Last week we discussed the finer elements of Construction Liens and the rights such liens provide. However, a construction lien is not an absolute right. Pursuant to section 14 of the Construction Act (“CLA”), only a person who supplies services or materials to an improvement for an owner, contractor or subcontractor has a lien upon the interest of the owner in the premises for the process of those services or materials.[1] 

Although these requirements may appear straight-forward (hah), there are many underlying steps and qualifications that a claimant must meet prior to actually retaining lien rights under section 14.

Services or Materials 

The outset of section 14 requires the claimant to have actually supplied services or materials – although section (1) of the CLA contains a redundant definition for services and materials, the definition for “supply of services” provides greater insight insofar as meaning:

“any work done or service performed upon or in respect of an improvement, and includes, a) the rental of equipment with an operator; and b) where the making of the planned improvement is not commenced, the supply of design, plan, drawing or specification that in itself enhances the value of the owner’s interest in the land”

Accordingly, work such as provision of actual labour, or drafting of architectural and/or structural design drawings, and even the rental of large equipment (e.g. tractors/cement mixers) would be considered services and materials. Additionally, not all materials suppliers are considered to have actually supplied said materials. For example, a glass manufacturer who provides raw materials to a sub-contractor could be considered to provide “materials”. However, an owner of a store such as Home Depot would not be considered to have provided “materials” if a sub-contractor purchases items such as nails or bolts in bulk.

Improvement

Pursuant to section 1(1) of the CLA, an improvement includes any alteration, addition, or capital repair to the premises, as well as any construction, erection, or installation or complete or partial demolition on same land. Although this definition is broad enough to encompass many forms of labour, it is also limited in the type of installation/removal work performed. For example, unloading dirt in a distant location that was initially excavated from the subject property would qualify as an improvement.[2] On the other hand, the removal of snow from a work-site for maintenance purposes would not be considered an improvement unless such services rendered to enable the value of the land to be enhanced.[3]

Owner, Contractor or Subcontractor

Although we will expand in greater detail in subsequent weeks on who qualifies to be an owner, this portion of the provision highlights that the provision of services and materials to an improvement for land must be performed only to people qualified to receive such services or materials.

The rationale behind this concept is simple: suppose you are an owner, and someone, who you have no contractual relation with, hires a party to perform various services on your property, and subsequently disappeared without paying for said services. You did not ask for these services, but they were performed. It would be unjust and unreasonable to impose a cloud on your property’s title even if your land improved and increased in price as a result of the services.

Accordingly, the CLA grants a remedy as against an owner, contractor, or subcontractor because it can reasonable be implied that such individuals either requested, or envisioned, the type of services that would or could be provided.

Specific Services and Materials 

Although this is a vast topic and requires further deliberation, note that this requirement entails that a lien can only be secured for the specific unpaid work claimed. For example, suppose you provide work at a project early in the year and receive payment for same (“Job A”). Several months later you perform additional work at the same project and, accordingly, do not receive payment (“Job B”). A claimant therefore cannot attempt to lien for work as part of Job A when it would only be entitled to work for Job B (although there are many additional considerations which will be covered in subsequent weeks).

Conclusion 

Although section 14 presents some hurdles and check-points to meet to qualify for lien rights, these are but the tip of the ice-berg for ensuring that a claimant ultimately preserves and subsequently secures such rights. Tune in next week for the first part of Computation of Time in the CLA for the preservation of lien rights!

 Until next week!

 [1] Construction Act, R.S.O. 1990, c. C.30, s. 14.

[2] Benny Haulage Ltd v Carosi Construction Ltd (1998), 1998 CarswellOnt 3036, at paras 41, 73-79 (Gen. Div.).

[3] G Newman Aluminum Sales Ltd v Snowking Enterprises Inc (1980), 1980 CarswellOnt 551, at para 9 (H. Ct. J.).

The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of Sutherland Law's lawyers by email or telephone.