In Sayers Foods Ltd. v. Gay Company Ltd., 2026 ONSC 918, the Ontario Divisional Court dismissed an application for judicial review brought by Sayers Foods Ltd. (Sayers), an owner resisting a prompt‑payment adjudication determination. The determination required Sayers to pay over CA$667,000 (plus interest) to Gay Company Ltd. (Gay Co.), the project’s general contractor. The adjudicator found that the contractor’s Payment Certificates were properly certified under the CCDC‑2 contract. The adjudicator also rejected Sayers’ defences, including notice‑holdback obligations alleged to be preventing the owner from making payment, alleged false statutory declarations provided by the contractor, and a substantial set‑off claim for delay, finding that such defences were not established under the contract or the Construction Act, RSO 1990 c C30 (the Construction Act).
The Court emphasised that section 13.18(5) of the Construction Act provides only narrow grounds for setting aside an adjudication determination, reinforcing the interim and expedited nature of the adjudication process. The Court rejected Sayers’ arguments of jurisdictional error, procedural unfairness, fraud and reasonable apprehension of bias, holding that none of these grounds met the statutory threshold. The Court found that the adjudicator reasonably interpreted the CCDC‑2 contract, including the “entire agreement” clause.
The Court further affirmed that owners must substantiate any set‑off rights within the adjudication itself. Here, Sayers’ primary basis for withholding payment of the two invoices was its set-off claim for delay. Sayers did not dispute the quantum of the invoices but argued that the adjudication process is too short and informal to allow a party to assemble a complex claim for delay. The adjudicator rejected this argument, noting that Sayers had taken no substantive steps to advance its delay claim in the nine months between delivering its notice of delay and the commencement of the adjudication. More fundamentally, the adjudicator found that Sayers had no contractual entitlement to set-off of its asserted delay claim. As Sayers lacked a contractual basis for the set-off and did not challenge the invoiced amounts, the adjudicator ordered the payment of the invoices.
Background
The dispute arose after a fire destroyed Sayers’ grocery store in Apsley, Ontario, in December 2020. In March 2022, Sayers contracted with Gay Co. under a CCDC‑2 Stipulated‑Price Contract valued at approximately CA$8.16 million for the construction of a replacement store.
As work progressed, Gay Co. issued Payment Certificates Nos. 18 and 19 in November and December 2023, and the consultant certified the amounts payable under the contract. Sayers ceased payment and issued Notices of Non‑Payment under the Construction Act, prompting Gay Co. to commence two prompt‑payment adjudications, which were later consolidated.
Adjudication
Before the adjudicator, Sayers asserted three primary reasons for non‑payment:
- First, Sayers argued that subcontractor liens registered against the project triggered “notice holdback” obligations under section 24(2) of the Construction Act, requiring it to retain amounts beyond the basic 10% statutory holdback.
- Second, Sayers alleged that Gay Co. had filed false statutory declarations by representing that subcontractors had been paid when some had subsequently registered liens.
- Third, Sayers advanced an intended set‑off claim based on alleged construction delay, claiming a substantial credit initially estimated at CA$900,000 and later framed as a CA$1.2 million delay claim plus monthly amounts until completion. Sayers contended that the parties had agreed to completion dates, that Gay Co. failed to meet them, and that Sayers was therefore entitled to withhold the certified payments. Notably, Sayers did not dispute the value of the work completed.
Gay Co. disputed each of these grounds. On notice holdback, Gay Co. argued that it could not be invoked because Sayers had never received a “written notice of lien” in the prescribed form, as required under sections 1(1) and 24(2) of the Construction Act and O. Reg. 303/18.
On statutory declarations, Gay Co. maintained that its declarations were accurate when made and that any unpaid subcontractor accounts resulted from Sayers’ own withholding of certified funds.
Most significantly, on set-off, Gay Co. submitted that the CCDC‑2 Contract contained no binding completion date, no delay‑damages mechanism, and no contractual right permitting Sayers to unilaterally set-off alleged delay damages against certified progress payments, particularly where Sayers had not followed the claim procedure under GC 6.6.
The adjudicator found for Gay Co. on all issues. He concluded that the consultant had properly certified the disputed payment certificates and that Sayers was required to pay them within the contractual 28‑day period, subject only to basic holdback obligations. On notice holdback, he determined that no obligation existed because Sayers had not received any written notices of lien in the prescribed form; registration of liens alone did not meet the statutory requirement for a written notice of lien. On the statutory declarations, the adjudicator found no basis to conclude that Gay Co. had made false or fraudulent declarations and noted that the absence of cross‑examination did not permit him to make credibility findings on the record before him.
