Legal Blog

Contract Termination or Abandonment

Scepter Industries Ltd v. Georgian Custom Renovations Inc 2019 Ont (Div Ct)

Under the Construction Lien Act, the lien time, when there was no publishing of a certificate of substantial performance, started to run when the contract was either completed or abandoned. The court, reversing the motion judge, held that, even though the owner attempted to terminate the contract, the contractor never abandoned it until the settlement discussions, ultimately unsuccessful, were completed. Accordingly, since the claim for lien was registered within 45 days of the date that the settlement discussions completely broke down, the lien had been preserved in time. The motion judge had also said, in obiter, seemingly as consolation for discharging the claim for lien, that the contractor could always obtain a certificate of pending litigation, an interim preservation order, or an injunction to preserve its interest in the property. The Divisional Court noted “this statement is obiter dicta and is wrong.” Harsh words, but correct. A number of cases have all indicated that the Construction Act is a complete code for securing the price of services and materials against an improvement. Alternative remedies are not available. The controversy in this case would not have arisen under the Construction Act; it added a third category to start the lien period running: the date when the contract is terminated.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.