© Duncan W. Glaholt, 2003 An Overview of Construction Liens Duncan W. Glaholt Glaholt LLP

© Duncan W. Glaholt, 2003

An Overview of An Overview of Construction Construction

LiensLiensDuncan W. GlaholtDuncan W. Glaholt

Glaholt LLPGlaholt LLP


Owner’s View of Lien Owner’s View of Lien ClaimantsClaimants

Owner

Lien Claimants


Lien Claimants’ View of Lien Claimants’ View of OwnerOwner


Where did lien legislation Where did lien legislation come from?come from?

Construction of the White House, 1792


Key # 1Key # 1

What What interestsinterests does the Lien Act does the Lien Act attempt to balance?attempt to balance?

1. 1. Public interestPublic interest: not to impede free : not to impede free enterprise but not to allow owners to enterprise but not to allow owners to enrich themselves on the back of enrich themselves on the back of tradestrades

2. 2. Owner’s interestOwner’s interest: not to have land : not to have land interfered with unnecessarilyinterfered with unnecessarily- be able to access capital- be able to access capital- be free of non-privies- be free of non-privies


Key # 1 Key # 1 (continued)(continued)

3. 3. Contractor’s interestContractor’s interest: not to impede : not to impede free enterprise, nor to unjustly free enterprise, nor to unjustly enrich owner, nor to have enrich owner, nor to have bargaining with trades interfered bargaining with trades interfered withwith

4. 4. Trades’ / Suppliers’ interestTrades’ / Suppliers’ interest: Secure : Secure paymentpayment


Key # 2Key # 2 Two solutions to balancing Two solutions to balancing

competing interests:competing interests:

1. 1. PrivatePrivate: Bonding industry: Bonding industry

2. 2. PublicPublic: Lien legislation: Lien legislation


ss. 4 & 5Performance

& Payment

Bonds Lien Bonds Liens

Contracts

HB

Key # 3 – Interaction of Legal Key # 3 – Interaction of Legal SchemesSchemes

Statutory Trusts


Understanding Understanding the Lien Actthe Lien Act

It’s all in the index!It’s all in the index!


Organization of ActOrganization of Act

Part I – GeneralPart I – General Part II – Trust ProvisionsPart II – Trust Provisions Part III – The LienPart III – The Lien Part IV – HoldbacksPart IV – Holdbacks Part V – Expiry, Preservation and Part V – Expiry, Preservation and

Perfection of LiensPerfection of Liens Part VI – Right to InformationPart VI – Right to Information


Organization of ActOrganization of Act

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

Part VIII – Jurisdiction and Part VIII – Jurisdiction and ProcedureProcedure

Part IX – Extraordinary RemediesPart IX – Extraordinary Remedies Part X – AppealsPart X – Appeals Part XI – PrioritiesPart XI – Priorities Part XII – Miscellaneous RulesPart XII – Miscellaneous Rules


Supply of ServicesSupply of Services ""supply of servicessupply of services" means any work done or " means any work done or

service performed upon or in respect of an service performed upon or in respect of an improvementimprovement, and includes, , and includes, (a) the rental of equipment (a) the rental of equipment with an operatorwith an operator, , andand(b) (b) where the making of the planned where the making of the planned improvement is not commencedimprovement is not commenced, the supply , the supply of a design, plan, drawing or specification of a design, plan, drawing or specification that in itself enhancesthat in itself enhances the value of the the value of the owner's interest in the land,owner's interest in the land,and a corresponding expression has a and a corresponding expression has a corresponding meaningcorresponding meaning


ImprovementImprovement

""improvementimprovement" means, " means,

(a) (a) any alteration, addition or repairany alteration, addition or repair to, orto, or

(b) any construction, erection or (b) any construction, erection or installation on any land, and installation on any land, and includes the demolitionincludes the demolition or removal or removal of any building, structure or works of any building, structure or works or part thereof, and "improved" has or part thereof, and "improved" has a corresponding meaninga corresponding meaning


OwnerOwner

""ownerowner" means any person, " means any person, including including the Crownthe Crown, having an , having an interest in a interest in a premisespremises at whose at whose request andrequest and, , (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 an improvement is made to the premises premises but does not include a home but does not include a home buyerbuyer


ContractorContractor

""contractorcontractor" means a person " means a person contracting with or employed contracting with or employed directly by the ownerdirectly by the owner or an agent of or an agent of the owner to supply services or the owner to supply services or materials to an improvement materials to an improvement


