Once lien rights are extinguished, they are extinguished forever. After a lien is first registered on title, does a withdrawal of the Claim for Lien instrument forever extinguish those lien rights? In Gay Company Limited v. 962332 Ontario Inc., 2023 ONSC 6023, survival of the claimant’s lien rights turned on this question.
Following a statutory interpretation of the Land Titles Act[1] and review of the procedures and practice of the Land Registrar, the Ontario Superior Court of Justice held an instrument must be certified by the Ontario Land Registrar to be considered “registered”. As a result, a withdrawal of an uncertified “registration” may be made without affecting the validity of future registrations.
Registration and Discharge of Claims for Lien in Ontario
When liens attach to the premises where the materials or services were supplied, the first step to preserve a lien claim in Ontario is to register a Claim for Lien on title to the premises through the Land Registry Office. The Construction Act describes how lien rights are preserved in section 34.[2] The registration procedure is set out in section 78 of the Land Titles Act.[3]
Upon receipt of a registration for a lien, the Land Registrar formally has 21 days to determine whether to certify the instrument,[4] although in practice the determination may take longer. If the Land Registrar decides not to certify the lien registration, a message is sent to the lien claimant providing reasons for the determination. The claimant has 30 days to remedy issues for the non-certification or appeal the Land Registrar’s decision.[5] If the claimant fails to rectify the registration or file an appeal within 30 days, the lien registration is not considered complete or certified. The Land Registrar may proceed as if the lien was not submitted for registration.
Where a Claim for Lien registration is certified by the Land Registrar, the lien may be discharged by the registration of an Application to Delete Construction Lien, or deleted by the lien claimant through the registration of an Application General (provided certain conditions are met).[6] Once a discharge of lien is registered and certified, the lien cannot be revived by section 48 of the Construction Act.
Facts
In Gay Company Limited v. 962332 Ontario Inc., the defendant lien claimant attempted to register a construction lien against the property of the plaintiff, Gay Company Limited (“Gay Company”), on two occasions.
On the first attempt, the law clerk handling the defendant’s Claim for Lien made a typographical error in the lien claimant’s name. While the clerk prepared an Application to Delete the First Claim for Lien to rectify the error, the responsible lawyer instead instructed the clerk to submit a registration for a Second Claim for Lien with the correct name. The clerk accidentally submitted both the Application to Delete the First Claim for Lien (which the lawyer did not advise the clerk to file) and the Second Claim for Lien to the Land Registry Office.
Subsequently, the Land Registry Office informed the law clerk that the Second Claim for Lien could not be registered because of another error in the lien claimant’s name. The law clerk responded by requesting the Land Registry Office to withdraw the First Claim for Lien and the Application to Delete the First Claim for Lien. The law clerk also corrected the claimant’s name in the Second Claim for Lien.
Consequent to these requests and changes, the Land Registrar certified the Second Claim for Lien and withdrew both the First Claim for Lien and the Application to Delete the First Claim for Lien. At the time of the motion, the only instrument remained against the title to Gay Company’s property was the Second Claim for Lien.
Issue
Gay Company took the position that the defendant’s lien was discharged when the Application to Delete the First Claim for Lien was submitted. Section 48 of the Construction Act provides that the discharge of lien is irrevocable and a discharged lien cannot be revived. Gay Company argued that the First Claim for Lien was discharged by the Application to Delete the First Claim for Lien, lien rights were extinguished and the Second Claim for Lien was invalid.
The defendant argued that the First Claim for Lien and the Application to Delete the First Claim for Lien were both properly withdrawn, never certified, and thus not registered. Therefore, the withdrawal of the First Claim for Lien had no impact on the Second Claim for Lien.
The Decision
In considering the purpose and language of the Land Titles Act, the Land Registry Reform Act[7], the procedures of the Land Registry Office and the format of the Parcel Register, the Court ruled that an instrument “must be received, certified and not withdrawn before it is certified. Once an instrument is certified, then the registration is complete.”[8]
As the First Claim for Lien and the Application to Delete the First Claim for Lien were not certified by the Land Registrar, they were not “registered” within the meaning of the Land Titles Act and could be withdrawn without extinguishing lien rights. The First Claim for Lien could not be discharged as it was never “registered”. Further, section 48 of the Construction Act did not apply to prohibit the registration of the Second Claim for Lien.
The lien claimant’s rights lived on, despite the withdrawal of the unregistered First Claim for Lien.
Concluding Thoughts
- Claimants should aim to register liens correctly the first time, without errors, and should not proceed lightly with deletions or discharges. The extinction of lien rights is permanent. In this case, had the claimant’s Application to Delete been registered within the meaning of the Land Titles Act before the Second Claim for Lien had been registered correctly, the outcome may have been different.
- Given that instruments are only formally considered “registered” once they are certified, it may be prudent to require proof of certification before transferring funds or paying amounts in exchange for the registration of an instrument on title.
[1] Land Titles Act, RSO 1990, c L 5.
[2] Construction Act, R.S.O. 1990, c. C.30, s. 34.
[3] Land Titles Act, RSO 1990, c L 5, s. 78.
[4] Gay Company Limited v. 962332 Ontario Inc., 2023 ONSC 6023, at para. 48.
[5] Best practice is to alert the Land Registrar that changes are being made to rectify the instrument, otherwise the Land Registrar may consider the instrument to have been withdrawn.
[6] See, “Application to Delete Construction Lien or Application General” by Andrea Lee, Glaholt Bowles LLP, dated January 20, 2016.
[7] Land Registration Reform Act, RSO 1990, c L 4
[8] Gay Company Limited v. 962332 Ontario Inc., 2023 ONSC 6023, at para. 55.
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