Lien on Me: Possibility of Correcting Errors when Registering Liens

By Sia Moshiri 

The Construction Lien Act (“CLA”) is known for its rigid rules and strict deadlines. This is understandable given the significant consequences of a registered lien.  By putting a lien on title, a party encumbers the property of another before judgement has been given. A lien claimant also has priority over several different types of creditors. Consequently, legislators have made sure that any party who wishes to pursue this remedy must meet several requirements.

What if one makes a mistake? Is all hope lost? A recent decision from the Ontario Superior Court of Justice provides a great reminder of the curative powers of the CLA, and section 6 in particular.

Facts
In Stubbe’s Precast Commercial Ltd. v. King & Columbia Inc., the plaintiff supplied precast to a residential tower owned by the defendant corporation._[1] Two liens totalling $2 million were registered. A significant counterclaim was issued in response.

It came to light that the plaintiff’s lawyer made a mistake: rather than registering the lien documents under the name “Stubbe’s Precast Inc.”, he registered it under the name “Stubbe’s Precast Ltd.”  

The defendant posted security to vacate the lien but brought forward a motion to have the liens discharged since the entity named did not exist. They further argued that, since the CLA provides the very strong remedy of liens, it mandates strict compliance. They said that the defendant corporation suffered prejudice since they were deprived of the ability to argue the invalidity of the certificates of actions (notably no actual certificates of action were filed in this matter)._[2]

The plaintiff countered by suggesting that such a small error should be corrected through section 6 of the CLA which currently states:

6 No certificate, declaration or claim for lien is invalidated by reason only of a failure to comply strictly with subsection 32 (2) or (5), subsection 33 (1) or subsection 34 (5), unless in the opinion of the court a person has been prejudiced thereby, and then only to the extent of the prejudice suffered.  R.S.O. 1990, c. C.30, s. 6; 2017, c. 24, s. 6 (1)._[3]

The plaintiff also relied on an older decision, G.C. Rentals Ltd. v. Falco Steel Fabricators Inc._[4] In that matter, the court faced a very similar situation: the lien documents mistakenly included a “Ltd.” at the end of the lien claimant’s name. The court ruled that this was a “misnomer, not a nullity” and that the liens should not be discharged because of this._[5]

Decision
The court dismissed the defendant’s motion to discharge the lien.

The court, echoing the G.C. Rentals Ltd decision, found that the error here did not render the lien a nullity and felt the error is one of the cases contemplated by section 6 of the CLA._[6] The court found that there was no evidence of prejudice suffered by the defendants:

16 In my view, the slip up here by Mr. Zasada’s office (inserting the suffix Ltd. instead of Inc. in the name of the Lien Claimant), is a self-replicating mistake amounting to misnomer is the minor, technical error contemplated by the Court of Appeal in Gillies Lumber and, as such, as in G.C. Rentals, it does not render the lien claim to be a nullity.

17 As in G.C. Rentals, I find that there is found in this case no evidence that the Defendant was misled, prejudiced or acted to its detriment, in spite of Defendant’s counsel’s very clever argument claiming prejudice. Nor is there any evidence that the Defendant acted to its detriment because of the mistake._[7]

It was clear to the court that the two parties knew “with whom they were dealing.”[8] The court also characterized the defendant’s arguments regarding certificates of action as “shadow-boxing” and did not consider it a strong point in its favour._[9]

Ontario versus BC: A Difference 
A very similar fact pattern in British Columbia led to a very different result. In 581582 B.C. Ltd. v. Habib, the plaintiff filed a builder’s lien against the title of the defendant’s property. _[10] The claim of lien was filed “in the name of ANE Consulting Ltd”. The evidence showed that lien claimant carried on business as ANE Consulting but was incorporated as 581582 B.C. Ltd. The court ruled that the lien was invalid:

8 It is settled law in this province that a builders lien claimant must strictly comply with the requirements of the Builders Lien Act: see Nita Lake Lodge Corp. v. Conpact Systems (2004) Ltd., 2006 BCSC 885 (B.C. S.C.), and Framing Aces Inc. v. 0733961 B.C. Ltd., 2009 BCSC 389  (B.C. S.C.). It is equally well settled law that a non-legal entity has no capacity to file a builder’s lien: see Framing Aces Inc. , and Canbar West Projects Ltd. v. Sure Shot Sandblasting & Painting Ltd., 2010 ABQB 372  (Alta. Q.B. [In Chambers]). Put another way — entities that do not have legal personhood cannot obtain builder’s liens, and only a legally recognized person, such as, for example, a human being, a corporation, or a society, may apply for a builder’s lien. In the present case I am driven to the conclusion that the claim of lien was filed by a non-person._[11]

One must point out that the fact patterns are not exactly the same here: the mistake in BC involved misstating the entire corporations’ name as opposed to putting Ltd. instead of Inc. Furthermore, the CLA is not the same as British Columbia’s Builders Lien Act – especially when it comes to curative provisions. Nevertheless, the stark contrast between these two judgments possibly suggests a cultural difference between how the provinces shall view such errors – with BC courts appearing to be far less tolerant.

Discussion & Takeaways
Stubbe’s Precast Commercial Ltd. shows that it is possible to correct certain mistakes when registering liens as long as the error does not cause demonstrable prejudice.

It should be noted that after July 1, 2018, in the newly amended CLA (which will be called the Construction Act), the new section 6 outlines a non-definitive list of minor errors/irregularities which can be corrected. These include errors made in naming of an owner, a person for whom services or materials were supplied, and the description of the premises (and address for service) relating to the claim for lien.

[1] Stubbe’s Precast Commerical Ltd. v. King & Columbia Inc. 2018 ONSC 995 [Stubbe]

[2] Ibid at para 6

[3] Construction Lien Act  R.S.O. 1990, c. C.30, s. 6; 2017, c. 24, s. 6 (1) Note: After July 1, 2018, certain amendments to the Construction Lien Act shall come into force. See the discussion section of this article for more detail

[4] G.C. Rentals Ltd. v. Falco Steel Fabricators Inc. [2000] O.J. No. 1055, 132 O.A.C. 70 [G.C. Rentals Ltd.]

[5] Ibid at para 10

[6] Stubbe at para 23

[7] Ibid at para 16-17

[8] Ibid at para 18

[9] Ibid at para 6

[10] 581582 B.C. Ltd. v. Habib 2013 BCSC 378 [Habib]

[11] Ibid at para 8