SubcontractorSubcontractor

""subcontractorsubcontractor" means a person not " means a person not contracting with or employed contracting with or employed directly by the owner or an agent of directly by the owner or an agent of the owner but who supplies services the owner but who supplies services or materials to the improvement or materials to the improvement under an agreement with the under an agreement with the contractor or under the contractor contractor or under the contractor with another subcontractorwith another subcontractor


Interest in the PremisesInterest in the Premises

""interest in the premisesinterest in the premises" means an " means an estate or interest of any natureestate or interest of any nature, and , and includes a statutory right given or includes a statutory right given or reserved to the Crown to enter any reserved to the Crown to enter any lands or premises belonging to any lands or premises belonging to any person or public authority for the person or public authority for the purpose of doing any work, purpose of doing any work, construction, repair or maintenance in, construction, repair or maintenance in, upon, through, over or under any lands upon, through, over or under any lands or premises or premises


PricePrice

""priceprice" means the contract or " means the contract or subcontract price, subcontract price,

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

(b) where no specific price has been (b) where no specific price has been agreed upon between them, the agreed upon between them, the actual actual valuevalue of the services or materials that 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


Substantial PerformanceSubstantial Performance For the purposes of this Act, a contract is For the purposes of this Act, a contract is

substantially performedsubstantially performed, , (a) when the improvement to be made under that (a) when the improvement to be made under that contract or a substantial part thereof is contract or a substantial part thereof is ready for use ready for use or is being used for the purposes intended; andor is being used for the purposes intended; and(b) when the improvement to be made under that (b) when the improvement to be made under that contract is contract is capable of completion orcapable of completion or, where there is , where there is a a known defectknown defect, , correctioncorrection, at a cost of not more , at a cost of not more than,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.


Part I - GeneralPart I - General

s. 3: Act binds Crown, but not Crown’s s. 3: Act binds Crown, but not Crown’s landland

s. 4: waivers of rights are void s. 4: waivers of rights are void s. 5: contracts amended so as to s. 5: contracts amended so as to

conformconform

s. 6:


Section 6Section 6

No certificate, declaration or claim No certificate, declaration or claim for lienfor lien is invalidated by reason only is invalidated by reason only of a of a failure to comply strictlyfailure to comply strictly with with subsection subsection 32(2) or (532(2) or (5), subsection ), subsection 33(1)33(1) or subsection or subsection 32(4),32(4), unless in unless in the opinion of the court a person has the opinion of the court a person has been prejudiced thereby, and then been prejudiced thereby, and then only to the extent of the prejudice only to the extent of the prejudice suffered.suffered.


Part II - TrustsPart II - Trusts

s. 7 - Owner’s trusts. 7 - Owner’s trust s. 8 – Contractor’s s. 8 – Contractor’s

trusttrust s. 9 – Vendor’s s. 9 – Vendor’s

trusttrust s. 10 – Discharges. 10 – Discharge s. 11 – Reductions. 11 – Reduction s. 12 – Retainages. 12 – Retainage s. 13 - s. 13 -


Part II - TrustsPart II - Trusts s. 7s. 7

7.--(1) All amounts 7.--(1) All amounts receivedreceived by an owner, by an owner, other than the Crown or a municipalityother than the Crown or a municipality, that , that are to be used in the financing of the are to be used in the financing of the improvement, including any amount that is to improvement, including any amount that is to be used in the payment of the purchase price be used in the payment of the purchase price of the land and the payment of prior of the land and the payment of prior encumbrances, encumbrances, constituteconstitute, subject to the , subject to the payment of the purchase price of the land payment of the purchase price of the land and prior encumbrances, and prior encumbrances, a trust fund for the a trust fund for the benefit of the contractorbenefit of the contractor. .


Section 7(2)Section 7(2)

Where amounts become Where amounts become payablepayable under a contract to a contractor by under a contract to a contractor by the owner the owner on a certificate of a on a certificate of a payment certifierpayment certifier, , an amount that is an amount that is equal to an amount so certifiedequal to an amount so certified that that is in the owner's hands or received is in the owner's hands or received by the owner at any time thereafter by the owner at any time thereafter constitutes a trust fund for the constitutes a trust fund for the benefit of the contractorbenefit of the contractor. .



