A guide to construction liens in Ontario: Part Two

The purpose of lien legislation is to provide an informal, inexpensive, expeditious, yet formidable, remedy for enforcing construction claims by contractors and subcontractors.

The current version of the Construction Lien Act, for example, decrees that the procedure for enforcing a lien “shall be as far as possible of a summary character…” and penalizes litigants in costs “where the least expensive course is not taken…” This sounds simple and obviously desirable, but over the years a complex body of construction lien law has grown up in the courts and through the sometimes tortuous process of legislative change, resulting in a field which is filled with traps for the unwary.

A comprehensive account of construction lien law’s development and current state is given in the new, 3d edition of Kirsh and Alter: A Guide to Construction Liens in Ontario (LexisNexis, 2011). The following is the second part of their two-part special for DCN.

Repealing the Requirement for Affidavits of Verification

The Open for Business Act, 2010 also includes a change to the form and content of a lien, with the repeal of provisions requiring each claim for lien to be verified by an affidavit in a particular form.

This amendment to the Act appears to be a legislative response to the practical considerations that have arisen since the advent of the electronic land registration system in Ontario and the conflict between the Land Registration Reform Act and the Construction Lien Act. The recent amendments to the Construction Lien Act not only repeal the requirement for an affidavit of verification, but also expand the class of individuals who may be cross-examined on a claim for lien, to include: (i) the lien claimant, (ii) the agent or assignee of the lien claimant, and (iii) a trustee of the workers’ trust fund, where applicable. The required form for a claim for lien may now be signed by the “claimant or agent”, but the legislation does not specify whether cross-examination is restricted to the agent who signed the claim for lien, or may be conducted on some other officer, director or representative of a corporation.

Responding to Concerns with the “Sheltering” Lien Statement

With the introduction of the electronic registration system in Ontario, regulations required lawyers who were obtaining orders to vacate a lien to certify either that no other claims for lien had been registered on title, or that no other registered claim for lien was sheltering under the certificate of action, the registration of which was being vacated. In response to concerns raised by members of the bar, a recommendation was adopted to eliminate the requirement for this “sheltering” statement. This recommendation resulted an amendment the Construction Lien Act to permit a lien claimant, whose lien is sheltered under a lien that is the subject of a vacating order, to proceed with an action to enforce the sheltered lien as if the order had not been made.

The evolving realm of construction liens is filled with subtle legal and practical nuances. Lien claimants and their lawyers must be careful to ensure that they follow the requirements of the Act, as mistakes can be both easy to make and costly.

The new edition of Kirsh and Alter provides up-to-date guidance on the multitude of issues associated with liens for anyone involved in the construction and building industries in Ontario.

About the authors:

Harvey J. Kirsh is Counsel to Glaholt LLP and an arbitrator and mediator with the Global Engineering and Construction Group of JAMS (Judicial Arbitration and Mediation Services). He is certified by the Law Society of Upper Canada as a specialist in construction law.

Matthew R. Alter is a Partner at Cassels Brock & Blackwell LLP and a member of the firm’s Construction, Infrastructure and Advocacy Groups. He is certified by the Law Society of Upper Canada as a specialist in construction law.