Under the Act, the first threshold to be met is whether the supply of services or materials gives rise to the right to a lien.
Generally, parties entitled to a lien include contractors, subcontractors, labourers, and suppliers of materials, lessors of equipment, engineers, and architects. Once the threshold question of entitlement to a lien has been determined, the lien must be preserved and perfected.
Preserving the Lien
Liens are preserved by registering a Claim for Lien within 45 days after the earliest of either the last day of substantial work by a party on land, or, if the term of the contract continues, publication/posting of a certificate of substantial performance of a contract in publicly accessible daily commercial news.
Subsection 34(5) states that every Claim for Lien shall set out:
(a) Name and address for service of the person claiming the lien, of the owner of the, premise, of the person for whom the services or materials were supplied and the time within which those services or materials were supplied;
(b) Short description of the services or materials that were supplied;
(c) Contract price or subcontract price;
(d) Amount claimed in respect of services or materials that have been supplied; and
(e) Description of the premises
Mistakes may occur when attempting to preserve the lien. Section 6 of the Act is a curative provision which has been interpreted broadly and indicates that no pertinent lien document is invalidated by a failure to strictly comply with enumerated provisions, including the preservation of lien claims.
In determining whether a claim should be invalidated, the determinative issue in the application of Section 6 appears to be whether the opposing party has been prejudiced rather than the number of errors present. For example, failure to state the name of the owner is fatal since the purpose of a lien is to attach an owner’s interest, either freehold or leasehold. Accordingly, failure to give such notice in the claim for lien defeats the lien.
Perfecting the Lien
After a party has preserved a lien claim, the lien must be “perfected”. To perfect a lien, an action must be commenced, and the Certificate of Action registered, within 45 days of a lien having been preserved, in accordance with Subsection 36(2) of the Act.
Setting the Action down for Trial
An action commenced to perfect a lien must be ‘set down’ for trial within two years of the action having being started. If a trial date is not set within that time frame, a lien claim will become unenforceable.
Our team of litigators at Simmons da Silva LLP has in-depth experience in construction lien matters.
Amrita Mann is an Associate at Simmons da Silva LLP.
Disclaimer: This article is only intended for information purposes and is not intended to be construed as legal advice