Where the substantial performance of Where the substantial performance of a contract has been certifieda contract has been certified, or has , or has been declared by the court, been declared by the court, an amount an amount that is equal to the unpaid pricethat is equal to the unpaid price of the of the substantially performed portionsubstantially performed portion of the of the contract that is in the owner's hands contract that is in the owner's hands or is received by the owner at any time or is received by the owner at any time thereafter thereafter constitutes a trust fund for constitutes a trust fund for the benefit of the contractorthe benefit of the contractor. .



The owner is the trustee of the trust The owner is the trustee of the trust fund created by subsection (1), (2) fund created by subsection (1), (2) or (3), and the owner or (3), and the owner shall not shall not appropriate or convert any part of a appropriate or convert any part of a fund to the owner's own use or to fund to the owner's own use or to any use inconsistent with the trustany use inconsistent with the trust until the contractor is paid all until the contractor is paid all amounts related to the improvement amounts related to the improvement owed to the contractor by the owner. owed to the contractor by the owner.


Section 10Section 10

Subject to Part IV (holdbacks)Subject to Part IV (holdbacks), every , every payment by a trustee payment by a trustee to a person the to a person the trustee is liable to paytrustee is liable to pay for services or for services or materials supplied to the improvement materials supplied to the improvement discharges the trust of the trustee discharges the trust of the trustee making the paymentmaking the payment and the trustee's and the trustee's obligations and liability as trustee obligations and liability as trustee to all to all beneficiariesbeneficiaries of the trust of the trust to the extent to the extent of the paymentof the payment made by the trustee. made by the trustee.



(1) Subject to Part IV, a trustee who pays in whole or (1) Subject to Part IV, a trustee who pays in whole or in part for the supply of services or materials to an in part for the supply of services or materials to an improvement out of improvement out of money that is not subject to a money that is not subject to a trusttrust under this Part may under this Part may retainretain from trust funds an from trust funds an amount equal to that paid by the trustee without amount equal to that paid by the trustee without being in breach of the trust. being in breach of the trust.

(2) Subject to Part IV, where a trustee pays in whole (2) Subject to Part IV, where a trustee pays in whole or in part for the supply of services or materials to or in part for the supply of services or materials to an improvement out of an improvement out of money that is loaned to the money that is loaned to the trusteetrustee, trust funds , trust funds may be applied to discharge the may be applied to discharge the loanloan to the extent that the lender's money was so to the extent that the lender's money was so used by the trustee, and the application of trust used by the trustee, and the application of trust money does not constitute a breach of the trust. money does not constitute a breach of the trust.



Subject to Part IV, a trustee may, Subject to Part IV, a trustee may, without being in breach of trust, without being in breach of trust, retain retain from trust fundsfrom trust funds an amount that, as an amount that, as between the trustee and the person the between the trustee and the person the trustee is liable to pay under a contract trustee is liable to pay under a contract or subcontract related to the or subcontract related to the improvement, is improvement, is equal to the balance in equal to the balance in the trustee's favour of all outstanding the trustee's favour of all outstanding debts, claims or damages, whether or debts, claims or damages, whether or not related to the improvementnot related to the improvement. .


Section 13(1)Section 13(1)In addition to the persons who are otherwise liable in an action for breach of trust under this Part, (a) every director or officer of a corporation; and(b) any person, including an employee or agent of

the corporation, who has effective control of a

corporation or its relevant activities, who assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to breach of trust by the corporation is

liable for the breach of trust.


Part II - TrustsPart II - Trusts

s. 13(2)s. 13(2)

The question of whether a person has The question of whether a person has effective control of a corporation or its effective control of a corporation or its relevant activities is one of fact and in relevant activities is one of fact and in determining this the court determining this the court may may disregard the form of any transaction disregard the form of any transaction and the separate corporate existence and the separate corporate existence of any participantof any participant. .


Part II - TrustsPart II - Trusts s. 336 Criminal Codes. 336 Criminal Code

Every one who, being a trusteeEvery one who, being a trustee of anything of anything for the use or benefit, whether in whole or for the use or benefit, whether in whole or in part, of another person, or for a public or in part, of another person, or for a public or charitable purpose, charitable purpose, converts, with intent to converts, with intent to defraud and in contravention of his trustdefraud and in contravention of his trust, , that thing or any part of it to a use that is that thing or any part of it to a use that is not authorized by the trust is not authorized by the trust is guilty of an guilty of an indictable offence and liable to indictable offence and liable to imprisonment for a term not exceeding imprisonment for a term not exceeding fourteen yearsfourteen years. .


