construction liens april 14, 2004 afternoon session

Construction Liens Construction Liens

April 14, 2004April 14, 2004

Afternoon SessionAfternoon Session

The more things change, the The more things change, the more they are the samemore they are the same

(Plus (Plus çça change, plus c’est la a change, plus c’est la mmême choseême chose))

Alphonse Karr, Alphonse Karr, Les GuLes Guêpesêpes,, 1849 1849

Part I – GeneralPart I – General

WHY?WHY?

A. G’s Committee ReportA. G’s Committee Report::

““The need […] emanates from the The need […] emanates from the complicated nature of contractual complicated nature of contractual relationships within the construction relationships within the construction industry, and the credit-granting practices industry, and the credit-granting practices which are an integral part of that industry. which are an integral part of that industry. Ordinary contractual remedies are Ordinary contractual remedies are believed to be inadequate in the face of believed to be inadequate in the face of these phenomena.”these phenomena.”

WHY?WHY?

A. G’s Committee Report:A. G’s Committee Report:

““The major objective […] is to provide The major objective […] is to provide remedies to construction suppliers that go remedies to construction suppliers that go beyond those provided by the ordinary law beyond those provided by the ordinary law of contract. The legislation creates two of contract. The legislation creates two types of statutory rights: lien rights and types of statutory rights: lien rights and trust rights.”trust rights.”

WHY?WHY?

A. G’s Committee ReportA. G’s Committee Report::

““Should the owner be unable or unwilling Should the owner be unable or unwilling to pay for the work that has been done, his to pay for the work that has been done, his interest in the premises may be sold. The interest in the premises may be sold. The trust rights isolate contract monies, and trust rights isolate contract monies, and require them to be used for paying require them to be used for paying suppliers who have contributed towards suppliers who have contributed towards the making of an improvement.”the making of an improvement.”

Where?Where?

Construction of the White House, 1792

First AnywhereFirst Anywhere: Maryland, 1791: Maryland, 1791

First in CanadaFirst in Canada: Ontario & Manitoba, : Ontario & Manitoba, 18731873

First major amendment in OntarioFirst major amendment in Ontario: : 19831983

WHAT?WHAT?

KEY DEFINITIONSKEY DEFINITIONS

Privity of ContractPrivity of Contract

"contract" = the contract between the "contract" = the contract between the owner and the contractorowner and the contractor

““Home BuyerHome Buyer””

. . . a person who buys the interest of an . . . a person who buys the interest of an owner in a premises that is a home, whether owner in a premises that is a home, whether built or not at the time the agreement of built or not at the time the agreement of purchase and sale in respect thereof is entered purchase and sale in respect thereof is entered into, into, providedprovided, ,

(a) not more than 30 per cent of the purchase price (a) not more than 30 per cent of the purchase price . . . is paid prior to the conveyance, . . . is paid prior to the conveyance, andand

(b) the home is not conveyed until it is ready for (b) the home is not conveyed until it is ready for occupancy, . . . occupancy, . . .

““MaterialsMaterials””

. . . every kind of movable property, . . . every kind of movable property, (a) that becomes, or is intended to become, (a) that becomes, or is intended to become,

part of the improvement, or that is used part of the improvement, or that is used directly in the making of the improvement, directly in the making of the improvement, or that is used to facilitate directly the or that is used to facilitate directly the making of the improvement,making of the improvement,

(b) that is equipment rented without an (b) that is equipment rented without an operator for use in the making of the operator for use in the making of the improvement;improvement;

““OwnerOwner””

. . . any person, including the Crown, . . . any person, including the Crown, having an interest in a premises at whose having an interest in a premises at whose request request andand, , (a) upon whose credit, (a) upon whose credit, oror(b) on whose behalf, (b) on whose behalf, oror(c) with whose privity or consent, (c) with whose privity or consent, oror(d) for whose direct benefit,(d) for whose direct benefit,an improvement is made to the premises an improvement is made to the premises but does not include a home buyerbut does not include a home buyer

““Person Having a LienPerson Having a Lien””

. . . includes both a lien claimant and . . . includes both a lien claimant and a person with an unpreserved lien. a person with an unpreserved lien.

