Case Comment:
Rockhill Construction Ltd. v Ottens
By Catherine DiMarco
One interesting aspect of practicing construction law is finding a decision which appears to be narrow and straightforward, however, if one scratches the surface, one can often uncover interesting and esoteric issues which can help in practice to avoid a similar pitfall.
In the case of Rockhill Construction Ltd v Ottens,1 the Ontario Superior Court of Justice considered the application of the two-year deadline to set a lien action down for trial under section 37 of the (then in force) Construction Lien Act, RSO 1990 c C 30 in the circumstances of an amended statement of claim. The wording of section 37 remains the same under the new Construction Act, RSO 1990 c C 30.
Background Facts
The plaintiff, Rockhill, registered a claim for lien in the amount of $73,897.56 on August 21, 2015 on title to the defendants’ (the Ottens’) property. On October 1, 2015, Rockhill issued a statement of claim, claiming entitlement to a lien and asserting a breach of contract claim. Rockhill’s statement of claim did not specifically reference the lien it had registered.
Rockhill then amended its statement of claim on October 6, 2015. The key amendment to the statement of claim was the addition at paragraph 5 of the words “with lien registered as YR2343288”. That same day, Rockhill issued a certificate of action under section 36(3) of the Construction Lien Act. For reasons not explained in the decision, the Certificate of Action was not registered on title until October 29, 2015.
Thus, the only difference between the original statement of claim and the amended statement of claim was that the amended statement of claim specifically referenced the registration number of Rockhill’s claim for lien registered on title.
On October 5, 2017, Rockhill delivered its trial record. This was more than 2 years after it issued the original statement of claim, but less than two years after it amended its statement of claim to specifically reference the claim for lien registered on title to the property.
A search of the parcel register revealed that there were no further claims for lien or certificates of action that had been set down for trial under which Rockhill could purport to enforce its lien.
The Motion
The defendant homeowners, the Ottens, moved under section 46(1) of the Act for an order declaring Rockhill’s lien expired, an order vacating the registration of the claim for lien from title to the property, and an order dismissing the action to enforce the lien. The Ottens argued that Rockhill’s lien expired under section 37(1) on October 1, 2017, because the action was not set down for trial within two years of the date the statement of claim was issued (October 1, 2015).
Rockhill, in turn, argued that its lien had not expired, because it delivered its trial record on October 5, 2017, before the two-year expiration period under section 37(1), from the date the statement of claim was amended.
Section 46(1) provides that, where a perfected lien that attaches to the premises has expired under section 37, the Court, upon the motion of any person, shall declare that the lien has expired and shall make an order dismissing the action to enforce that lien and vacating the registration of a claim for lien and the certificate of action in respect of that action.
The Analysis
In his reasons for decision, Justice Charney considered the analysis of Justice Corbett in K.H. Custom Homes Ltd v Smiley.2 Justice Charney underscored the mandatory statutory requirements to set a lien action down for trial before the two-year anniversary of the issuance of the statement of claim. There is neither residual discretion of the Court to extend the timeline, nor to provide relief from failure to comply.
The narrow issue before Justice Charney was the date of “the commencement of the action that perfected the lien”. Specifically, whether the date was October 1, 2015, when the statement of claim was issued, or October 6, 2015, when the statement of claim was amended to include specific reference to the lien registered on title to the property.
Respectfully, I disagree with the argument made by Rockhill that a statement of claim that perfects a lien must plead the actual lien in the legal description of the premises referenced in the claim in order to comply with the Act. By that rationale, the October 1, 2015, claim could not be said to “perfect” the lien, since the statement of claim did not reference the specific registration number of the claim for lien.
Justice Charney granted the Ottens’ motion on the basis that the issuance of the statement of claim on October 1, 2015, was “the commencement of the action that perfected the lien”, and, therefore, the second anniversary of that date was October 1, 2017. Justice Charney held that: (i) this was consistent with Rules 14.01 and 14.03 of the Rules of Civil Procedure; (ii) the original statement of claim claimed entitlement to a lien under the Construction Lien Act; and (iii) there was no authority provided to support Rockhill’s proposition that the statement of claim must specifically reference the registration number of the lien claimant’s claim for lien. On that basis, His Honour held, Rockhill failed to comply with the requirements of section 37.
Take-Away
It appears that, had Rockhill issued a fresh statement of claim and fresh certificate of action prior to November 2, 2015, and had Rockhill set the new action down for trial within 2 years of the issuance of the fresh statement of claim, the lien likely could have been saved.
Practitioners would be wise to follow this route if he or she finds themselves in similar circumstances in the future. Last supply as set out in the claim for lien was August 4, 2015, thus the claim for lien need only have been perfected by November 2, 2015. There was sufficient time for Rockhill to “re-perfect” the claim for lien by issuing a new statement of claim, and registering a certificate of action on title.
Going forward, because of the increased times to preserve and perfect a lien before the lien expires (60 days to preserve, plus 90 days to perfect), there will be fewer time pressures to consider issues like the ones encountered by Rockhill in this matter, and more time to consider and craft a solution that preserves the lien claimant’s rights.
1 2018 CarswellOnt 6911 (SCJ)
2 2015 ONSC 6037 (Ont. S.C.J.)