Part III – The LienPart III – The Lien s. 14 – Creates the Liens. 14 – Creates the Lien s. 15 – States when liens arises. 15 – States when liens arise s. 16 – Crown bound by the lien provisions s. 16 – Crown bound by the lien provisions

of the Act, but property of Crown and of the Act, but property of Crown and municipal roads and streets are notmunicipal roads and streets are not

s. 17 – Limits value of liens. 17 – Limits value of lien s. 18 – Joint or common interestss. 18 – Joint or common interests s. 19 – Leasehold interestss. 19 – Leasehold interests s. 20 – General lienss. 20 – General liens s. 21 – Liens a charge on holdbackss. 21 – Liens a charge on holdbacks



(1) A person who supplies services or materials (1) A person who supplies services or materials to an improvement for an owner, contractor or to an improvement for an owner, contractor or subcontractor, has a lien subcontractor, has a lien upon the interest of upon the interest of the owner in the premisesthe owner in the premises improved improved for the for the price of those services or materialsprice of those services or materials. .

(2) (2) No person is entitled to a lien for any No person is entitled to a lien for any interest on the amount owedinterest on the amount owed to the person in to the person in respect of the services or materials that have respect of the services or materials that have been supplied by the person, but nothing in this been supplied by the person, but nothing in this subsection affects any right that the person subsection affects any right that the person may otherwise have to recover that interest. may otherwise have to recover that interest.



A person's lien arises and takes A person's lien arises and takes effect when the person effect when the person first supplies first supplies services or materialsservices or materials to the to the improvement. improvement.


Section 16Section 16(1) A lien does not attach to the interest of the Crown

in the premises(2) Where an improvement is made to a premises in

which the Crown has an interest, but the Crown is not an owner within the meaning of the Act, the lien may attach to the interest of any other person in that premises.

(3) Where the Crown is the owner of a premises within the meaning of this Act, or where the premises is, (a) a public street or highway owned by a

municipality; or (b) a railway right-of-way, the lien does not attach to the premises but constitutes a charge as provided in section 21, and the provisions of this Act shall have effect without requiring the registration of a claim for lien against

thepremises.


Section 17Section 17(1) The lien of a person is(1) The lien of a person is limited to the amount owing to the limited to the amount owing to the personperson in relation to the improvement in relation to the improvement andand, subject to Part IV , subject to Part IV (holdbacks), it is (holdbacks), it is further limitedfurther limited to the to the least amount owedleast amount owed in in relation to the improvement relation to the improvement by a payerby a payer to the contractor or to the contractor or to any subcontractor to any subcontractor whose contract or subcontract was in whose contract or subcontract was in whole or in part performed by the supply of services or whole or in part performed by the supply of services or materials giving rise to the lienmaterials giving rise to the lien. .

(2) (2) Subject to Part IV, Subject to Part IV, the total value of the liens of all the total value of the liens of all members of a class, as defined in section 79, is limited to the members of a class, as defined in section 79, is limited to the least amount owed in relation to the improvement by a payer least amount owed in relation to the improvement by a payer to the contractor or to any subcontractor whose contract or to the contractor or to any subcontractor whose contract or subcontract was in whole or in part performed by the supply subcontract was in whole or in part performed by the supply of services or materials made by the members of the class. of services or materials made by the members of the class.

(3) (3) Subject to Part IVSubject to Part IV, in determining the amount of a lien , in determining the amount of a lien under subsection (1) or (2), there may be taken into account under subsection (1) or (2), there may be taken into account the amount that is, as between a payer and the person the the amount that is, as between a payer and the person the payer is liable to pay, payer is liable to pay, equal to the balance in the payer's equal to the balance in the payer's favour of all outstanding debts, claims or damages, whether favour of all outstanding debts, claims or damages, whether or not related to the improvement. or not related to the improvement.


