Legal Blog

Promissory Estoppel Can Defeat Limitation Defences to Lien Claims

J.D. Strachan Construction Limited v. Egan Holdings Inc. 2019 Ont SCJ

The Construction Act sets out strict time periods in which to preserve a claim for lien and, then, perfect a claim for lien by commencing an action. Promissory estoppel is a defence that states a party ought to be estopped from relying on a position, in this case a limitation period, if a party has made a promise or assurance to another, which was intended to affect their legal relationship, and, relying on that representation, the other party changed its position. The judge stated that promissory estoppel applies to the Construction Act limitation periods. However, the judge held that, for promissory estoppel to apply, the promisor had to intend, as objectively determined, to affect legal relations by giving the promise or assurance and, in this case, there was no evidence that the parties discussed the statutory period to perfect the lien or agree that the lien was not to be perfected. There was no evidence that the alleged promisor would not rely on the limitation period. Further, before coming to a deal, which the alleged promisor breached, the limitation period had already expired.

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