Legal Blog

Lien Discharge

9585800 Canada Inc. v. JP Gravel et al 2019 Ont SCJ

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 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. The judge in this case distinguished that rule because he 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 he found that the discharge of the first lien was meaningless and that the 2nd lien was an appropriate lien and was valid. Note: under the original rule in Southridge if an error is discovered after the time for preservation has passed, the proper means to deal with the error is to 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.