Section 17(4)Section 17(4) Despite subsection (1), where Despite subsection (1), where land is dedicated land is dedicated

to a municipality as a public street or highwayto a municipality as a public street or highway and an improvement is made to the land at the and an improvement is made to the land at the written request of, written request of, oror under an agreement under an agreement with, the municipality, but not at its expense, with, the municipality, but not at its expense, the the municipality shall neverthelessmunicipality shall nevertheless, on default , on default of payment by the proper payer,of payment by the proper payer, be liable to be liable to the value of the holdbacks under Part IV that the value of the holdbacks under Part IV that would have been required were the would have been required were the improvement made at the expense of the improvement made at the expense of the municipalitymunicipality, and the procedure for making a , and the procedure for making a claim under this subsection shall be the same claim under this subsection shall be the same as for enforcing a claim for lien against a as for enforcing a claim for lien against a municipality in respect of a public street or municipality in respect of a public street or highway highway


Part IV – Part IV – HoldbacksHoldbacks

The Serene Centre of the Lien Act


Part IV - HoldbacksPart IV - Holdbacks s. 22(1) – Basic Holdbacks. 22(1) – Basic Holdback s. 22(2) – Finishing Holdbacks. 22(2) – Finishing Holdback s. 22(3) – Applies regardless of contracts. 22(3) – Applies regardless of contract s. 23(1) – Defaulting payer = owners. 23(1) – Defaulting payer = owner s. 23(2) – Defaulting payer = contractors. 23(2) – Defaulting payer = contractor s. 23(3) – Defaulting payer = subcontractors. 23(3) – Defaulting payer = subcontractor s. 24(1) – What amounts an owner s. 24(1) – What amounts an owner cancan pay pay s. 24(2) – What amounts an owner s. 24(2) – What amounts an owner can’tcan’t

pay (written notice of lien)pay (written notice of lien) s. 25 – Payment where s. 25 – Payment where subcontractsubcontract

certified certified completecomplete


Part IV - HoldbackPart IV - Holdback

s. 26 – Payment of basic holdbacks. 26 – Payment of basic holdback s. 27 – Payment of finishing holdbacks. 27 – Payment of finishing holdback s. 28 – Direct payment to lien s. 28 – Direct payment to lien

claimantclaimant s. 29 – Discharges. 29 – Discharge s. 30 – How not to use holdbacks. 30 – How not to use holdback



Each payerEach payer upon a contract or subcontract upon a contract or subcontract under which a lien may arise under which a lien may arise shall retain a shall retain a holdback equal to 10 per cent of the price holdback equal to 10 per cent of the price of the services or materials as they are of the services or materials as they are actually suppliedactually supplied under the contract or under the contract or subcontract subcontract until all liens that may be until all liens that may be claimed against the holdback have expiredclaimed against the holdback have expired as provided in Part V, or have been as provided in Part V, or have been satisfied, discharged or provided forsatisfied, discharged or provided for under under section 44 (payment into court). section 44 (payment into court).


Section 23Section 23(1) (1) Subject to subsections (2), (3) and (4), an owner is Subject to subsections (2), (3) and (4), an owner is personally liable for holdbackspersonally liable for holdbacks that the owner is that the owner is required to retain under this Part to those lien claimants required to retain under this Part to those lien claimants who have valid liens against the owner's interest in the who have valid liens against the owner's interest in the premises. premises.

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

(3) Where the (3) Where the defaulting payer is a subcontractordefaulting payer is a subcontractor, the , the owner's personal liability to a lien claimant or to a class owner's personal liability to a lien claimant or to a class of lien claimants as defined by section 79 of lien claimants as defined by section 79 does not does not exceed the lesser ofexceed the lesser of, ,

(a) the (a) the holdbacks the owner is required to retainholdbacks the owner is required to retain; and ; and (b) the (b) the holdbacks required to be retained by the holdbacks required to be retained by the contractor or a subcontractor from the lien claimant's contractor or a subcontractor from the lien claimant's defaulting payerdefaulting payer..



Payments made in accordance with Payments made in accordance with this Part operate as a this Part operate as a dischargedischarge of of the lien to the extent of the amount the lien to the extent of the amount paid. paid.



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


Part V - ExpiryPart V - Expiry

Key 1 – 45 day periodKey 1 – 45 day period Key 2 – From a date readily Key 2 – From a date readily

ascertainable by each lien claimant:ascertainable by each lien claimant:

Contractor: Contractor: Earlier ofEarlier of publication of publication of certificate of substantial performance, certificate of substantial performance, completion or abandonmentcompletion or abandonment

Others: Others: Earliest ofEarliest of last supply , last supply , certificate of completioncertificate of completion


Part V - ExpiryPart V - Expiry

s. 32: 10 rules for ascertaining date s. 32: 10 rules for ascertaining date for and certification of “substantial for and certification of “substantial performance”performance”

