In an adjudication under Ontario’s Construction Act, the adjudicator issued a Determination directing that an owner (Sayers) pay $685,574.91, plus interest, to a contractor, Gay. Sayers successfully moved for leave to apply for judicial review and the amount of the Determination was paid into Court pending the hearing of the Application. On March 4, 2026, in Sayers Foods Ltd. v. Gay Company Ltd., 2026 ONSC 918, the Application was dismissed by a panel of three Justices who are very experienced in construction law. The decision, as well as prior and subsequent decisions in the same proceeding, are must reading for construction lawyers in Ontario, and recommended reading for those involved with adjudication procedures elsewhere in Canada. With limited exceptions, the decisions at times make clear, and at other times telegraph, how the Ontario Courts are likely to deal with a number of issues going forward. The clarity is welcome. Below, we highlight the significance of a number of the Court’s decisions, comments and rulings. We have not covered all of them.
1. Re: the Constitutionality of Section 13.18(5)
Section 13.18(5) of the Construction Act provides that a Determination may only be set aside on an application for judicial review if one of 7 enumerated grounds are established. In this regard, at para. 7 of its March 4, 2026 decision, the Court expressly confirmed that “No challenge is brought to the constitutionality of this provision, and we proceed on the basis that this court’s jurisdiction is circumscribed by 13.18(5)”. This comment recognizes that the subsection’s legislative limitation on the scope of judicial review may be unconstitutional. In this regard, see for example the Supreme Court of Canada decision in Dunsmuir v. New Brunswick, 2008 SCC 9 (CanLII), where the Court held at para. 28-31:
“Judicial review is the means by which the courts supervise those who exercise statutory powers, to ensure that they do not overstep their legal authority. … … This is done within the context of the courts’ constitutional duty to ensure that public authorities do not overreach their lawful powers.” … “The legislative branch of government cannot remove the judiciary’s power to review actions and decisions of administrative bodies for compliance with the constitutional capacities of the government. … As noted by Beetz J. in Syndicat national des employés de la commission scolaire régionale de l’Outaouais v. U.E.S., local 298 [1988] 2 S.C.R. 1048 (S.C.C.), [hereinafter Bibeault], at p. 1090, “[t]he role of the superior courts in maintaining the rule of law is so important that it is given constitutional protection”. In short, judicial review is constitutionally guaranteed in Canada, particularly with regard to the definition and enforcement of jurisdictional limits.”
The constitutionality of s.13.18(5) accordingly remains to be addressed another day.
2. Re: the Motion for Leave and Motions to Strike
In an interim proceeding, Gay Company Limited v. Sayers Foods Limited, 2024 ONSC 3226 (CanLII), Gay brought a motion to strike portions of the Affidavits filed on the motion for leave. The court suggested at para. 3 that “a lengthy argument on the motion would not ensure the leave to appeal panel has clear, appropriate material before it. As set out in Sayers’ factum, the typical practice is to have motions to strike heard at the same time as the primary motion: See Guttierrez v. The Watchtower Bible and Tract Society of Canada, 2019 ONSC 3069.” The parties agreed to proceed in that fashion. It is likely the Court will require parties to do so going forward.
3. Re: The Stay on Enforcement of the Determination
Leave to apply was granted without reasons on the merits. Sayers then moved for a stay of the Adjudicator’s Determination (i.e., the obligation to pay). The Court had previously, in Anatolia Tile & Stone Inc. v. Flow-Rite Inc., 2023 ONSC 1291 (CanLII) at para. 12, cautioned that where a stay of the enforcement of a Determination is granted, “securing the disputed payment will be a common term of a stay order”. Gay advised that it would consent to the stay on the condition that the full amount of the Determination be paid into court. Here, the Court held that, given the Respondent’s conditional agreement, “the balance of convenience weighs strongly in favour of requiring payment into court of the full amount in issue” (Sayers Foods Ltd. v. Gay Company Limited, 2024 ONSC 4832 (CanLII), at para. 5). In its March 4, 2026 decision, however, it cautioned, at para. 129 that there should be no expectation that enforcement will be stayed pending a Judicial Review application:
“To be clear, the process followed in this case should not be seen as a guiding precedent for ordering payment into court, rather than payment in accordance with a Determination, pending an application for judicial review.”
4. Ongoing Lien Proceedings and Potential Over-securitization
At para. 127-129, the Court noted that questions had been raised about the relationship between the Judicial Review proceedings and ongoing construction lien proceedings. It held:
“… it is not appropriate for this court to engage in questions related to the impact of the payment of funds to Gay Co. as a result of the Adjudicator’s Determination and this court’s decision to uphold it. If the net value of lien claims is reduced as a result of the flow of funds following payment to Gay Co., the parties may seek variations in lien security within the lien proceedings, and those issues can be adjudicated there.”
