In search of efficiency: an analysis of adjudication under the Ontario Construction Act

The focus of this dissertation is to analyse the efficiency of the adjudication provisions of the Ontario Construction Act ('CCA') which is to come into force on 1 October 2019. This is achieved through the creation of a bespoke model developed using the law and economics principles of welfare economics and efficiency. Welfare economics is used to determine the most pertinent variables to evaluate whether efficiency, as defined by the model, is achieved. Determinants of social welfare are referred to as utility, which, when evaluated, provide insight into the overall effect of the CA. Through the comparative review of the construction industry in Ontario, Canada with those in England and Wales (‘E.W.’), the main risks of construction are identified as time money quality and unknowns which represent the measures of utility under the model. Efficiency in this dissertation is modelled similarly to Kaldor-Hicks efficiency, which is achieved when the benefits from the CA are deemed to offset any negative externalities. To permit the analysis of the CA, the adjudication experience in E.W., which is deemed the seminal model of adjudication, is analysed to understand the implications to the industry, including its strengths, weaknesses and associated issues. Assumptions made regarding the dissertation are informed through the consultation of academic scholarship on the construction industry in E.W. and Canada. The E.W. experience is first discussed in Chapters 2 through 4: Chapter 2 introduces the E.W. construction sector, Chapter 3 discusses issues associated with adjudication, and Chapter 4 presents the history of adjudication. The Canadian content is provided in Chapters 5 and 6: Chapter 5 provides a summary of the Ontario construction industry, the legislative history of construction dispute resolution in the process and introduces the review which catalysed the introduction of the CA, and Chapter 6 contains the analysis of the CA provisions using the bespoke model developed in Chapter 1. Following the analysis of the CA, it is determined that the relevant provisions of the CA are efficient. Chapter 7 contains an analysis of the future of the construction industry, focusing on technological advancements and how adjudication can maintain its relevancy as a dispute resolution process in the future. This research is important to the scholarship of construction law in both jurisdictions as it provides a method to analyse legislation using a defined method of efficiency. Additionally, there is little scholarship applying an academic lens to construction in Canada, and particularly in Ontario, which is guided by practical texts that provide summaries of the relevant legislative rules for components of construction. Efficiency is a critical aspect of construction which is rarely defined or analysed despite being present in industry and academic sources. Therefore, this dissertation provides a model which may be further developed or applied to legislation in either jurisdiction to understand the effects of provisions on the industry and attempt to bridge the gap between practical and academic sources on construction.