(Meant to be idiot (i.e. lawyer) proof, (Meant to be idiot (i.e. lawyer) proof, but are not)but are not)

s. 33: same for subcontract s. 33: same for subcontract “completion”“completion”


Section 34(1)Section 34(1) (1) A lien may be preserved (1) A lien may be preserved during the during the

supplyingsupplying of services or materials of services or materials or at any or at any time before it expirestime before it expires, , (a) where the lien attaches to the premises, (a) where the lien attaches to the premises, by the by the registrationregistration in the proper land in the proper land registry office of a claim for lien on the title registry office of a claim for lien on the title of the premises in accordance with this Part; of the premises in accordance with this Part; andand(b) where the lien does not attach to the (b) where the lien does not attach to the premises, by premises, by giving to the owner a copy of giving to the owner a copy of the claim for lien together with the affidavit the claim for lien together with the affidavit of verification required by subsection (6).of verification required by subsection (6).



Where a claim for lien is in respect Where a claim for lien is in respect of a public street or highway owned of a public street or highway owned by a municipality, the copy of the by a municipality, the copy of the claim for lien and affidavit shall be claim for lien and affidavit shall be given to the clerk of the given to the clerk of the municipalitymunicipality. .



Where the owner of the premises is Where the owner of the premises is the Crown, the copy of the claim for the Crown, the copy of the claim for lien and affidavit shall be given lien and affidavit shall be given to to the office prescribed by regulationthe office prescribed by regulation, , or, where no office has been or, where no office has been prescribed, to the prescribed, to the ministry or Crown ministry or Crown agency for whom the improvement is agency for whom the improvement is mademade. .


Form Form s. 34(5): Page 1 of Claim for Lien:s. 34(5): Page 1 of Claim for Lien:

Every claim for lien shall set out,Every claim for lien shall set out,(a) the name and address for service of the (a) the name and address for service of the person claiming the person claiming the lienlien and the name and address of the and the name and address of the owner of the premisesowner of the premises and of and of the the person for whom the services or materials were suppliedperson for whom the services or materials were supplied and and the the time within which those services or materials were supplied;time within which those services or materials were supplied;(b) a (b) a short description of the services or materialsshort description of the services or materials that were that were supplied;supplied;(c) the (c) the contract price or subcontract pricecontract price or subcontract price;;(d) the (d) the amount claimedamount claimed in respect of services or materials that in respect of services or materials that have been supplied; andhave been supplied; and(e) a (e) a description of the premisesdescription of the premises,,(i) where the lien attaches to the premises, (i) where the lien attaches to the premises, sufficient for sufficient for registrationregistration under the Land Titles Act or the Registry Act, as the under the Land Titles Act or the Registry Act, as the case may be, orcase may be, or(ii) (ii) where the lien does not attach to the premises, being the where the lien does not attach to the premises, being the address or other identification of the location of the premisesaddress or other identification of the location of the premises..


Form Form s. 34(6): Page 2 of Claim for Lien:s. 34(6): Page 2 of Claim for Lien: A claim for lien shall be A claim for lien shall be verified by an verified by an

affidavitaffidavit of the person claiming the lien, of the person claiming the lien, including a trustee of the workers' trust including a trustee of the workers' trust fund where subsection 81 (2) applies, or of fund where subsection 81 (2) applies, or of an agent or assignee of the claimant who an agent or assignee of the claimant who is informed of the facts set out in the is informed of the facts set out in the claim, and the affidavit of the agent or claim, and the affidavit of the agent or assignee assignee shall state that the agent or shall state that the agent or assignee believes those facts to be trueassignee believes those facts to be true. .


PerfectionPerfection

45 days after 45 days after lastlast day to register lien day to register lien

Can mean up to 90 days or more to Can mean up to 90 days or more to start action and register Certificate start action and register Certificate of Action!of Action!


ShelteringShelterings. 36(4)s. 36(4)

Q. Why is he shunned and feared? A. He's the world's worst jinx.


Expiration PeriodExpiration Period

s. 37s. 37


Expiration PeriodExpiration Period 37. (1) 37. (1) A perfected lien expires A perfected lien expires

immediately after the second immediately after the second anniversary of the commencement of the anniversary of the commencement of the action that perfected the lien, unless one action that perfected the lien, unless one of the following occurs on or before that of the following occurs on or before that anniversaryanniversary: : 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.