The Court went on to confirm that its having:
“case managed on the basis that this court might have a role in sorting out concerns about over-security of claims resulting from claims asserted in both the prompt payment adjudication process and the lien claim process… proved to be ill-advised. It served to delay payment that should have been prompt and seems to have led to some paralysis in the lien proceedings themselves”.
As above, the Court cautioned that the process followed “should not be seen as a guiding precedent for ordering payment into court, rather than payment in accordance with a Determination, pending an application for judicial review”.
5. But What About the Unpaid Trades, During the Stay?
In granting the stay, the Court noted that an Owner is not entitled to set-off against the basic holdback, which has to be available to satisfy valid subcontractor lien claims. It also confirmed its now well established preference for “early payment of established subcontractor claims from minimum holdback, and consequent reduction in lien security”, citing Homes by DeSantis (Lake) Inc. v. Sutton Forming Inc., 2023 ONSC 2628 (Div. Ct.), applying Urbacon Building Groups Corps. v. Guelph (City), 2009 CanLII 72065 (ON SC). The Court went on to ask itself how those principles ought to apply where the quantum of a disputed Determination has been paid into Court. The Court appears to have suggested that a payment through to the trades out of funds paid into Court in the event of a stay could only be paid out to the trades on consent, stating at (para. 13 of Sayers Foods Ltd. v. Gay Company Limited, 2024 ONSC 4832 (CanLII)):
“This court has not addressed how the process of retiring subcontractor claims in lien proceedings may be affected by a prompt payment determination. However, the parties need not await a decision from this court on these issues to order their affairs appropriately: if the parties consent to payment out of some or all of the funds paid into court to retire subcontractor claims against basic holdback, they may request an appropriate consent order from the court”.
Given its caution about stays on enforcement (reviewed above), it may be that the Court will take the existence of unpaid lien or trust claims further down the construction pyramid into consideration going forward, in deciding whether or not to grant a stay.
6. Who Needs to Be Served with the Notice of Application?
The Court confirmed, in Gay Co. Ltd. v. Sayers Foods Ltd., 2024 ONSC 6123 (CanLII) at para. 4, that while it is not necessary to serve the Attorney General with a notice of a motion to seek leave for Judicial Review, where leave is granted one must comply with the Judicial Review Procedure Act and serve the Notice of Application on the Attorney General with “sufficient time to enable the Attorney General to decide whether they wish to exercise their right to be heard on the application”. The Court also requested that “ODACC” (the Ontario Dispute Adjudication for Construction Contracts, which administers the Adjudication regime in Ontario), be served with the Notice and given an opportunity to participate. In its March 4th, 2026, reasons for decision, the Court went further at para. 135-136 and confirmed that ODACC should be served with the Notice of Application in all circumstances, noting that subsection 9(2) of the Judicial Review Procedure Act provides that the statutory decision maker may be made a party to an application for judicial review and following Children’s Lawyer for Ontario v. Goodis (2005), 2005 CanLII 11786 (ON CA), 75 OR (3d) 309, where the Court of Appeal interpreted that provision to entitle the decision maker to be added as a party. The Court went on to expressly state at para. 140 that “Failure to take these steps could affect the exercise of the court’s discretion in a case where a party fails to serve ODACC”. It suggested that ODACC might wish to establish a portal for such purposes.
7. Fresh Evidence?
Sayers also moved to introduce fresh evidence in support of its Application, arguing that a more permissive standard for the introduction of fresh evidence ought to be applied to judicial review of determinations under the Construction Act, than is applied under the well-established standard for judicial review applications in general, set out in Sierra Club Canada v. Ontario (Ministry of Natural Resources and Ministry of Transportation), 2011 ONSC 4086, paras. 10-15. The Court disagreed, finding “no good basis for this argument”. It then went on to elaborate on the circumstances where fresh evidence would be potentially admissible at para. 44:
“Fresh evidence may be used to establish prejudice arising from alleged unfairness. They may not be used for anything more, and in particular, they may not be used for an assessment of the underlying merits of the impugned determination. If the court found that there was procedural unfairness, and that this unfairness had deprived a party of a reasonable opportunity to adduce material evidence, and that this failure could have affected the result of the adjudication, then the remedy usually would be to allow the application and remit the matter for adjudication on a complete record”.
