Legal Blog

Rewards

We always look for cases in which a lien action is unsuccessful and the person registering the lien must then defend a claim for damages arising out of the registration of an improper or excessive lien. One such case is MHA Contracting Inc. v. Christie Mechanical Contractors Ltd., a 2005 decision of the Ontario Superior Court of Justice.

Dismissal 

The judge dismissed the plaintiff’s action; we will not bore you with the details because that aspect of the decision was not noteworthy. The real fight dealt with the defendant’s counterclaim alleging that the plaintiff registered liens for work that was not lienable and, in any case, liens that were grossly excessive.

In effect, the plaintiff was the corporate entity of an office employee who had been working on a number of projects. The corporation registered liens on five different projects for a total of $257,000. The judge held that, not only did the defendant not owe the plaintiff what it was claiming, the plaintiff had not performed work that was lienable.

Costs 

The defendant only sought the legal costs, which, we assume, included the bonding costs, incurred in vacating the liens from title.

The judge agreed that section 35 of the Construction Lien Act applied to fix the corporate plaintiff with liability for registering the improper and excessive liens. The judge then held that the employee was personally liable under section 86(1) of the Act. That section allows the court to award costs against an agent who has knowingly participated in the preservation or perfection of an improper lien.

Quantum

Thus far, probably nothing still jumps out at you. That is because we have not told you that the judge awarded $38,300 for those costs. We were floored. How could it cost that much for legal and bonding fees to vacate five liens from title? Moreover, this does not include the actual costs of the trial; the trial judge still had to award and fix those costs separately.

Unfortunately, we cannot give you details as to how the costs to vacate the liens escalated to that extent. The judge discussed the quantum in one line and never discussed it again.

Regardless, the outcome of the action was a just reward for a plaintiff who played fast and loose with lien registrations. Finally, we have an award that illustrates that the Act is not just a licence to lien first and ask questions later.