On September 27, 2007 the Ontario Court of Appeal held that the installation or repair of an assembly line that was portable and capable of removal from a building did not give rise to lien rights under the Construction Lien Act.
In Kennedy Electric Limited v. Dana Canada Corporation, two subcontractors registered liens against an automobile parts manufacturing facility in which they had installed an assembly line. The assembly line was pre-built by the general contractor at its premises and was tested and inspected. The subcontractors were then retained to take the line apart, transport it to the facility and install it.
The assembly line consisted of 100 platforms and 165 robots and, when installed, was attached to the floor by several thousand chemical and mechanical bolts. The line covered 100,000 square feet of the building, was twenty feet high and weighed approximately 500,000 tons. Transportation of the line required 165 transport trucks.
Court rules assembly line not an “improvement” under CLA
A dispute arose and two subcontractors, Kennedy Electric and Cassidy, registered liens against the facility. At trial, the court concluded that the assembly line could not be considered an “improvement” to the land, as required by the Construction Lien Act (CLA) to give rise to lien rights. In assessing lienability, the court considered the issue of portability and the degree to which the equipment was integrated into the building.
The Court of Appeal unanimously held that the subcontractors did not have lien rights under Ontario’s Construction Lien Act. The court relied on the trial judge’s finding that the assembly line was portable and found that the trial judge had made no “palpable and overriding error.” Speaking for the court, Justice Armstrong went on to say, “[w]hile a different judge may have come to another conclusion on the issue of portability, I am satisfied that it was open to the trial judge to reach the conclusion that he did.”
Lienability a factual determination
The court reviewed a number of other cases on the issue and concluded that, “[w]hether [the cases] fall within the definition of improvement is essentially a fact-finding exercise. While a trial judge must apply the statutory definition of ‘improvement’ to the evidence and he or she is therefore engaged in deciding a question of mixed fact and law, the factual determination is by far the more significant element in the exercise.” Justice Armstrong summarized the court’s view, saying, “In most cases, the installation or repair of machinery used in a business operated in a building, particularly where the machinery is portable, will not give rise to lien rights under the CLA. On the other hand, where machinery is installed in a building for the use of a business and is completely and permanently integrated into the building, a lien claim will arise.”
This decision will be of interest to both purchasers and suppliers of machinery and equipment in manufacturing and other facilities. Kennedy Electric Limited v. Dana Canada Corporation http://www.ontariocourts.on.ca/decisions/2007/september/2007ONCA0664.htm