““PremisesPremises””

. . . includes, . . . includes,

(a) the improvement,(a) the improvement,

(b) all materials supplied to the (b) all materials supplied to the improvement, improvement, andand

(c) the land occupied by the improvement, or (c) the land occupied by the improvement, or enjoyed therewith, or the land upon or in enjoyed therewith, or the land upon or in respect of which the improvement was respect of which the improvement was done or made;done or made;

““PricePrice””

. . . means the price, . . . means the price,

(a) agreed upon between the parties, (a) agreed upon between the parties, oror

(b) where no specific price has been (b) where no specific price has been agreed upon between them, the actual agreed upon between them, the actual value of the services or materials that value of the services or materials that have been supplied to the improvement have been supplied to the improvement under the contract or subcontractunder the contract or subcontract

““Supply of ServicesSupply of Services””

. . . means any work done or service . . . means any work done or service performed upon or in respect of an improvement, performed upon or in respect of an improvement, andand includes, includes,

(a) the rental of equipment with an operator, (a) the rental of equipment with an operator, andand

(b) where the making of the planned improvement (b) where the making of the planned improvement is not commenced, the supply of a design, plan, is not commenced, the supply of a design, plan, drawing or specification that in itself enhances the drawing or specification that in itself enhances the value of the owner's interest in the land,value of the owner's interest in the land,

““Written Notice of LienWritten Notice of Lien””

. . . includes a claim for lien and any written . . . includes a claim for lien and any written notice given by a person having a lien that, notice given by a person having a lien that,

(a) identifies the payer and identifies the (a) identifies the payer and identifies the premises, premises, andand

(b) states the amount that the person has not (b) states the amount that the person has not been paid and is owed to the person by the been paid and is owed to the person by the payer. payer.

Substantial PerformanceSubstantial Performance

s. 2(1): s. 2(1): . . . a contract is substantially performed, . . . a contract is substantially performed,

(a)(a) when the improvement to be made under that contract or when the improvement to be made under that contract or a substantial part thereof is ready for use a substantial part thereof is ready for use oror is being used is being used for the purposes intended; for the purposes intended; andand

(b)(b) when the improvement to be made under that contract is when the improvement to be made under that contract is capable of completion or, where there is a known defect, capable of completion or, where there is a known defect, correction, at a cost of not more than,correction, at a cost of not more than,

(i)3 per cent of the first $500,000 of the contract (i)3 per cent of the first $500,000 of the contract price,price,

(ii)2 per cent of the next $500,000 of the contract (ii)2 per cent of the next $500,000 of the contract price, andprice, and

(iii)1 per cent of the balance of the contract price.(iii)1 per cent of the balance of the contract price.

CompletionCompletion

s. 2(3):s. 2(3): . . . a contract shall be deemed to be . . . a contract shall be deemed to be

completed and services or materials shall be completed and services or materials shall be deemed to be last supplied to the improvement deemed to be last supplied to the improvement when the price of completion, correction of a when the price of completion, correction of a known defect or last supply is not more than the known defect or last supply is not more than the lesser of, lesser of, (a)1 per cent of the contract price; and(a)1 per cent of the contract price; and(b)$1,000.(b)$1,000.

KEY CONCEPTSKEY CONCEPTS

Section 3Section 3

This statute binds the This statute binds the provincial Crown. provincial Crown.

Section 4Section 4

Waivers of lien are void – no Waivers of lien are void – no matter what!matter what!

Section 5Section 5

Every contract or subcontract is Every contract or subcontract is deemed amended to conform to deemed amended to conform to the Act. the Act.