Part VI – Right to Part VI – Right to InformationInformation

s. 39s. 39

++

$5.00$5.00

==

Cup of non fat latte at Starbucks Cup of non fat latte at Starbucks



Any person having a lien or who is Any person having a lien or who is the beneficiary of a trust under Part the beneficiary of a trust under Part II or who is a mortgagee II or who is a mortgagee may, at any may, at any time, by written request, require time, by written request, require informationinformation to be provided within a to be provided within a reasonable time, not to exceed reasonable time, not to exceed twenty- one days…twenty- one days…


Part VIPart VI s. 40 – Cross- Examinations. 40 – Cross- Examination



Any person who has verified a claim Any person who has verified a claim for lien that has been preserved for lien that has been preserved is is liable to be cross-examined without liable to be cross-examined without an order on the claim for lien at any an order on the claim for lien at any time, irrespective of whether an time, irrespective of whether an action has been commenced. action has been commenced.


Part VII – Discharge of Part VII – Discharge of LiensLiens

s. 44: Vacating lienss. 44: Vacating liens s. 45: Declaring liens expireds. 45: Declaring liens expired s. 46: Dismissing an actions. 46: Dismissing an action s. 47: Discharging a liens. 47: Discharging a lien s. 48: s. 48:

Discharges are irrevocableDischarges are irrevocable


Part VIII – Jurisdiction and Part VIII – Jurisdiction and ProcedureProcedure

ss. 50 – 67: “summary” proceduress. 50 – 67: “summary” procedure

Yeah, right!Yeah, right!


Part IX – Extraordinary Part IX – Extraordinary RemediesRemedies

s. 68: Application for appointment of s. 68: Application for appointment of TrusteeTrustee

s. 69: Labour and Material Payment s. 69: Labour and Material Payment BondsBonds


Part X – Part X – AppealsAppeals



(1) Subject to subsection (3), an appeal lies (1) Subject to subsection (3), an appeal lies to the to the Divisional CourtDivisional Court from a judgment or from a judgment or an order on a motion to oppose an order on a motion to oppose confirmation of a report under this Act. confirmation of a report under this Act. (3) (3) No appeal lies fromNo 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 Act, where the amount claimed is $1,000 or less; oror less; or(b) (b) an interlocutory order made by the an interlocutory order made by the court. court.


Part XI - PrioritiesPart XI - Priorities

Remember first Remember first principlesprinciples

No free rides!No free rides!No unjust enrichment!No unjust enrichment!



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

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

nono: go to Question 2: go to Question 2



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

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

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

Answer: Answer: AfterAfter mortgage registered and mortgage registered and either fully or partially advanced?either fully 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 3: Is it a homebuyer’s Question 3: Is it a homebuyer’s mortgage?mortgage?

Answer: If it is, the above scheme is Answer: If it is, the above scheme is irrelevant and the mortgagee has irrelevant and the mortgagee has prioritypriority


Part XII – Miscellaneous Part XII – Miscellaneous RulesRules

S. 86S. 86


Section 86Section 86 1) Subject to subsection (2), any order as to the costs in an 1) Subject to subsection (2), any order as to the costs in an

action, application, motion or settlement meeting is in the action, application, motion or settlement meeting is in the discretion of the court, and discretion of the court, and an order as to costs may be an order as to costs may be made against, made against, (a) (a) any partyany party to the action or motion; or to the action or motion; or(b) (b) the solicitor or agent of any party to the action, the solicitor or agent of any party to the action, application or motion, where the solicitor or agent has,application or motion, where the solicitor or agent has,(i) knowingly participated(i) knowingly participated in the preservation or perfection in the preservation or perfection of a lien, or represented a party at the trial of an action, of a lien, or represented a party at the trial of an action, where it is clear that the claim for lien is without where it is clear that the claim for lien is without foundation or is for a grossly excessive amount, or that the foundation or is for a grossly excessive amount, or that the lien has expired, orlien has expired, or(ii) (ii) prejudiced or delayed the conduct of the actionprejudiced or delayed the conduct of the action,,and and the order may be made on a solicitor-and-client basisthe order may be made on a solicitor-and-client basis, , including where the motion is heard by, or the action has including where the motion is heard by, or the action has been referred under section 58 to, a master, case been referred under section 58 to, a master, case management master or commissioner. management master or commissioner.

Documents

© Duncan W. Glaholt, 2003 An Overview of Construction Liens Duncan W. Glaholt Glaholt LLP