Adjudication: ODACC releases third Annual Report
Ontario Dispute Adjudication for Construction Contracts (ODACC) has issued its third Annual Report (the report) for the 2022 fiscal year, running from August 1, 2021 to July 31, 2022. See our previous blog posts for a discussion of the 2020 Annual Report and the 2021 Annual Report.
The report highlights an overall increase in the construction industry’s use of adjudication during ODACC’s third year of operation: 121 adjudications were commenced (compared to 50 in 2021); 24 of the 121 adjudications were terminated; and 67 determinations were rendered (compared to 34 in 2021).
Of the 67 determinations rendered during the 2022 fiscal year, 75% were rendered within the 30-day timeline prescribed by section 13.13(1) of the Construction Act, R.S.O. 1990, c. C.30 (the Act).
In 2022, the distribution of subject matters and industry sectors involved in adjudications largely continued the trends observed in prior years. Most determinations related to matters involving either the valuation of services or materials provided under a contract, or payment under a contract, including in respect of a change order, whether approved or not, or a proposed change order.
Of the adjudications commenced, 52 (43%) involved the residential sector; 30 (25%) involved the transportation and infrastructure sector; 23 (19%) involved the commercial sector; 10 (8%) involved the public buildings sector; and six (5%) involved the industrial sector.
The total amount claimed in adjudications continued to grow in 2022. After nearly quadrupling between 2020 and 2021, the total amount claimed nearly quadrupled again between 2021 and 2022, reaching a total of approximately $33.5 million, or an average of $277,168 per adjudication – a 59% increase from 2021.
That said, the total amount to be paid pursuant to the determinations rendered continued to be significantly lower than the total amounts claimed: in the 2022 fiscal year, a total of $3,449,619 (compared to $908,123 in 2021) was awarded in the 67 determinations.
Broken down by sector, the average payout was: $94,717 in the transportation and infrastructure sector; $69,673 in the commercial sector; $59,657 in the industrial sector; $29,492 in the residential sector; and $13,750 in the public buildings sector.
For stakeholders contemplating the use of adjudication to resolve a dispute, ODACC’s adjudicator registry currently lists 55 ODACC-certified adjudicators. The vast majority of adjudicators have set their hourly rate in the range of $250-500, and 93% of adjudicators are willing to conduct adjudications for a flat fee (ranging from $800-$3,000) that is proportionate to the amount in dispute. In addition, many of the adjudicators are willing to travel across Ontario to address disputes without any travel or disbursement charges.
Overall, the report highlights that adoption of adjudication by the construction industry is continuing to increase. Given the short timelines for adjudication prescribed by the Act, it is important for stakeholders to take appropriate steps to ensure they are prepared for an adjudication, as well as for what comes after receiving an adjudication determination, as discussed in our previous blog post.