AND FINALLY,AND FINALLY,

COLD COMFORTCOLD COMFORT

Section 6Section 6

Strict complianceStrict compliance, except:, except:

s. 32(2)(5) and 33(1)– Certificate of s. 32(2)(5) and 33(1)– Certificate of Substantial Performance and its Substantial Performance and its PublicationPublication

S. 34(5) – Contents of Claim for LienS. 34(5) – Contents of Claim for Lien

Section 6Section 6

… … unless in the opinion of the unless in the opinion of the court a person has been court a person has been prejudiced by the failure to strictly prejudiced by the failure to strictly complycomply..

Part II – Trust Part II – Trust

Part II – Trust Part II – Trust

Think of each improvement as a cash silo:All cash goes in at the top (owner)All cash comes out at the bottom (least degree of priority).

Part II – TrustPart II – Trust

4 KEY CASES4 KEY CASES

Minneapolis-Honeywell Minneapolis-Honeywell Regulator Co. v. Empire Regulator Co. v. Empire Brass Manufacturing Co.Brass Manufacturing Co.

[1955] 3 D.L.R. 561 (S.C.C.)[1955] 3 D.L.R. 561 (S.C.C.)

““. . . too often the contract price has . . . too often the contract price has been paid in full and the security of the been paid in full and the security of the land is gone. It is to meet that situation land is gone. It is to meet that situation that s. 19 [contractor’s trust] has been that s. 19 [contractor’s trust] has been added. The contractor and sub-added. The contractor and sub-contractor are made trustees of the contractor are made trustees of the contract moneys and the trust continues contract moneys and the trust continues while employees, material men or while employees, material men or others remain unpaid.” others remain unpaid.”

““. . .. . .payment is the correlative of receipt. payment is the correlative of receipt. The assignee acts through the right and The assignee acts through the right and power of the assignor; and the receipt power of the assignor; and the receipt by him is likewise that by the creditor. If by him is likewise that by the creditor. If this were not so, the entire purpose of this were not so, the entire purpose of the section could be nullified by an the section could be nullified by an assignment contemporaneous with the assignment contemporaneous with the contract.”contract.”

Rudco Insulation Ltd. v. Rudco Insulation Ltd. v. Toronto Sanitary IncToronto Sanitary Inc. (1998), . (1998),

42 O.R. (3d) 292 (C.A.)42 O.R. (3d) 292 (C.A.)

. . . applying a strict interpretation to the . . . applying a strict interpretation to the provisions in ss. 8 and 10 of the Act and provisions in ss. 8 and 10 of the Act and considering the purpose of the legislation, I considering the purpose of the legislation, I am of the view that Part II of the Act did not am of the view that Part II of the Act did not confer trust benefits on the recipients of the confer trust benefits on the recipients of the overhead expenses and payments to them overhead expenses and payments to them did not reduce . . . trust obligations . . .did not reduce . . . trust obligations . . .

Structural Contractors Ltd. v. Structural Contractors Ltd. v. Westcola Holdings Inc.Westcola Holdings Inc.

(2000), 48 O.R. (3d) 417 (Ont. (2000), 48 O.R. (3d) 417 (Ont. C.A.)C.A.)

Westcola is essentially a landlord. Rent is Westcola is essentially a landlord. Rent is not an incidental matter to it. Rent is its not an incidental matter to it. Rent is its lifeblood, its lifeblood, its raison d'êtreraison d'être. To exclude rent . To exclude rent from the trust in the case of a landlord from the trust in the case of a landlord would be to exclude Westcola from the would be to exclude Westcola from the application of s. 7. No justification has been application of s. 7. No justification has been suggested for such a step.suggested for such a step.

Teepee Excavation & Grading Teepee Excavation & Grading Ltd. v. Niran Construction LtdLtd. v. Niran Construction Ltd. . (2000), 49 O.R. (3d) 612 (C.A.)(2000), 49 O.R. (3d) 612 (C.A.)

