In Ontario, the Construction Act governs the rights and obligations related to construction liens, including the expiry of lien rights. One particular aspect of this legislation that can impact the expiry of construction lien rights is a hiatus in supply—essentially, a pause or break in the supply of services or materials to a project. Understanding how a hiatus in supply affects the timing for preserving and perfecting a construction lien is crucial for contractors, subcontractors, suppliers, and owners involved in the construction industry.

The Basic Framework for Construction Lien Timelines

Under the Construction Act, a lien must be preserved by registering a claim for lien against the title of the property, typically, within 60 days after the last day of supplying services or materials to the project (which constitutes the “supply end date”). Following preservation, a lien claimant has an additional 90 days from the supply end date to perfect the lien by commencing an action in court and registering a certificate of action.

Impact of Hiatus on Supply

A hiatus in supply can complicate the determination of the “last day of supply,” potentially affecting when lien rights expire. The Act recognizes that work on a construction project may not proceed in a continuous sequence and that there may be legitimate breaks in supply for various reasons, such as weather conditions, waiting for permits, or other logistical challenges.

How Hiatus Affects Lien Timing

1. Continuous Supply: If the hiatus is part of the normal course of construction work, and the supply of services or materials is deemed continuous, the clock for lien rights expiry starts only after the actual completion of work or delivery of materials, considering the hiatus as part of the ongoing project timeline.
2. Significant Breaks: If the hiatus represents a significant break not considered part of the normal project timeline, the period before the hiatus could be treated as a separate supply period for the purpose of lien rights. In such cases, lien rights related to work or materials supplied before the hiatus may need to be preserved and perfected independently from those supplied after the hiatus resumes.

Legal Interpretation and Practical Advice

The determination of whether a hiatus in supply resets the clock for lien rights or is considered part of a continuous supply is subject to the legal interpretation of the Act and caselaw and depends on the specific circumstances of the project. Courts will look at the intention of the parties, the reasons for the hiatus, and the nature of the supply to determine if the supply should be considered continuous.

For parties involved in a construction project experiencing a hiatus in supply, it is advisable to:

• Document the Reasons for Hiatus: Keep detailed records of the reasons for any breaks in supply, including any agreements or communications between the parties regarding the hiatus.
• Monitor Lien Deadlines Closely: Be vigilant about tracking lien preservation and perfection deadlines, considering the potential impact of any hiatus in supply.
• Seek Legal Advice: Consult with a legal professional specializing in construction law to assess how a hiatus in supply may affect your lien rights and to ensure that your rights are preserved and perfected in accordance with the Act.

Conclusion

A hiatus in supply can have significant implications for the expiry of construction lien rights in Ontario. The key to managing these implications lies in understanding the nuances of the Construction Act, closely monitoring project timelines and lien deadlines, and seeking expert legal guidance when necessary. By taking these steps, parties can better navigate the complexities of lien rights and protect their financial interests in construction projects.

Please note these materials have been prepared for general information purposes only and do not constitute legal advice. Readers are advised to seek legal advice by contacting Frank Feldman* regarding any specific legal issues.