Ontario’s Open for Business Act, 2010 (OFBA) amended numerous statutes, including the Construction Lien Act (CLA).
The OFBA amendments are probably the most significant changes to the Province’s construction lien legislation in 20 years. These amendments have come into force in stages, with the balance becoming effective on July 1, 2011. Coming-into-force dates for the various provisions are noted below.
The principal amendments consist of:
- an expanded definition of “improvement”
- a requirement for developers of land intended to be registered under the Condominium Act, 1998 to publish notice prior to registration
- repeal of the requirement for an Affidavit of Verification and changes to reflect electronic registration in the land registry system
- elimination of the requirement for the “sheltering statement” when vacating the registration of a Certificate of Action
DEFINITION OF “IMPROVEMENT” (IN FORCE OCTOBER 25, 2010)
The definition in s. 1(1) of the CLA of an “improvement” which may give rise to a lien right has been expanded to include “the installation of industrial, mechanical, electrical or other equipment on land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works.”
This amendment appears to respond to the case of Kennedy Electric Ltd v Dana Canada Corp., where such installations were found not to constitute improvements and were not, therefore, lienable.
AMENDMENTS AFFECTING CONDOMINIUMS (IN FORCE JULY 1, 2011)
New s. 33.1 of the CLA requires an owner of land that is intended to be registered under the Condominium Act, 1998 to publish notice of the intended registration in a construction trade newspaper at least 5 and not more than 15 days (excluding Saturdays and holidays) before submitting the condominium description for approval. Failure to publish the notice exposes an owner to liability to a person entitled to a lien who suffers damages as a result of failing to preserve a lien before the registration occurs.
There are companion amendments to the General Regulations under the CLA which prescribe new Form 24 for the owner’s Notice of Intention to Register a Condominium under section 33.1 of the CLA.
REPEAL OF REQUIREMENT FOR AFFIDAVIT OF VERIFICATION (IN FORCE JULY 1, 2011)
Section 34(6) of the CLA, requiring each claim for lien to be verified by an affidavit of verification, has been repealed, apparently in response to a conflict with the current realities of the electronic land registry system in Ontario.
The OFBA amendments also potentially broaden the class of individuals who may be cross-examined on a claim for lien, given the deletion of the affidavit of verification.
ELIMINATION OF REQUIREMENT FOR “SHELTERING STATEMENT” TO VACATE REGISTRATION OF CERTIFICATE OF ACTION (IN FORCE JULY 1, 2011)
Section 44(9) of the CLA has been amended to provide that a lien claimant, whose lien is sheltered under a lien that has been vacated, may proceed with an action to enforce the sheltered lien as if the order to vacate had not been made. This amendment has the effect of eliminating the requirement for a lawyer to provide a “sheltering statement” when seeking to vacate the registration of a certificate of action, as had been required by Ontario Regulation 19/99, made under the Land Registration Reform Act. A corresponding amendment has also been made to Regulation 19/99 which now provides that an application to delete a claim for lien, where a certificate of action is registered, can simply include a statement that “the certificate is being deleted in accordance with the CLA”. The amendments to Regulation 19/99 also come into force on July 1, 2011. These amendments to the CLA and Regulation 19/99 appear to have responded to concerns raised by members of the bar, given the difficulty in affirmatively stating that a particular claim for lien was not sheltering.