““. . . but where all of the steps have . . . but where all of the steps have been taken and a conclusion reached at been taken and a conclusion reached at a hearing, the court should not dismiss a hearing, the court should not dismiss the action for lack of a lien claim and the action for lack of a lien claim and thus compel a further proceeding thus compel a further proceeding concerning the same issue . . . the concerning the same issue . . . the court has available the discretion to court has available the discretion to dismiss or to permit the action to dismiss or to permit the action to proceed without the lien claim, as the proceed without the lien claim, as the circumstances dictate.”circumstances dictate.”

s. 13s. 13

Part II – Trust ProvisionsPart II – Trust Provisions

The Hammer:The Hammer:s. 13(1): In addition to the persons who are s. 13(1): In addition to the persons who are otherwise liable in an action for breach of trust otherwise liable in an action for breach of trust under this Part, under this Part, (a) every director or officer of a corporation; and(a) every director or officer of a corporation; and(b) any person, including an employee or agent (b) any person, including an employee or agent of the corporation, who has effective control of a of the corporation, who has effective control of a corporation or its relevant activities,corporation or its relevant activities,who assents to, or acquiesces in, conduct that who assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know he or she knows or reasonably ought to know amounts to breach of trust by the corporation is amounts to breach of trust by the corporation is liable for the breach of trust. liable for the breach of trust.

Baltimore Aircoil of Canada Inc. v. ESD Baltimore Aircoil of Canada Inc. v. ESD Industries IncIndustries Inc. (2002), 60 O.R. (3d) 290 . (2002), 60 O.R. (3d) 290

(S.C.J.)(S.C.J.)Section 13 is not a restatement of the common Section 13 is not a restatement of the common lawlawAt common law, if a corporation breaches a At common law, if a corporation breaches a trust, in order to pass that liability on to directors trust, in order to pass that liability on to directors and officers, it is necessary to prove that they and officers, it is necessary to prove that they are constructive trusteesare constructive trusteesUnder s. 13, that level of proof is not necessaryUnder s. 13, that level of proof is not necessaryAll that needs to be shown is that individuals All that needs to be shown is that individuals belonged to the defined group and assented to belonged to the defined group and assented to or acquiesced in the corporation’s conductor acquiesced in the corporation’s conduct

Dominion Sheet Metal & Roofing Works v. Dominion Sheet Metal & Roofing Works v. 4701 Steeles Holdings Inc4701 Steeles Holdings Inc. (2002), 21 . (2002), 21

C.L.R. (3d) 250 (Ont. S.C.J.)C.L.R. (3d) 250 (Ont. S.C.J.)

It is not necessary for a plaintiff to prove It is not necessary for a plaintiff to prove that it suffered damages from the alleged that it suffered damages from the alleged breach of trust in order to hold a defendant breach of trust in order to hold a defendant liable under s. 13.liable under s. 13.

Structural Contracting Ltd. v. Westcola Structural Contracting Ltd. v. Westcola Holdings IncHoldings Inc. (2000), 48 O.R. (3d) 417 . (2000), 48 O.R. (3d) 417

(C.A.)(C.A.)

A trial was not necessary to establish that A trial was not necessary to establish that a sole director assented to or acquiesced a sole director assented to or acquiesced in conduct he knew or reasonably ought to in conduct he knew or reasonably ought to have known amounted to breach of trust. have known amounted to breach of trust. As the sole officer, director and controlling As the sole officer, director and controlling mind of the corporation, it was beyond mind of the corporation, it was beyond argument that he reasonably ought to argument that he reasonably ought to have known that the trust was breached.have known that the trust was breached.

Part III – The LienPart III – The Lien

Part III – The Lien Part III – The Lien All You Need to Know!All You Need to Know!

s. 14(1):s. 14(1): No lien for interest No lien for interest

Part III – The Lien Part III – The Lien All You Need to KnowAll You Need to Know

s. 15s. 15: Your lien “arises” and : Your lien “arises” and “subsists” unless and until it “subsists” unless and until it

“expires”.“expires”.


s. 16s. 16: You can lien the Crown : You can lien the Crown (but not its land).(but not its land).


s. 17s. 17: No set off against : No set off against holdback, otherwise . . . knock holdback, otherwise . . . knock

yourself out.yourself out.


s. 19s. 19: You can lien a lease!: You can lien a lease!

