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Ontario Superior Court clarifies the limitation period under the Construction Act

Feb 27, 2019 | Blawg 

The Ontario Superior Court has once again confirmed that time limits under the Construction Lien Act (now the Construction Act) (the “Act”) will be strictly applied. In Rockhill Construction Ltd. v. Ottens, the Court discharged a construction lien and dismissed the lien action because it was not set down for trial within two years of the date on which the claim was issued. The wrinkle was that the claim, which was issued on October 1, was deficient and the deficiency was not fixed until October 6. The Court found October 1 to be the operative date and held that the limitation period was triggered when the statement of claim was issued.

The Facts

The owners of a home (the “Home Owners”) entered into an agreement with Rockhill Construction Ltd. (“Rockhill”) to renovate their home (the “Property”). On August 21, 2015, Rockhill registered a lien (the “Lien”) against title to the Property under the Act as a result of the Home Owners’ failure to pay outstanding invoices.

On October 1, 2015, Rockhill issued a statement of claim against the Home Owners, seeking both a lien under the Act and damages for breach of contract. However, the statement of claim did not specifically reference the registration number of the Lien, contrary to the provisions of the Act.  On October 6, 2015, Rockhill amended its statement of claim to reference the registration number of the Lien.

Under the Act, Rockhill was required to set the action down for trial within two years after the date the action was commenced, but it did not do so until October 5, 2017, which was more than two years after the original statement of claim was issued, but just under two years after the claim was amended.

The Home Owners argued that the Lien expired on October 1, 2017, being the date that was two years after the issuance of the original statement of claim, and that, therefore, the action to enforce the Lien should be dismissed and the Lien should be removed from title.

Rockhill argued that the two year period did not start running until October 6, 2015, when its claim was amended.  Rockhill asserted that since a statement of claim for a lien must expressly reference the registration number of the lien in order to comply with the Act and that requirement was not satisfied until the statement of claim was amended on October 6, 2015, October 6 was the relevant date.

The Court held that the original statement of claim specifically claimed a lien on the Property and the amended claim simply provided particulars of an allegation which was set out in the original statement of claim.  Accordingly, the Lien expired on October 1, 2017, two years after the original statement of claim was issued. 

The action to enforce the Lien was dismissed and the registration of the claim for lien on the Property was removed.  This meant that until Rockhill obtained a judgment for the unpaid invoices (which it was still entitled to pursue) and furthermore obtained an order allowing the judgment to be enforced against the assets of the Home Owners, the Property was not affected.

The Takeaway

This case leaves no doubt that the two year limitation period set out in the Construction Act will be strictly applied.  In this case, although the statement of claim was not fully compliant with the Act, the limitation period nevertheless began to run when the claim was issued.  A subsequent amendment of the claim did not extend the limitation period.

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