An order to pay is an order to pay – payment into lawyer’s trust not sufficient for adjudication order

In the decision of High Tech Power Inc. v. BDA Inc., 2024 ONSC 4327, the court recently re-affirmed that adjudications under the Construction Act are to be upheld and that a party ordered by an adjudicator to pay money must make that payment to the successful party.

Background

In this case, High Tech Power Inc. (“High Tech”) was successful on a Construction Act adjudication claim of $316,960.26. The contractor, BDA Inc. (“BDA”), paid this amount to its own lawyers to be held in trust. $161,037.68 from the amount paid to BDA’s lawyers was released to satisfy a debt owed by High Tech to its unionized workers. The remaining amount, $155,922.58, continued to be held by BDA’s lawyers and was not released to High Tech due to other pending litigation.

In addition to the adjudication, High Tech registered a lien against the project property in the amount of $419,395.24 (more than the amount awarded in the adjudication). BDA vacated the lien from title to the property by posting a lien bond. BDA sought to have the lien bond amount reduced to account for the payment made to its lawyers relating to the adjudication, despite approximately half of the funds still being held by BDA’s lawyers and not paid to High Tech.

The court’s decision

The Construction Act requires a party who is ordered to pay money to another party in an adjudication to make the payment with 10 days after the adjudicator’s determination.

While it was agreed that the amount of the lien bond can be reduced for the $161,037.68 already paid to High Tech, the court decided that the payment by BDA to its own lawyers does not constitute payment of the adjudicator’s determination. The court stated that the goal of an adjudication is to “ensure the flow of money on construction projects is protected”. BDA’s payment to its own lawyers, who are bound to take instructions from BDA, does not meet this goal.

The court ordered BDA to post a new lien bond with a reduced amount to account for the $161,037.68 actually paid to High Tech but was required to maintain the bond for the rest of the lien claim, including amount still held by BDA’s own lawyers.

Key takeaway

This is the newest in a line of cases where the court has upheld adjudication determinations as being payable and enforceable, to meet the goals of the Construction Act. A payment by the unsuccessful party to its own lawyers in trust pending other litigation does not count as a payment to the successful party that was successful on the adjudication.