Part IV - HoldbacksPart IV - Holdbacks

Part IV – HoldbacksPart IV – Holdbacks

The Serene Centre of the Lien Act


s. 22s. 22: : Two holdbacks: Basic and Two holdbacks: Basic and FinishingFinishing


s. 23s. 23: : Two defaulting payers: Two defaulting payers: contractors and subcontractorscontractors and subcontractors


s. 23s. 23: : Two limitations on owner’s Two limitations on owner’s liability for holdbackliability for holdback

s. 23(2): Limitations. 23(2): Limitation

(2) Where the defaulting payer is the (2) Where the defaulting payer is the contractor, the owner's personal liability to contractor, the owner's personal liability to a lien claimant or to a class of lien a lien claimant or to a class of lien claimants as defined by section 79 does claimants as defined by section 79 does not exceed the holdbacks the owner is not exceed the holdbacks the owner is required to retain. required to retain.

s. 23(3): Limitations. 23(3): Limitation

(3) Where the defaulting payer is a (3) Where the defaulting payer is a subcontractor, the owner's personal liability to a subcontractor, the owner's personal liability to a lien claimant or to a class of lien claimants as lien claimant or to a class of lien claimants as defined by section 79 does not exceed defined by section 79 does not exceed the the lesser oflesser of, , (a) the holdbacks the owner is required to retain; (a) the holdbacks the owner is required to retain; andand (b) the holdbacks required to be retained by the (b) the holdbacks required to be retained by the contractor or a subcontractor from the lien contractor or a subcontractor from the lien claimant's defaulting payer.claimant's defaulting payer.

s. 30: s. 30: No set-off against holdbackNo set-off against holdback

““Where the contractor or a subcontractor defaults in the Where the contractor or a subcontractor defaults in the performance of a contract or subcontract, a holdback performance of a contract or subcontract, a holdback shall not be applied by any payershall not be applied by any payer toward obtaining toward obtaining services or materials in substitution for those that were to services or materials in substitution for those that were to have been supplied by the person in default, nor in have been supplied by the person in default, nor in payment or satisfaction of any claim against the person payment or satisfaction of any claim against the person in default, until all liens that may be claimed against that in default, until all liens that may be claimed against that holdback have expired as provided in Part V, or have holdback have expired as provided in Part V, or have been satisfied, discharged or provided for under section been satisfied, discharged or provided for under section 44 (payment into court).”44 (payment into court).”

Part V – Expiry, Preservation and Part V – Expiry, Preservation and PerfectionPerfection

s. 31(2) Expiration


31(2) (a)31(2) (a) Is the contract certified? Is the contract certified?

If so the liens expire at the conclusion of the If so the liens expire at the conclusion of the forty-five-day period next following the forty-five-day period next following the occurrence of occurrence of the earlier ofthe earlier of,,

(i) the date on which the certificate is (i) the date on which the certificate is published; published; andand

(ii) the date the contract is completed (ii) the date the contract is completed or or abandoned; abandoned;


31(2) (b)31(2) (b) If not certified, then If not certified, then the earlier ofthe earlier of,,

(i) the date the contract is completed, (i) the date the contract is completed,

andand

(ii) the date the contract is (ii) the date the contract is abandoned.abandoned.

s. 31(3) Expiration

31(3) For everyone else, 31(3) For everyone else,

(a) (a) if certifiedif certified, the 45 days runs , the 45 days runs from the earliest of,from the earliest of,

(i) (i) publicationpublication

(ii) (ii) last supplylast supply

(iii) (iii) subcontract certified undersubcontract certified under

s. 33; s. 33;

31(3) For everyone else, 31(3) For everyone else,

(b) (b) If not certifiedIf not certified, the 45 days runs , the 45 days runs from from the earliest ofthe earliest of,,

