Landmark II Inc v 1535709 Ontario Limited, 2011 ON CA 567
(Released August 31, 2011)
In 2004, the plaintiff Landmark II Inc.
("Landmark") entered into a written
contract with the defendant 1535709 Ontario Limited
("1535709") to expand a truck parking
lot on 1535709's property. The entire contract price was
$58,850, to be paid in four equal instalments based on the
construction milestones set out in the contract. When 1535709
refused to pay the second instalment when due, Landmark abandoned
the job, filed a lien for the unpaid balance of the contract and
commenced a claim of quantum meruit for the same amount. 1535709
counterclaimed for damages suffered as a result of Landmark's
failure to complete the contract.
The trial judge found that 1535709 had breached the contract by
failing to pay and that Landmark was not obligated to continue its
work without payment. The trial judge found that Landmark's
work as of the date of abandonment was valued at $16,000 and, after
deducting the amount of the first payment, she determined that
1535709 owed Landmark $1,287.50. 1535709's counterclaim was
dismissed. On appeal, the Divisional Court upheld the trial
judge's decision in brief written reasons.
Landmark subsequently appealed to the Court of Appeal. Of
importance, Landmark contested the trial judge's finding of
liability for having registered a lien in an amount that was
grossly excessive to the amount owed to it, pursuant to s. 35 of
the Construction Lien Act ("CLA").
Landmark argued that it was able to lien for the unpaid balance of
the contract. The Court disagreed.
Typically, the amount claimed in a construction lien relates to
the value of work or materials supplied for which payment has not
been received and not the value of work or materials not yet
supplied. In this case, the Court found that it is not necessarily
improper for a lien claimant to lien for the entire amount of a
contract. Although a lien claimant is only secured for the actual
value of the work or materials supplied (usually determined at
trial) through a lien, if a lien claimant demonstrates an intention
to stay on the job and finish the contract, the lien claimant can
avoid liability under s. 35 of the CLA and effectively secure the
value of future work to complete the contract.
The Court held that a lien claimant cannot lien for the value of
the contract when it has left the job and does not intend to finish
it. In other words, the Court held that a lien claimant cannot use
a lien to secure a claim for breach of contract should it walk off
In this case, the Court found that Landmark had improperly
claimed a lien for the full contract value as it placed the lien
two months after it had abandoned the job and had no intention of
completing the contract. Landmark was therefore found liable under
s. 35 of the CLA to 1535709 for the borrowing costs to vacate the
The Court's expanded view of liens being used to secure
future work or materials supplied to a project where a lien
claimant intends to complete its work is especially problematic for
project owners as the costs to vacate liens could rise to an
On a second ground of appeal, the Court's decision followed
existing jurisprudence setting out the election that a lien
claimant must make between a claim for quantum meruit and a claim
for breach of contract. In a construction lien action, a claimant
must elect between these alternative remedies, at the latest by the
time of judgment. Landmark argued that it was entitled to an
election from the court.
In this case, the Court found that Landmark had not indicated it
was pursuing alternative remedies with the intention of making an
election. Further, there was no obligation on the trial judge to
provide an election. If Landmark was seeking damages for breach of
contract as an alternative to its claim for quantum meruit, it was
required to so elect. Without the election, Landmark was not
entitled to damages for the breach of contract as an alternative to
the trial judge's assessment of damages under the claim for
Landmark's results may have been significantly different if
it had acted to preserve its right to an election for breach of
contract. The decision highlights the importance of maintaining a
lien claimant's right to an election between alternative
remedies in order to ensure that the best recovery is obtained.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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