Practical Lessons for Construction Lawyers from Sayers Foods Ltd. v. Gay Company Ltd., 2026 ONSC 918

INTRODUCTION

Ontario’s adjudication regime under the Construction Act was designed to provide rapid, interim resolution of payment disputes in the construction industry. Since the onset of statutory adjudication in 2019, the Divisional Court has been called upon with increasing frequency to delineate the boundaries of judicial oversight of adjudicators’ determinations. Sayers Foods Ltd. v. Gay Company Ltd., 2026 ONSC 918, is not only the latest notable Divisional Court pronouncement on statutory adjudication, but it also addresses matters of general importance beyond the Construction Act: allegations of fraud, delay claims, adjudicator bias and the treatment of evidence on judicial review.

BACKGROUND

Sayers Foods Ltd. (“Sayers”) hired Gay Company Ltd. (“Gay”) under a CCDC 2 Stipulated Price Contract to construct a replacement grocery store after the original building had been destroyed by fire.

Sayers alleged that Gay caused project delays and delivered Notices of Non-Payment under the Construction Act for two of Gay’s invoices notwithstanding the Consultant had certified the disputed invoices. Gay then commenced two statutory adjudication processes under the Construction Act which the parties agreed to consolidate into a single adjudication. The adjudication process included a hearing conducted on Zoom.

The Adjudicator ordered Sayers to pay $685,574.91, plus interest (the “Determination”). The quantum of Gay’s invoices was undisputed; the central issue was whether Sayers had established any basis to withhold payment of the certified invoices.

THE ADJUDICATOR’S DETERMINATION

Sayers gave three reasons for non-payment: it was retaining notice holdback, it believed Gay had delivered false statutory declarations, and it intended to claim against Gay for delay costs.

On notice holdback, the Adjudicator found that Sayers acknowledged there was no written notice of lien in the prescribed form, and that its counsel agreed there was no obligation to retain notice holdback.[1]

On the alleged false statutory declarations, the Adjudicator found that they were accurate when submitted and noted he was “reluctant to make any such finding of fraud or untrue statement” absent cross-examination—an important practical consideration for parties alleging fraud in adjudication.

On delay, which the Adjudicator considered the “primary reason for non-payment,” he found there was no contractually binding schedule and that Sayers did not follow the contractual process for claiming a credit for delay.

PRELIMINARY ISSUES AT THE DIVISIONAL COURT

1. Approach to Facts on Judicial Review

The Divisional Court took issue with Sayers providing a summary of facts citing the adjudication record rather than the Determination. On judicial review, the starting point is the Adjudicator’s findings of fact and analysis—it is not a new hearing. Sayers’s approach amounted to an attempt to re-argue the adjudication rather than explaining why the Adjudicator’s findings were unreasonable in light of the record. The Divisional Court has clarified that facts in a judicial review are derived from the adjudicator’s determination, just as on an appeal the factual record is derived from the lower court decision. To overturn facts as established by an adjudicator requires palpable, overriding error.

2. Introduction of New Evidence

The Divisional Court rejected Sayers’s argument that a more permissive standard for the introduction of fresh evidence should apply for judicial reviews of Construction Act adjudications. Sayers argued that the short timeframes for adjudication caused unfairness, but the Divisional Court declined to relax the general standard. It found the proposed fresh evidence would not have impacted the outcome in any event, and that if Sayers had complied with its contractual obligations in a timely manner, it would have had the evidence prior to the adjudication. The Divisional Court also declined to admit the evidence because it contained impermissible material, including factual and legal argument, inadmissible opinion evidence, and hearsay.

ARGUMENTS ON THE MERITS

Sayers applied to the Divisional Court for judicial review, relying on numerous grounds including the Adjudicator’s treatment of Sayers’ three reasons for non-payment.

1. Notice Holdback

The Divisional Court found the Adjudicator’s analysis was reasonable: notice holdback obligations for an owner do not arise unless written notice of lien is given in the prescribed form. Sayers’s argument that its discovery of liens registered on title constituted such notice is wrong in law, and there was no evidence it had received written notices of lien in the prescribed form.

