Two recent cases from the Ontario Superior Court of Justice reviewed the type and level of evidence required for a court to declare a lien expired on an ex parte motion under Section 45 of the Construction Act:^[1] Mobilinx v Edge1^[2] and 2829785 Ontario Inc. v. Total Home & Yard Improvement Inc.^[3]

Ex parte discharge motions are heard without notice to the lien claimant. If granted, the motion permanently disposes the claimant’s rights in respect of that lien. For those reasons, they are held to a high evidentiary onus.

In Mobilinx, an ex parte motion to declare a lien expired was dismissed without prejudice to moving again on further evidence.^[4] In 2829785 Ontario, an ex parte motion was also dismissed without prejudice to moving again on further evidence. It was brought again with additional affidavit evidence, but was once again dismissed with permission to move again on prior notice to the lien claimant.^[5] Both decisions provide helpful motion practice points to avoid repeat attempts and dismissals.

Key Takeaways for Section 45 Ex Parte Motions to Declare Liens Expired

• A person or party moving to declare a lien expired under Section 45 of the Construction Act has to meet a high evidentiary onus: “evidence on a motion to declare a lien expired must satisfy the court that no additional evidence or argument from the absent lien claimant would reasonably make a different in disposition of the motion.”^[6] Prior endorsements from the court in relation to the same project, without more, do not satisfy this onus.
• Evidence in the form of affidavits from individuals without any direct project knowledge may be insufficient. Direct evidence of the work performed, the improvement and the applicable procurement process may be necessary to determine which version of the Construction Act applies if the Act’s transition provisions are in issue.
• Ex parte motions dealing with non-Toronto properties can be brought in Toronto with leave, opposed motions dealing with non-Toronto properties cannot be brought in Toronto.

1) The Mobilinx Decision

In Mobilinx, the contractor moved under Section 45 of the Construction Act to discharge a lien registered by a rental equipment corporation, Edge1, on the basis that the lien was not preserved in time.^[7]

The Construction Law Act was amended on July 1, 2018 with further amendments on October 1, 2019. Section 87.3 of the Construction Act governs which version of the Act applies. This is important because the previous Construction Lien Act (“CLA”) has shorter deadlines for the preservation and perfection of liens. Pursuant to Section 87.3 of the Act, the shorter lien deadlines under the CLA continue to apply to a non-leasehold improvement if the procurement process for the improvement commenced before July 1, 2018 by the owner of the premises.^[8]

Mobilinx moved to discharge Edge1’s lien on the basis that the old CLA continued to apply to the project, and as a result, Edge1 had failed to preserve its lien within the shorter deadlines of the old CLA.

In support of its motion, Mobilinx relied on the court’s prior endorsement to vacate a lien on the same project. Although the prior endorsement accepted that the old CLA continued to apply to the project, the court did not accept this as sufficient evidence on this motion for two reasons:

1. The motion record did not include motion materials for the prior motion that was endorsed, so there was no additional support that the old CLA continued to apply to the project. Mobilinx’s evidence was limited to a law clerk's affidavit which included evidence from Infrastructure Ontario's website. The judge found this evidence to amount to unverifiable hearsay. Mobilinx did not tender evidence from those who would have direct evidence on the procurement process, such as representatives of the project.
2. The evidentiary requirements between Section 44 ex parte motions to vacate liens from title and Section 45 ex parte motions to discharge liens are not the same.^[9] Section 44 vacating motions are a form of interlocutory relief that does not prejudice an absent claimant because the security interest is just swapped for another form of security. Conversely, a Section 45 motion is a final order because declaring a lien expired is irrevocable. An expired lien cannot be revived, therefore there is a high evidentiary onus on the moving party who seeks a declaration that the lien has expired.^[10]

The motion was dismissed but without prejudice to Mobilinx moving again on further and better evidence showing that procurement for the improvement occurred prior to July 1, 2018, or in the alternative, have the motion brought on notice to Edge1.

2) The Total Home & Yard Decision

In Total Home & Yard, the owner moved under Section 45 of the Construction Act for an order declaring the contractor's lien expired. The subject property was in Picton, Ontario.

This was the owner’s second attempt to discharge the lien. Previously the motion had been dismissed without prejudice to the owner returning with “evidence from the owner on the triggering events for a contractor’s lien.”

The court dismissed the motion because no better evidence was tendered. The court found that "after two 'kicks at the can' the lien claimant is entitled to notice of any further motion to declare its lien expired.”^[11] The motion was dismissed again without prejudice to a third attempt, but on the condition that notice would be given to the lien claimant.

The court stated that a "chronic problem" with Section 45(1)(a) motions are that these motions often overlook the express requirement for proof supporting that the lien has not been preserved or perfected within the time allowed, pursuant to Section 45(1)(b).^[12]

The only evidence tendered to support the expiry of the lien was:

1. a copy of the contract;
2. the affiant's statement that the lien claimant completed work in July 2022; and
3. the fact that a certificate of action had not been registered.^[13]

The court found this evidence to be too limited and unsubstantiated to justify a lien discharge. The Associate Judge also noted that there was a concerning discrepancy between the purchase order and the lien claim which was not addressed in the materials. The total contract price on the purchase order was $140,340.20 whereas the claim for the lien lists the total contract price as $169,182.47. This discrepancy should have been addressed in the motion materials.^[14]

The court provided examples of further evidence that should have been tendered to support the motion to declare the lien expired:^[15]

• Correspondence from the lien claimant regarding the work performed;
• The lien claimant's invoices;
• Demands for payments; and
• Evidence of the scope of work and completion.

Concluding Comments

The discharge of a lien without notice is a powerful remedy. After lien rights are discharged, they are gone forever. The construction specialist Associate Judges in Toronto remain vigilant for imperfect motion records that do not satisfy a high evidentiary onus for the final disposition of claimants’ lien rights. To avoid dismissals and repeat attempts, owners, contractors and others who wish to discharge expired liens should ensure evidentiary records are complete and leave no doubt that a permanent discharge is justified.