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Posted on January 2, 2014 | Posted in Construction

We have previously discussed two cases (see newsletters of January 2002 and January 2009) in which a corporation that has been dissolved – probably for non-payment of taxes or failure to file tax returns – registers a claim for lien and commences an action. In these cases, the corporations were revived and wanted to carry on as if nothing unusual had happened.

What happens between the date that the corporation is dissolved and the date it is revived? Under the Business Corporations Act, the revival is retroactive – unless the retroactive effect of the re-instatement would adversely affect the rights of others.

In the cases discussed in our newsletters, the judges held that, when a dissolved corporation purports to register a lien, a subsequent revival after the lien period expires prejudices an owner or mortgagee and, accordingly, the revival should not be retroactive. As a result, the judges discharged the liens.

However, in both cases, the judges allowed the actions in contract to continue – subject to the newly revived corporations paying costs to the defendants.

 

Still Dead

In 1306474 Ontario Inc. v. Sharpe, a 2009 Master’s decision, the Master was faced with a slightly different scenario. Despite being dissolved, the corporate lien claimant had supplied the work, registered its claim for lien, and commenced its action. Further, and most importantly, when the defendant brought a motion to discharge the lien and dismiss the action, the corporate lien claimant still took no steps to be revived. To quote my proof-reader after she read this, “Was this guy an idiot?”

 

Under these circumstances, not only did the Master discharge the lien, she also dismissed the action.

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