Act (see Dunsmuir v. New Brunswick, 2008 SCC 9, para. 27; Yatar v. TD Insurance Meloche Monnex, 2024 SCC 8, paras. 46-50 and the cases cited therein). Judicial review for substantive reasonableness is not a listed ground of review, and on the presumption that s.13.18(5) is valid legislation, Caledon’s arguments respecting substantive unreasonableness are not within the scope of this court’s jurisdiction in this case.

Application to the Adjudicator’s Substantive Determination

[66] At para. 10.52, the Adjudicator provided a helpful chart setting out a breakdown of the amounts awarded. The first three items, totaling $12,025.00, are for activities undertaken in respect to “both ponds” (such as mobilization, de-mobilization, traffic protection, and “line and grade and survey” work). The next two items, totaling $75,795.25, 30, are in respect to Pond #7. The final item, valued at $5,625.67, is in respect to Pond #14.

[67] The Adjudicator did not put his mind to a reasonable division of the first three items between Pond #7 and Pond #14. Such a division could have been made on a practical basis, given the evidence, or could have been divided 50/50 between the two contracts if that seemed reasonable. If this item were a material amount, I would send it back for decision by the Adjudicator. However, the total value in issue is not material enough to justify requiring the parties to undergo further process on this issue, and I would divide it 50/50 for the purposes of promoting finality in respect to this determination which – it is to be recalled – is interim and without prejudice to the position of the parties moving forward.

[68] In the result, I would uphold the Adjudicator’s award of $5,625.67 in respect to Pond #14, and $6,012.50, being 50% of the $12,025 awarded for activities undertaken in respect to “both ponds”. This results in a total award in respect to Pond #14 of $11,638.17, plus HST, plus interest.

Disposition

[69] The application is allowed in part, and the Adjudicator’s award in respect to the amounts owed for Bronte’s work on Pond #7 is quashed. The balance of the Adjudicator’s award is upheld. In the result, the amount awarded is reduced to $11,638.17, plus HST, plus interest.

[70] Since success has been divided, there shall be no costs awarded for the application or the motion for leave to bring the application unless either side advises this court, by email, by August 31, 2024, that there is a material offer to settle the application that would bear on this costs disposition.

D.L. Corbett J.

I agree: ___________________________

Backhouse J.

I agree: ___________________________

Charney J.

Date of Release: August 23, 2024

[^1]: Apparently neither the Merits Decision nor the Jurisdiction Decision have been released to legal databases. They should be: the “open court principle” applies to adjudicative bodies and public release of decisions is one way in which decisionmakers such as ODACC adjudicators are publicly accountable.