Legal Blog

Lien Discharge

9585800 Canada Inc. v. JP Gravel et al 2019 Ont SCJ (Div Ct)

Subcontractor registered a claim for lien. However, the claim referenced the wrong date as the last day worked on the site. It stated that the first work was October 30, 2017 and the last work was May 5, 2017 when it should have said the last work was May 5, 2018. Before the 45 days to preserve the lien had elapsed, the sub discharged the first lien and registered another lien, identical to the first with the exception that the last day of work was the correct day. The general contractor took the position that once the first lien was discharged, the sub could not register a 2nd lien. The motion judge in this case distinguished that rule because she found the first lien to be a nullity as a lien for non-existent work (i.e. how could the sub lien for work that was allegedly completed before the job even started?). Accordingly she found that the first lien was a nullity and therefore (i) its discharge was meaningless and (ii) the second lien was an appropriate and valid lien. On appeal, the Divisional Court overturned the decision, discharged the second lien, and dismissed the action. It noted that s. 48 of the Construction Act states that, once a lien is discharged, it cannot be revived. It disagreed that the first lien was a nullity. It was merely an irregularity that could have been validated under s. 6 of the Act. Note: The normal correct course of action under the circumstances is set out in Southridge Construction v. 667293 Ontario (1993 Ont Div Ct): register the 2nd lien and then, on notice, move for an order to vacate the first lien and, if necessary, seek to amend the statement of claim enforcing the lien.

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