With respect to the delay claim, the adjudicator held that the contract did not include a binding completion date, that Sayers had not advanced its credit claim beyond the initial notice given months earlier, and that Sayers’ alleged damages were at least arguably consequential and therefore excluded under the contract.
The adjudicator determined that Sayers’ withholding was contrary to both the contract and the prompt‑payment regime and ordered Sayers to pay the outstanding balance of CA$667,667.14 plus interest.
Judicial review under s. 13.18 of the Construction Act
Sayers sought judicial review under section 13.18 of the Construction Act after obtaining leave. It advanced multiple arguments within the enumerated grounds of section 13.18(5) as follows:
- Jurisdictional error: Sayers alleged that the adjudicator had improperly addressed matters that could not be the subject of adjudication, including notice holdback and what Sayers characterised as complex, multi‑issue delay claims contrary to section 13.5(4).
- Procedural unfairness: Sayers asserted that the adjudicator reversed the proper order of submissions, failed to ensure that the contract uploaded to the Ontario Dispute Adjudication for Construction Contracts (ODACC) portal was complete, declined to allow cross‑examination, and held Sayers to an excessive evidentiary standard inconsistent with the interim nature of adjudication.
- Irreparable harm: Sayers argued that the adjudicator erred by failing to consider irreparable harm and balance of convenience in making what it described as an interim payment order.
- Fraud: Sayers alleged that Gay Co. had procured the determination through fraud by advancing inconsistent positions about scheduling in other litigation and by relying on allegedly false statutory declarations.
- Reasonable apprehension of bias: Sayers argued that several procedural rulings and the adjudicator’s refusal to provide a Zoom recording gave rise to a reasonable apprehension of bias.
The Divisional Court dismissed the application. The Court held that judicial review under section 13.18(5) is “not a re-hearing de novo” but rather “a review of the decision in light of the record below.” Applying a reasonableness review standard to the adjudicator’s substantive findings and a correctness review standard to procedural fairness grounds within the constraints of section 13.18(5)5, the Court concluded that the adjudicator acted within his jurisdiction and followed the procedures applicable to adjudication.
On the “complex, multi-issue disputes” argument, the Court held that the adjudicator’s finding that Gay Co.’s claim concerned two payment claims, not the underlying defences, was reasonable. The Court noted that allowing an owner’s defence raising multiple complex issues to defeat the claim would “defeat the prompt payment provisions.”
On procedural fairness, the Court examined Sayers’ complaints about the order of submissions, the upload of the contract to the ODACC portal, cross-examination, and evidentiary standard. The Court concluded that none of the alleged failures amounted to breaches of procedures “to which the adjudication was subject” under section 13.18(5)5, and in any event, no prejudice was shown.
On irreparable harm, the Court rejected Sayers’ argument that the adjudicator erred by failing to consider irreparable harm and balance of convenience. The Court noted that prompt-payment determinations are not interlocutory injunctions. Rather, adjudication is a statutory payment mechanism, not an equitable remedy. Adjudicators are not required to assess irreparable harm or balance of convenience.
On fraud, the Court held that Sayers’ arguments were unfounded. Gay Co.’s positions in other litigation were not inconsistent in any dishonest way, the statutory declarations were not false when made, and nothing in Gay Co.’s conduct amounted to fraud capable of setting aside the determination.
On bias, the Court rejected Sayers’ allegations. The Court concluded that there was no duty to record or disclose hearing recordings and that nothing in the reasons suggested predisposition on the part of the adjudicator. The application was therefore dismissed, and the Court ordered the funds held in court to be released to Gay Co. in satisfaction of the adjudication determination.
Key takeaways
This decision confirms the high level of deference granted to adjudicators under Ontario’s prompt‑payment regime and reinforces that adjudication is a practical and effective tool for ensuring timely payment. It further confirms that “complexity of a dispute does not oust an Adjudicator’s jurisdiction to decide that dispute if it is necessary to do so to rule on a matter properly the subject of an adjudication” which means that parties cannot avoid an adjudication simply because the underlying issues are complicated. If the matter must be addressed to resolve the payment dispute, the adjudicator can—and will—decide it.
Contractors and subcontractors should treat adjudication as another tool in their toolbox to secure cashflow, even where delay-based set-off claims are raised. Owners wishing to rely on set-off must ensure that their contractual delay and set‑off rights are clearly drafted, and that any set‑off is substantiated within the adjudication itself.
While parties remain free to pursue full delay and damages claims through litigation or arbitration, those disputes can proceed later, after payment flows in accordance with the adjudicator’s interim determination.
For more information on this topic, please contact the authors, Karen Groulx, Dragana Cerovina and Ekin Cinar.