8. The “Nub” of the Case and the “one matter per adjudication” requirement
Prior to the Bill 216 and Bill 60 Construction Act changes which came into force January 1, 2026, section 13.5(4) provided that “An adjudication may only address a single ‘matter’, unless the parties to the adjudication and the adjudicator agree otherwise. Section 13.5(1) in turn set out those ‘matters’ which could be the subject of an adjudication. With the January 1, 2026 changes, section 13.5(4) was changed to substitute the word ‘dispute’ for the word ‘matter’. (Curiously, what can and cannot be adjudicated are still tied to ‘matters’). An issue which has vexed construction law lawyers since the introduction of s.13.5(4) was the extent to which a Respondent in an adjudication can raise a set-off to a claim without running afoul of the “only one matter at a time” (now “one dispute at a time”) limitation. In other words, where, for example, the claimant gives a Notice of Adjudication to seek payment for a single invoice, can the respondent defend that claim (without the claimant’s consent) on the basis that it has, for example, a $5,000,000.00 counterclaim for the impacts of delay? In other words, is the counterclaim part and parcel of the same “matter” (being the extent to which the claimant is entitled to be paid the invoice) or is it a separate matter which should be adjudicated or litigated separately? There are arguments on both sides, of course. The facts in Sayers were very similar to the above example: Gay was seeking payment of 2 invoices and Sayers’ “primary basis” for not paying them was its delay claim. According to the Court, the “nub of the case” was Sayers’ principal argument that it had a meritorious delay claim which the Adjudicator erred in rejecting. The Respondent had not objected that the delay claim was a separate matter which could not proceed before the Adjudicator absent consent, and the Divisional Court accordingly did not directly address that question. Issues surrounding “single matters” were, however, addressed. Curiously, Sayers argued that Gay’s claims could not be subjected to Adjudication because its complex and multifaceted set-off and counterclaim amounted to “multiple matters” that took the claims out of the jurisdiction for Adjudication. The Court dealt with the argument at para. 75-77. In rejecting it, the Court gave insight into how “single matter” issues might be dealt with going forward:
[75] … [Sayers] argues that its multiple and complex defences to the claims to payment, including set-off claims, should have taken these disputes outside the adjudication regime pursuant to s. 13.5(4) of the Act. [76] The Adjudicator ruled that Gay Co.’s two claims for payment were the two “matters” before him, consolidated on consent. The Adjudicator noted that s.13.5(1)3 permits a party to adjudicate “disputes that are the subject of a notice of non-payment under Part I.1”. “Disputes” here is plural. The Adjudicator found that Sayers had raised multiple “disputes” in respect to the “matter” of Gay Co.’s two claims to payment. This finding is reasonable and accords with the scheme and provisions of the Act. [77] Turning to Sayers’ position that Gay Co.’s claims should not be subject to adjudication because of complexity, it would defeat the prompt payment provisions if an owner could deprive an adjudicator of jurisdiction by raising, as a matter of defence to a “single matter” dispute, a defence that raises “multiple and complex” issues of fact and/or law. The subject-matter of the arbitration does not change because of a defence raised to it by an owner, although the focus of the arbitration may turn out to be on the defence, if the affirmative claim is otherwise uncontested.
There are a number of takeaways from these three paragraphs. First, we believe Gay’s approach to commence separate adjudications on an invoice by invoice basis is good practice. It might not always be necessary, however doing so removes any argument that the claimant is pursuing multiple matters. Once commenced, the adjudications can be consolidated on consent, as appropriate. Second, the Court confirmed in the context of the pre-January 1, 2026 changes to the Act, that a respondent can raise a complex and multi-faceted counterclaim as a defence to a straightforward claim, without the consent of the claimant. In doing so, it observed that section 13.5(1)3 allows for the adjudication of “disputes” (plural) that are the subject of a notice of non-payment. As above, however, the January 1, 2026, changes provide that only one “dispute” can be adjudicated at a time, absent the consent of the parties. This change might accordingly alter the Court’s analysis, such that a responding party’s ability to raise multiple complex and multi-faceted reasons to deny payment of a single claim will be limited. Time, and further jurisprudence, might tell.
9. The Onus of Proof of a Respondent’s Set-Off Claim in an Adjudication
Sayers argued that the Adjudicator had erred in applying too high a standard of proof for the set-off claim. It argued “that interim adjudications are akin to injunctions or certificates of pending litigation” and that, towards having Gay’s claim dismissed, it need only establish that its delay claims contained a “serious issue to be tried”. It further argued as follows (as excerpted into the decision by the Court) at para. 105:
“Adjudicators need not assess matters as if a fulsome trial is being argued, nor should parties be held to the evidentiary standard of a trial. If delay claims are to be permitted in adjudications a party ought not be demanded to prove all of the elements of a delay claim as if they are at trial. Unless the threshold is lowered to a reasonably attainable standard, parties who have a meritorious set off or delay claims will simply have no fair opportunity to present them in a clear way in the confines of an adjudication. If there is a sizeable amount of money at stake, and there is a reasonable set off claim advanced which will need more time to be crystallized and proven with expert reports, the Adjudicator ought to make a determination that the dispute is too complex and multifaceted for adjudication, and be referred to court or arbitration if the contract between the parties requires same. Without some sort of gatekeeping, this system can quickly be abused and great miscarriage of justice will be permitted.”
