When it comes to lien filings, or attempts to dismiss them, deadlines are a reality. Three rulings from three Canadian provinces confirm the common thread of timeliness.
An Alberta contractor, subcontracted to supply concrete, filed two builder’s liens for non-payment. The court allowed the registration to be lifted under the provinces’ Prompt Payment and Construction Lien Act (PPCLA) after the respondent paid security into court, resulting in the removal of the liens from title.
As described by Brian Reid, partner with Bennett Jones in Calgary, and associate Connor Wilson, the contractor had 180 days from the date of the order to commence an action to enforce the liens. They failed to do so. Instead, they filed a statement of claim shortly before the expiry of the two-year general limitation period.
The respondent then asked the court to dismiss the lien. The contractor asked for an extension of the 180-day deadline.
The judge dismissed the request, write Reid and Wilson, confirming “even though a lien has been ‘bonded off’ and replaced with security through a consent order, the deadline in that order and the 180 day deadline for filing a statement of claim in the PPCLA must still be adhered to. Failing that, the lien will cease to exist.”
A second case from Nova Scotia outlined by Anosha Khan of Deloitte–Farrell LLP, concerns a lien vacated by the province’s Supreme Court upon application because it was not registered within 60 days of construction project abandonment.
The contractor had told the project owner they had financial difficulties and without financial assistance could not complete the work contracted. They then sold their assets to another contractor. However, the owner did not want the new contractor performing the work and was not interested in paying $335,000 extra for that work. The owner considered the agreement abandoned.
Although several alternate abandonment dates were discussed during the proceedings, the court ultimately ruled the lack of evidentiary support gave “no comfort to the court that (the contractor’s) lien was registered in time.”
And in Ontario, a complicated payment lien dispute between an owner and a contracted supplier also became subject to the clock, although with a slightly different outcome.
A contractor served the owner with a statement of claim and filed a lien. However, the owner never filed a defence.
As McCarthy Tetrault associates Ivan Merrow and Andrew West, and articling student Greer Hope outline, the contractor moved to have the owner noted in default 18 months later. Having become dormant, the action was ultimately struck from the trial list one year later.
Eighteen months after that, the matter was revived when the owner was amalgamated into another corporate entity. That new company moved to have the contractor’s lien dismissed upon payment of security into the court under section 44 of the CLA. They also simultaneously filed motions for relief, including an order declaring the lien expired, return of the posted security and dismissal of the action due to delay. In response, the contractor asked the court to restore the action to the trial list.
After unravelling what the court described as a “Gordian knot,” it declared the contractor’s lien expired and dismissed its action for a lien remedy.
However, the court handed down rulings allowing the action to proceed in another manner.
Merrow, West and Greer write, “The court found that the action could continue as a breach of contract claim.”
Secondly, the court ruled although delay can be proper ground for dismissal of an action, in this case, “the balance of justice weighed against granting the owner’s motion.”“Contractors must act diligently in pursuing construction lien claims,” they write. “Although inaction on the part of a contractor will not automatically give rise to an order dismissing the action, in some cases, delay will constitute a ‘proper ground’ for dismissal under section 47 of the CLA.”
Context will always be important to the court, but the ticking clock can never be ignored.
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to email@example.com