Can Section 6 of the Construction Lien Act Save Me?
May 31, 2016
There are certain situations where Section 6 of the Construction Lien Act (CLA) can be used to cure a defect in a lien, but only if the defect is minor.
Section 6 of the CLA states:
Minor irregularities
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.[1]
*Note that only the editor’s heading, which does not form part of the legislation, and not the section itself refers to minor irregularities.
Section 6 Test
As expressed in the recent decision of Master Albert in Govan Brown & Associates Ltd. v. Equinox 199 Bay Street Co., the test for whether a defect can be cured under Section 6 depends on the factual circumstances:
A lien claim that fails to comply with the requirements of subsection 34(5) of the Act is invalid. But if it is merely a failure to “strictly” comply then absent prejudice the lien claim remains valid unless the court determines that it is invalid due to prejudice. The test is one of degree.[2]
When there is a mistake in the lien, the court must first consider whether the non-compliance is a minor or technical irregularity, and if it is, then section 6 can be applied. If not, only then may the court consider the question of prejudice. This is based on a close reading of the statute itself.
Master Sandler, in Williams & Prior Ltd. v. Taskon Construction Ltd, stated, “strict compliance with these sections is the required standard. A failure to comply strictly can be over looked provided no prejudice has been suffered. But if the failure to comply is more than a failure to comply strictly, then s. 6 cannot apply.”[3]
In Williams & Prior, the plaintiff registered a lien for work done for a numbered company (“379”) but failed to name it as an owner. Instead, Williams registered the liens as against the leasehold interest of the two head tenants and landlords, however 379 was the subtenant. 379 was later added as a party defendant because it was held to be an owner under s. 1(1). After being added as a defendant, 379 moved to dismiss the action and to discharge and vacate the lien.
Master Sandler found that the failure of the lien claimant to name 379 as an “owner” i.e., as a person whose interest in the premises was improved was an “extremely serious error” and could not be cured by section 6. This was not a case of misnomer, but rather went beyond a mere minor or technical irregularity.
What then is a minor or technical irregularity?
Master Albert, in Govan, concluded that a lien claimant may register the lien against the incorrect leasehold owner and have section 6 be available to cure it, but only when the mistake is due to a “corporate name shell game”.
In Ambler-Courtney Inc. v. CAAG Land Development Ltd., the court agreed that s. 6 could be used where the legal description of the land was improper because it referred to the old registry system entry which had an outdated description of the land that included only part of the parcel.[4]
In Petroff Partnership Architects v Mobius Corp, the court took into account the entire lien document in deciding that the claimant’s failure to name the tenant as an owner in the correct section of the form could be cured by s. 6.[5] The Court did so because the lease was registered on title, the tenant was identified as an owner under the PIN and the tenant was also identified as an owner elsewhere in the form.
CONCLUSION
The test for whether a defective lien can be cured by Section 6 is one of degree and must be judged on a case by case basis. However, where a party fails to name the owner, the correct property or both, such an error would likely be considered a serious error and Section 6 will not be available to assist you.
[1] Construction Lien Act, RSO 1990, c C.30, s. 6.
[2] Govan Brown & Associates Ltd. v. Equinox 199 Bay Street Co., 2014 ONSC 3924, 2014 CarswellOnt 8856 at para 28.
[3] Williams & Prior Ltd. v. Taskon Construction Ltd., [2003] O.J. No. 498, 120 A.C.W.S. (3d) 941, 22 C.L.R. (3d) 1, at para. 75. and Wellington Plumbing & Heating Ltd. v. Villa Nicolini Inc., 2012 ONSC 5444, at para. 41.
[4] Ambler-Courtney Inc. v. CAAG Land Development Ltd., 1998 CarswellOnt 1636, 38 C.L.R. (2d) 58 at para 6.
[5] Petroff Partnership Architects v. Mobius Corp., 2003 CarswellOnt 2260, [2003] O.J. No. 2434 at para 22.
