Alberta Court Clarifies Adjudication Pursuant to the Prompt Payment and Construction Lien Act

Welcome Homes Construction Inc. v. Atlas Granite Inc. (Decision) is the first decision from the Alberta Court of King’s Bench about adjudication pursuant to the Prompt Payment and Construction Lien Act (PPCLA). In the Decision, the court clarified the scope of adjudication and highlighted important differences between the construction adjudication processes in Ontario and Alberta.

Background

Welcome Homes hired Atlas Granite to supply and install marble countertops for a project. A dispute subsequently arose, and Welcome Homes refused to pay for any of the work or materials supplied by Atlas Granite or take delivery of one of the countertops. Welcome Homes then terminated the contract and Atlas Granite filed a lien.

The parties proceeded to adjudication pursuant to the process provided for in the PPCLA and an award was made in favour of Atlas Granite. The parties then brought an application for advice and directions, which resulted in the Decision.

Decision

In the Decision, the court made two key findings that help clarify the adjudication process pursuant to the PPCLA in Alberta.

First, the court held that an adjudicator pursuant to the adjudication process determines only contractual rights, not lien rights. As a result, the court held that adjudication is only permitted between contractual counterparties. It is not permitted between parties who do not share privity of contract, such as a subcontractor and an owner, where lien rights are the only basis for a claim.

Second, the court made clear that adjudication decisions in Alberta are final and binding unless a court, arbitrator or agreement between the parties provides for a different outcome. This differs from Ontario, where adjudication decisions are interim decisions that are only temporarily binding.

Key Takeaways

There are two key takeaways from the Decision:

1. The limitation of the adjudication to contractual counterparties substantially narrows the potential scope for adjudication against project owners. As a result, the court remains the sole avenue for relief for lienholders without direct contractual claims.
2. For parties with access to adjudication, the adjudication process in Alberta provides a quicker and less expensive route to obtaining an enforceable judgment

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