Legal Blog

Interest

It is now official. A lien claimant cannot recover any interest on its lien from a person who is other than the person with whom the claimant contracted.

For example, assume that a sub contracts with a general to perform the electrical work on a project; the general does not pay the sub; and the sub registers a lien against the project. Under the law of contracts and the rules of civil procedure, the sub has a right to look to the general for the payment of interest on its outstanding account. However, does the sub have a right to interest either against the owner or against a bond posted by the general to vacate the claim for lien?

In P & D Holdings Ltd. v. Alta Surety Company, a 1996 decision of the Ontario Court of Appeal, the lien claimants attempted to look to a lien bond posted by the general contractor for interest on their claims. The Court held that when the Construction Lien Act stipulates that a lien cannot include a claim for interest, it means what it says. No interest was allowed.