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Posted on March 1, 1996 | Posted in Construction


(see our Jan./97 newsletter)

A crack in the Ontario wall has now appeared. One judge of the Ontario Court (General Division) has recognised a duty of good faith in tendering. She stated “A positive duty is placed upon potentially contractual parties in the context of a tender to act in good faith with diligence and integrity”: Vipond Automatic Sprinkler Co. v. E.S. Fox Ltd. (1996).

Unfortunately for the tenderer who did not receive the contract, the judge held that, in this case, there was no bad faith. 

Excessive Lien

(see our Jan./96 newsletter)

A lien claimant claimed a lien for $23,480.00; the Court ultimately awarded $18,009.00: LDR Contracting Inc. v. Filion , a 1996 decision of the Ontario Court (General Division). In order to successfully fight off part of the claim by the contractor, the defendant had to retain an architect to prepare a report. The judge held that the claim of the lien claimant was excessive (we assume in percentage terms and not in absolute amount). He awarded the defendant damages comprised of the fees of the architect of $1,200 and legal fees of $350 incurred in instructing the architect.


(see our Nov./95 newsletter) 

A second court decision has now been rendered that limits a lien claimant’s right to shelter under the statement of claim issued by another lien claimant: Sesco Ltd. v. Life Centre Non-Profit Housing Corp., a 1996 decision of the Ontario Court (General Division).

The judge stated “I agree with the quotation that for practical purposes a lien seeking shelter can probably find it only under a perfected lien advanced by someone higher in the same payment stream”.

The electrical supplier and the flooring contractor registered claims for lien, but did not commence actions. The general contractor did not lien the project. Other subcontractors liened the project and commenced actions. However, these contractors claimed relief in their statements of claim that did not include payment for electrical supplies and flooring services and materials. As a result, the liens of the electrical supplier and flooring subcontractor were not perfected and were invalid.

As we stated previously in our Nov./95 newsletter, “the pragmatic choice of not commencing the lien action and of attempting to shelter, may be a choice which results in the total loss of a lien”.

Accelerated Delay

In our newsletter of July/96, we discussed the case of Foundation Co. of Canada v. United Grain Growers Limited. A much more detailed case comment by Jonathan Speigel has been published in the Construction Law Reports at (1996), 29 C.L.R. 188. If you wish us to send you a copy of it, please call or fax us.


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