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Deadline Dilemmas: Navigating the Statutory Timelines for Liens
Constructive Thoughts Newsletter

Homeowners sought to remove a mechanics’ lien filed by their contractor for renovation work, arguing that the lien was registered and perfected outside the statutory limit. The Court dismissed the homeowners’ application to vacate the lien at this preliminary stage, citing significant factual disputes regarding the true last date of supply that necessitate a trial for resolution. This decision underscores the importance of precise documentation relating to the last date of supply, and highlights how the court will treat cases where the last date of supply is unclear.

 

In January 2023, the Applicants - Environmental Applications Group Inc., along with individuals Giovanni Sferrazza and Michelle Murray - contracted with Sam Design to renovate and decorate their home. By August 2023, Sam Design said it had completed 90% of the project and requested final payment. Disagreements arose over unpaid balances, work deficiencies, and whether certain tasks remained undone.

On August 16, 2023, Sam Design informed the Applicants by email that it would pause subcontracted work due to these disputes. In response, the homeowners requested that Sam Design return and finish the remaining tasks they believed were already paid for. One week later, Sam Design registered a mechanics’ lien against the property, indicating August 16 as its “last date of supply.” Under the Newfoundland Mechanics’ Lien Act, R Sam Design was then required to commence an action and register a Certificate of Action within 90 days of its last date of supply. The action was filed on October 27, but the Certificate of Action was not registered until November 20—96 days after August 16. 

The homeowners argued that the 90-day limit had expired by the time the Certificate of Action was filed, leaving the lien with no legal force. Sam Design countered that it continued supplying materials - and that some subcontractors completed tasks - well after August 16, which would shift the 90-day window accordingly.

Core Legal Question: Last Date of Supply

At the heart of the dispute lay the question of the “last date of supply,” which triggers the 90-day timeline under section 24(1) of the Mechanics’ Lien Act. If the last date was August 16, then more than 90 days had elapsed before Sam Design registered the Certificate of Action, making the lien enforcement steps out of time. However, if services or materials under the renovation contract were provided after August 16, the lien may have been perfected in time.

The homeowners argued that items they collected at Sam Design’s retail store after August 16 were purchased separately, completely unrelated to the renovation agreement. Sam Design claimed that many of those items - such as fixtures and wallpaper - still fell within the scope of the original contract. Both parties agreed subcontractors were on-site into September or October 2023, but they disagreed over who was directing or paying them at that point.

What the Court Said

The Court placed particular emphasis on the factual nature of the dispute. Newfoundland and Labrador’s lien legislation, like all provinces and territories, requires exacting compliance for establishing a lien, but also permits “substantial compliance” under section 19 if the claim form contains minor errors (such as an incorrectly noted last supply date) and no one is seriously prejudiced. The judge noted that section 24(1) ties the 90-day deadline to when “the work has been completed or the materials have been placed or provided.” That means deciding the actual last date is crucial—and is very much a question of fact.

  1. Determining the True Last Date of Supply
    The Court observed that both parties presented conflicting testimony on when the renovation work or material supply truly ended. Sam Design submitted that subcontractors - originally engaged through its renovation contract - were still tiling and installing blinds in September or October, and at least one billed Sam Design directly. The homeowners insisted the subcontractors were personally hired after August 16, which would sever any contractual link to Sam Design’s final date of supply. Sorting out these contradictory accounts, the Court reasoned, required a trial where witnesses could testify under oath, documents could be fully examined, and credibility assessed.  
     
  2. Not the “Clearest of Cases” for Early Dismissal
    Newfoundland and Labrador courts are generally reluctant to vacate a mechanics’ lien on a preliminary application unless it is plainly invalid. Citing past case law, the Court reiterated that a lienholder should not be stripped of its security unless there are clear grounds to do so. Because serious factual disputes persisted, this was not the “clearest of cases” warranting immediate removal of the lien.
     
  3. “Strict” vs. “Liberal” Interpretation
    While mechanics’ liens must be strictly complied with to exist, sections dealing with enforcement (like the time limit to file a Certificate of Action) receive a more liberal interpretation once a lien is validly created. Here, the Court held that if Sam Design supplied services or materials beyond August 16, then the date Sam Design initially wrote on its lien form could be treated as a mere technical error, curable under section 19’s substantial compliance principle. No compelling evidence suggested the homeowners suffered actual prejudice from Sam Design’s apparently late correction of dates.

Outcome

Because of the factual uncertainties, the Court declined to vacate the lien at this early stage and dismissed the homeowners’ application. The disputed dates, completeness of the work, amounts owed, and contractual scope will all be examined further as the lawsuit progresses.

Lessons + Takeaways

The Mechanic’s Lien Act shares many similarities with Alberta’s Prompt Payment and Construction Lien Act (the “PPCLA”), and as such, the principles discussed in this case will be relevant in Alberta. This case demonstrates how the “last date of supply” and potential errors in a statement of lien can shape a dispute. Courts are hesitant to strike liens based on a possible timing error when factual questions remain unresolved. Furthermore, Courts will be willing to apply corrective provisions, such as section 19 of the Mechanic’s Lien Act or section 37 of the PPCLA, to remedy errors and maintain fairness.

To ensure clarity surrounding any potential lien, contractors should carefully document every instance of work or material provision, especially near the end of a project when disputes are simmering. Owners, likewise, should maintain clear records of who performed work and when it was completed, if they intend to argue a lien expired.

If you would like advice on the interpretation and implications of lien rights on construction projects, please contact Anthony Burden or Jordan Lalonde in Calgary, Ryan Krushelnitzky in Edmonton, or any member of Field Law's Construction Group for guidance and assistance in this area.

 

Link to decision: Sam Design Inc. v. Environmental Applications Group Inc., 2024 NLSC 174