The Court did not accept the argument. It firstly held that Sayers had misinterpreted the injunction standard. Beyond this, however, the Court’s rejection of the argument was focused on the facts of the case before it. The Adjudicator had held that Sayers did not have a contractual right to assert its set-off claim under the contract and the Court concluded that “There is no miscarriage of justice in Sayers being required to live by the terms of the Contract and losing some security over claims that are not provided for in the Contract”. It is perhaps disappointing that the Court did not address the standard of proof to be applied where a set-off claim for backcharges, including the impacts of delay, are allowed under the subject contract or subcontract. Regardless, in the end and practically speaking, we believe that Adjudicators will strive to be sufficiently convinced of the merits of a backcharge claim before they will apply it to off-set the claimant’s entitlement to payment. From this perspective, the legal standard might not matter as much as the practical reality. See para. 103-106 of the March 4th Decision.
10. The Seventh Ground Under 13.18(5): fraud
Under section 13.18(5), one of the enumerated grounds for judicial review is where “the determination was obtained as a result of fraud”. This is a ground that has confused construction lawyers since s. 13.18(5) was introduced in 2018. Is it directed at potential fraud to which the Adjudicator was a participant, or can it include an intentionally or knowingly inaccurate statement made by a participant to an Adjudication? Justice Myers previously spoke to the issue on a motion for a stay in Accurate Railroad Construction Ltd. v. Sierra Infrastructure Inc., 2024 ONSC 3722 (CanLII), in which we acted for the Respondent:
[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.
In Accurate, we argued that the s.13.18(5) ground of fraud had to be interpreted in light of the purpose and scope of judicial review as it has historically been applied, and which focuses on conduct or circumstances which impact the jurisdiction, independence or bias of the statutory decision maker, not the conduct or representations of participants. We submitted that the “fraud” ground accordingly ought not apply where a party merely alleges that another spoke a non-truth. We referenced Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (CanLII), at paras. 6-8 and 14-15 and David Phillip Jones & Anne S de Villars, Principles of Administrative Law, 7th ed (Toronto: Carswell, 2020) at pages 149-151. In Accurate, the Divisional Court dismissed the Motion for Leave without reasons.1 No reasons were thus given about how the “fraud” element under s. 13.18(5) should be interpreted. The Court in Sayers, similarly, did not delve into this issue. Rather, it rejected the owner’s allegations of sufficient fraud on the facts, by not accepting Sayers’ arguments that sufficient “fraud” had arisen through misrepresentations and “dishonest positions”, catching it “by surprise”.
11. Procedural Fairness
As regards procedural correctness as a whole, the Court confirmed, at para. 9:
Issues of procedural fairness are reviewed in this court on a standard of correctness: Abrametz v. Law Society of Saskatchewan, 2022 SCC 29. In the context of an application for judicial review pursuant to s. 13.18 of the Construction Act, issues of procedural fairness must be analyzed through the lens of s. 13.18(5)5: (a) an applicant must show that the procedures followed did not accord with the procedures to which the adjudication was subject under Part II.1 of the Act; and (b) an applicant must show that the failure prejudiced the applicant’s right to a fair adjudication.
Sayers raised, and the Court dismissed, multiple allegations of procedural unfairness, and we will not speak to all of them here. Of note, the Court held that, in precluding cross-examinations and then referencing their absence as a factor in making a finding, and in reversing the order of oral submissions, no unfairness arose which affected the result. It followed Vavilov, supra, para. 102 and Taccone v. Registrar, Funeral, Burial, and Cremation Services Act, 2002, 2025 ONSC 6879, para. 67 in confirming that Judicial Review is not a “treasure hunt for error”. We suggest that in dealing with procedural unfairness, the Court reiterated (as it has, in various ways, before) that there will be a relatively high bar to overcome towards establishing “unfairness” sufficient to warrant intervention by way of Judicial Review. See, however, Ledore Investments v. Dixin Construction, 2024 ONSC 598, where the Divisional Court allowed an application for Judicial Review where the adjudicator had issued a Determination based on an issue which had not been raised by the parties, without giving the parties an opportunity to speak to it. Robert Kennaley Kennaley Construction Law 1 2024 ONSC 4798