2. Alleged Fraudulent Misrepresentation

Sayers argued that Gay was dishonest for arguing in a dispute with its subcontractor that the subcontractor was offside a construction schedule while denying the existence of an agreed schedule in the dispute with Sayers. The Divisional Court disagreed: subcontract terms do not have to mirror the prime contract, a subcontractor could be bound by a schedule while the contractor is not, and it is not dishonest for Gay to take the position that it incurred losses from subcontractor delay while maintaining it has no contractual liability to the owner for delay. Parties are entitled to advance alternative theories in litigation.

3. False Statutory Declarations

The Adjudicator found that the statutory declarations were true at the time they were made. The Divisional Court agreed, finding that the failure to pay subcontractors by the time of the adjudication was a consequence of Sayers’s failure to pay Gay, not dishonesty justifying non-payment.

PROCEDURAL FAIRNESS ARGUMENTS

1. Adjudicating Multiple and Complex Matters

Sayers argued that adjudication may only address a single matter. This was rejected because both parties consented to consolidation, and the subject matter does not change because of a defence. While the Court acknowledged that pursuing a set-off defence in adjudication may be challenging, it stated that “[o]wners who wish to be able to pursue a set-off claim for delay, in the context of a prompt payment adjudication, will bear the burden, in the adjudication, of establishing the contractual basis of their entitlement.” Sayers was not precluded from pursuing its delay claim in court.

2. Reversing the Order of Submissions

Sayers argued it was unfair that it was required to submit its case first. The Divisional Court disagreed: the only substantive issue was Sayers’s defence, for which it bore the burden of proof, and the party bearing the burden usually goes first. In any event, the order was agreed by the parties.

3. Non-Compliance with Section 13.11 and GC 6.6

Sayers challenged Gay’s compliance with section 13.11 of the Construction Act regarding provision of the contract to the adjudicator. The Divisional Court found no procedural fairness issue, as Sayers had an opportunity to address the matter, and any issues with the version should have been apparent at the outset.

Sayers also raised an argument regarding its failure to advance its claim for credit under GC 6.6 of the Contract. The Divisional Court stated this was not a question of procedural fairness and accordingly not within the court’s prescribed jurisdiction for judicial review. The Court commented that the Adjudicator’s concern was not that Sayers failed to “complete” its claim, but that it failed to “advance” it over the nine months between giving notice and the adjudication.

STANDARD OF PROOF AND THE INJUNCTION ANALOGY

Sayers argued that adjudications are akin to injunctions and the “serious issue to be tried” standard should apply to defences. The Divisional Court rejected this. It said a better analogy would be an award for interim support in family law: the legislature has concluded that payment cannot await a fulsome trial, and money must continue to flow. Holding that prompt payment adjudication is unavailable whenever an owner advances a complex delay claim would defeat the purpose of adjudication. The Divisional Court also noted that owners can protect themselves from risks associated with prompt payment through contractual terms, including processes for determination and remedies, and performance bonds.

REASONABLE APPREHENSION OF BIAS

Sayers argued the Adjudicator was biased, pointing in part to his refusal to release a Zoom recording of oral submissions. The Divisional Court found there is no obligation on an adjudicator to record argument, keep a recording, or release it. The Divisional Court responded to the assertion that the reasons read like a pre-decided result by noting that “[r]easons are not supposed to set out the intellectual journey of the decision-maker. They are not a chronicle of thehearing. They are a decision, supported by reasons.” Nevertheless, the Divisional Court cautioned that in future cases it would be helpful for adjudicators to issue a record of important concessions or determinations made before the conclusion of the hearing.

SERVICE OBLIGATIONS FOLLOWING LEAVE TO APPEAL

The Divisional Court noted that where leave for judicial review has been granted, the applicant must serve the Notice of Application on the Ontario Attorney General under the Judicial Review Procedure Act and should serve a copy on the Ontario Dispute Adjudication for Construction Contracts.

CONCLUSION

Sayers Foods reinforces that judicial review of adjudication determinations is narrow in scope, that fresh evidence will be admitted only in exceptional circumstances, and that parties must present their best case during the adjudication and not hope for a re-hearing on judicial review. The case underscores the importance of thorough preparation, strict adherence to contractual procedures, and realistic expectations about the limited grounds on which adjudication determinations may be challenged. It should be noted, however, that Sayers has sought leave to appeal to the Ontario Court of Appeal.

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