(i) (i) last supplylast supply

(ii) (ii) subcontract certified subcontract certified complete under s. 33.complete under s. 33.


s. 37 Expiration

s. 37s. 37

37(1)37(1) A perfected lien A perfected lien expiresexpires immediately immediately after the second anniversary of the after the second anniversary of the commencement of the action that perfected commencement of the action that perfected the lien, the lien, unlessunless one of the following occurs one of the following occurs on or before that anniversary: on or before that anniversary:

1. An order is made for the trial of an 1. An order is made for the trial of an action in which the lien may be action in which the lien may be

enforced.enforced.

2. An action in which the lien may be 2. An action in which the lien may be enforced is set down for trial. enforced is set down for trial.

s. 37s. 37Forget equities. Forget equities. Forget estoppel. Forget estoppel. Forget process arguments. Forget process arguments. The lien is gone.The lien is gone.

Graham Brothers Construction Ltd. v. Graham Brothers Construction Ltd. v. Correct Building CorpCorrect Building Corp. (1991), 46 . (1991), 46

C.L.R. 205 (Ont. Gen. Div.).C.L.R. 205 (Ont. Gen. Div.).

Parties are in the midst of negotiations for Parties are in the midst of negotiations for settlement when two-year period expiredsettlement when two-year period expired

Lien discharged, registration vacatedLien discharged, registration vacated

Golden City Ceramic & Tile Co. v. Iona Golden City Ceramic & Tile Co. v. Iona CorpCorp. (1993), 12 C.L.R. (2d) 1 (Ont. . (1993), 12 C.L.R. (2d) 1 (Ont.

Div. Ct.).Div. Ct.).

Parties are in the midst of long Parties are in the midst of long examinations for discovery when two-year examinations for discovery when two-year period expiredperiod expired

Lien discharged, registration vacatedLien discharged, registration vacated

Part VI – Right to InformationPart VI – Right to Information


A.G.’s Committee ReportA.G.’s Committee Report: :

We suggest that the Act should require We suggest that the Act should require disclosure of only that information which is disclosure of only that information which is pertinent to the decision of whether or not pertinent to the decision of whether or not to preserve a lien claim or to pursue a lien to preserve a lien claim or to pursue a lien action. action. These provisions should be These provisions should be reinforced with workable enforcement reinforced with workable enforcement mechanismsmechanisms..


Result:Result:

s. 39s. 39 + $5.00 gets you a cup of coffee + $5.00 gets you a cup of coffee

s. 40s. 40: gets you cross-examination: gets you cross-examination

Part VII – Discharge of Preserved Part VII – Discharge of Preserved and Perfected Liensand Perfected Liens


How?How?

s. 41(1):s. 41(1): by a deed of Release by a deed of Release


How?How?

s. 41(2):s. 41(2): by withdrawal of written by withdrawal of written notice of liennotice of lien


How?How?

s. 43:s. 43: by formal Postponement of by formal Postponement of LienLien


How?How?

s. 44:s. 44: by paying into court by paying into court (“Vacating”)(“Vacating”)


How?How?

s. 45:s. 45: by court declaration by court declaration


How?How?

s. 47:s. 47: any other way you want any other way you want


How?How? s. 48:s. 48: “ “A discharge of a lien under this Part is A discharge of a lien under this Part is

irrevocable and the discharged lien cannot be irrevocable and the discharged lien cannot be revivedrevived, but no discharge affects the right of the , but no discharge affects the right of the person whose lien was discharged to claim a person whose lien was discharged to claim a lien in respect of services or materials supplied lien in respect of services or materials supplied by the person subsequent to the preservation of by the person subsequent to the preservation of the discharged lien.”the discharged lien.”


s. 48 Discharge


Southridge Construction Group Inc. v. Southridge Construction Group Inc. v. 667293 Ontario Ltd667293 Ontario Ltd. (1993), 12 O.R. . (1993), 12 O.R. (3d) 233 (Div. Ct.)(3d) 233 (Div. Ct.)


