Adjudication, Small Claims, or Lien: Each option has conditionsCanadian Contractor
Construction Act amendments new to Ontario and Saskatchewan are under review across Canada
Canadian Contractor continues an examination of Ontario’s new Construction Act with a look at the adjudication and liens processes. With Saskatchewan adopting the near-exact legislation as Ontario for implementation in 2020, and other provinces having a close look, the changes could be significant for contractors across the country in coming years.
Adjudication seems to be the way to go…
Ontario’s adjudication is designed to make the resolution process quick and relatively easy: Parties have five days to submit their documents to the adjudicator; the adjudicator has 30 days to make a determination unless an extension is granted by request. The party determined to be liable has 10 days to pay up. This determination can be enforced by the courts for two years.
…but there is another way
However, if that doesn’t work, there is always the court process. Even this has been simplified, at least at first glance. Jonathan Martin, Troy Barit and Chad Eggerman of Miller Thompson LLP, co-authors of an article posted on mondaq.com, write, “Under the Act, effective July 1, 2018 and subject to the Act‘s grandfathering rules, construction lien claims under $25,000.00 can now also be referred to the Small Claims Court.”
However, the authors point out that the word “referred” is key. “Construction lien claims cannot be commenced (“perfected“) by way of a statement of claim issued in the Small Claims Court.” The lien action must be commenced in a regular court and only then “referred” to Small Claims by a Superior Court judge. While this referral to Small Claims makes smaller claims less cumbersome and potentially less expensive, there are still issues to be considered.
While authors Martin, Barit and Eggerman suggest the Small Claims process is meant to be faster and less expensive, it also restricts successful parties to a maximum of $3750 in their own legal cost claims. It also means that claimants will need to hire a lawyer to represent them at the Superior Court level while seeking the referral to Small Claims. Even then, “Small Claims Court does not have the final say in deciding the case and awarding a judgment,” they write. “The Act provides that the results of the Small Claims Court lien action constitute a ‘report.’” In order to be enforceable, they say, a report from the Small Claims Court must be then confirmed by the Superior Court.
In other words, claimants could find themselves in front of a Superior Court judge twice, each time requiring legal representation. No wonder the adjudication process will be the preferred route to take for smaller disputes, importantly while work is in progress.
Note: It should be noted that some amendments were passed in late December 2018 that correct and clarify certain transitional matters concerning Ontario’s new Act. Be sure to consult with your legal advisor to learn how the Act might impact your business.
What is the status quo for liens in the rest of Canada?
In the meantime, the liens process for claims continues, and is largely similar across all provinces. In many, the term is Mechanics Liens in place of Builders Liens. Here is a quick summary of some key filing deadline provisions which range from 30 to 60 days.
They call it the Forty-Five Day Rule. A lien must be filed within 45 days after the issuance of the Certificate of Completion, or if not applicable, within 45 days after completion, abandonment or termination of the Head Contract, or else the lien will be invalid. If a certificate of completion has been issued with respect to a contract or subcontract, the claims of lien of the contractor or subcontractor, and any persons engaged by or under the contractor, may be filed no later than 45 days after the date on which the certificate of completion was issued.
A Builders’ Lien must be registered at the Land Titles Office within 45 days from the date the work is completed, or the materials supplied to the project site.
Pending new legislation, Builders Liens must be filed or registered within 40 days from the date the work is completed or the materials were supplied to the project job site.
Liens must be filed 40 days from the date of substantial completion of the project.
Quebec Legal Hypothecs for construction must be filed within 30 days of the “end of work.” End of work does not have a definitive description in Quebec. It is typically viewed as the end of a contract, date last working date on a job site or date of last supply.
A Mechanics Lien for wages and services must be filed within 30 days from the date of last work. A lien for materials must be filed within 60 days from the date of “last supply or furnish.” All other claims for work, not indicated above, must be filed within 60 days of completion or abandonment of the contract.
A Builders Lien must be registered within 60 days from the date of completion or abandonment of the contract. A lien claim for wages can only include up to a maximum of 30 days’ worth of unpaid wages in Nova Scotia. The lien claim must be filed within 60 days of the last date and there is no way to extend the filing deadline.
Prince Edward Island
A Mechanics Lien must be filed or registered within 60 days from the completion or abandonment of your contract for work, services or materials supplied.
A contractor and subcontractor have 30 days from the completion or abandonment of the contract to file a Mechanics Lien. Material suppliers also have 30 days from the date that the last supplies were delivered at the job site, to file.
A Builders Lien must be registered at the Yukon Land Titles Office within 30 days of the work being completed and-or the materials supplied to the project job site.
All lien claims must be filed or registered within 45 days of one of the following:
Completion or abandonment of the contract;
Date of last supply of materials;
Last date labour was supplied for wages or;
Last supply date or contract expiry for machinery.
Did you miss Part 1 of this 2-Part series?
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