Facts:Facts:

Plaintiff general contractor registered against the property Plaintiff general contractor registered against the property of the defendant a lien for $175,095.38. of the defendant a lien for $175,095.38.

When the plaintiff subsequently discovered that it had When the plaintiff subsequently discovered that it had mistakenly understated the amount of its lien, it mistakenly understated the amount of its lien, it registered a second lien for $279,540.43 for construction registered a second lien for $279,540.43 for construction or contracting services supplied from May 13, 1991 to or contracting services supplied from May 13, 1991 to February 26, 1992 and discharged the first lien by February 26, 1992 and discharged the first lien by registering a release of lien. registering a release of lien.


Decision:Decision:

““ The plaintiff's lien rights set forth in its second The plaintiff's lien rights set forth in its second claim for lien have been eliminated and claim for lien have been eliminated and discharged by the registration of the Release, discharged by the registration of the Release, and cannot be revived, and thus, the lien must and cannot be revived, and thus, the lien must be ordered discharged, and the registration of be ordered discharged, and the registration of the lien and certificate of action must be the lien and certificate of action must be vacated and the plaintiff's action must be vacated and the plaintiff's action must be dismissed.” dismissed.”


Decision:Decision:

““ The plaintiff's lien rights set forth in its second The plaintiff's lien rights set forth in its second claim for lien claim for lien have been eliminated and have been eliminated and dischargeddischarged by the registration of the Release, by the registration of the Release, and cannot be revived, and thus, the lien must and cannot be revived, and thus, the lien must be ordered discharged, and the registration of be ordered discharged, and the registration of the lien and certificate of action must be the lien and certificate of action must be vacated and the plaintiff's action must be vacated and the plaintiff's action must be dismissed.” dismissed.”


Decision:Decision:

““ The plaintiff's lien rights set forth in its second The plaintiff's lien rights set forth in its second claim for lien claim for lien have been eliminated and have been eliminated and dischargeddischarged by the registration of the Release, by the registration of the Release, and and cannot be revivedcannot be revived, and thus, the lien must , and thus, the lien must be ordered discharged, and the registration of be ordered discharged, and the registration of the lien and certificate of action must be the lien and certificate of action must be vacated and the plaintiff's action must be vacated and the plaintiff's action must be dismissed.” dismissed.”


Decision:Decision:

““ The plaintiff's lien rights set forth in its second The plaintiff's lien rights set forth in its second claim for lien claim for lien have been eliminated and have been eliminated and dischargeddischarged by the registration of the Release, by the registration of the Release, and and cannot be revivedcannot be revived, and thus, the lien must , and thus, the lien must be ordered discharged, and the registration of be ordered discharged, and the registration of the lien and certificate of action must be the lien and certificate of action must be vacated and the vacated and the plaintiff's action must be plaintiff's action must be dismisseddismissed.” .”

Part VIII – Jurisdiction and Part VIII – Jurisdiction and ProcedureProcedure

Master Calum Master Calum McLeodMcLeod

Part IX – Extraordinary RemediesPart IX – Extraordinary Remedies

Part IX – Extraordinary RemediesPart IX – Extraordinary Remedies

s. 68s. 68: Receiver & Manager: Receiver & Manager

s. 69s. 69: Labour and Material : Labour and Material Payment BondsPayment Bonds

Part X - AppealsPart X - Appeals


s. 70:s. 70: Stated Case Stated Case

Celebrity Flooring Systems Ltd. v. One Celebrity Flooring Systems Ltd. v. One Shaftesbury Community AssociationShaftesbury Community Association (2003), 25 C.L.R. (3d) 279 (Ont. Master)(2003), 25 C.L.R. (3d) 279 (Ont. Master)


71(3) No appeal lies from,71(3) No appeal lies from,(a) a judgment or an order on a motion to (a) a judgment or an order on a motion to oppose confirmation of a report under this oppose confirmation of a report under this Act, where the amount claimed is $1,000 or Act, where the amount claimed is $1,000 or less; orless; or

(b) an interlocutory order made by the (b) an interlocutory order made by the court.court.


s. 71s. 71: Appeal to: Appeal to Divisional CourtDivisional Court

Villa Verde L.M. Masonry Ltd. v. Pier One Villa Verde L.M. Masonry Ltd. v. Pier One Masonry IncMasonry Inc. (2001), 54 O.R. (3d) 76 . (2001), 54 O.R. (3d) 76 (C.A.):(C.A.):

Where a judgment concerns claims only Where a judgment concerns claims only under the Construction Lien Act . . . the under the Construction Lien Act . . . the appeal is to the Divisional Court in all cases appeal is to the Divisional Court in all cases and not to the Court of Appeal for Ontario. and not to the Court of Appeal for Ontario.

Part XI - PrioritiesPart XI - Priorities


What fresh hell is this?


Remember first principlesRemember first principlesNo free rides!No free rides!No unjust enrichment!No unjust enrichment!

Section 78Section 78

Question 1: is it a building Question 1: is it a building mortgage?mortgage?

yesyes: mortgagee loses priority for : mortgagee loses priority for deficiency in holdback, period.deficiency in holdback, period.

nono: go to Question 2: go to Question 2


Question 2Question 2: When did the first lien arise?: When did the first lien arise?

AnswerAnswer: : BeforeBefore mortgage registered or fully mortgage registered or fully advanced? advanced?

mortgagee has priority until lien registered or mortgagee has priority until lien registered or written notice of lien receivedwritten notice of lien received

AnswerAnswer: : AfterAfter mortgage registered and either fully mortgage registered and either fully or partially advanced?or partially advanced?

mortgagee gets mortgagee gets lesserlesser of of

- actual value when first lien arose- actual value when first lien arose

- all advances made without notice- all advances made without notice


Question 3Question 3: Is it a homebuyer’s mortgage?: Is it a homebuyer’s mortgage?

AnswerAnswer: If it is, the above scheme is : If it is, the above scheme is irrelevant and the mortgagee has priorityirrelevant and the mortgagee has priority

Part XII – Miscellaneous RulesPart XII – Miscellaneous Rules

s. 86s. 86

Part XII – Miscellaneous RulesPart XII – Miscellaneous Rules86(1) […] An order as to costs may be made 86(1) […] An order as to costs may be made

against, against, (b) the solicitor or agent of any party to the (b) the solicitor or agent of any party to the

action, application or motion, where the solicitor or action, application or motion, where the solicitor or agent has,agent has,

(i) knowingly participated in the preservation (i) knowingly participated in the preservation or perfection of a or perfection of a lien, or represented a party lien, or represented a party at the trial of an action, where it is at the trial of an action, where it is clear that the clear that the claim for lien is without foundation or is for a claim for lien is without foundation or is for a grossly grossly excessive amount, or that the lien has excessive amount, or that the lien has expired, orexpired, or

(ii) prejudiced or delayed the conduct of the (ii) prejudiced or delayed the conduct of the actionaction

Part XII – Miscellaneous RulesPart XII – Miscellaneous Rules

86(2) Where the least expensive 86(2) Where the least expensive course is not taken by a party, the course is not taken by a party, the costs allowed to the party shall not costs allowed to the party shall not exceed what would have been incurred exceed what would have been incurred had the least expensive course been had the least expensive course been taken. taken.

Discussion PointsDiscussion Points

What can What can youyou do to make the do to make the Construction Lien ActConstruction Lien Act work for work for you and your company?you and your company?

What can What can your lawyeryour lawyer do to make do to make the the Construction Lien ActConstruction Lien Act work for work for you and your company?you and your company?

THE END.THE END.

construction liens april 14, 2004 afternoon session

Documents

planned improvement

lien rights

lien claimant

unpreserved lien

gs committee report

construction industry

construction suppliers

written notice of lien