Canada: Get Your Forms In Order For A Written Notice Of Lien

There are several new prescribed forms under Ontario's recently amended Construction Act that all players involved in the construction industry should be aware of.

One of those forms is the new "prescribed form" of the written notice of lien. Prior to the amendment, a written notice of lien was defined in s. 1(1) of the Act as follows: "written notice of a lien includes a claim for lien and any written notice given by a person having a lien that, (a) identifies the payer and identifies the premises, and (b) states the amount that the person has not been paid and is owed to the person by the payer."

As of July 1, 2018, a "written notice of lien" means a written notice of a lien in the prescribed form, given by the person having a lien. Essentially, the necessary requirements for the written notice came out of the definitions section of the Act and found their way into one of the prescribed forms, contained in a regulation to the Act. All the forms are available for download at the Ontario court services website.

The form cannot be modified in its "downloadable" Word version. In order to make changes, a fresh form can be redrafted in Word or the form can be converted into PDF version and modified in that format.

There is a curious item missing from the form. Generally speaking, most lien claimants are corporate entities. However, the form does not provide for the necessary signing details, namely the statement that the signatory has "authority to bind the corporation." My short-term solution has been to convert the form into PDF version and type in that statement.

Previously, counsel were likely accustomed to delivering a written notice of lien on their letterhead with their original or digital signature, by registered mail. This is no longer available as the new prescribed form has a signature line for the "person having a lien", meaning that counsel will now have to arrange for their clients to sign and return the form, prior to service (more on this below). The Act does not specify whether or not the service version of the written notice of lien must have an original signature.

One of the changes introduced on July 1, 2018, was the addition of two exceptions to s. 87, which permits service of documents and notices under the Act by way of registered mail. A written notice of lien is one of those exceptions, which must now be "served in a manner permitted under the rules of court for service of an originating process". An "originating process" is defined under the Ontario Rules of Civil Procedure as: "... a document whose issuing commences a proceeding under these rules, and includes:

(a) a statement of claim,

(b) a notice of action,

(c) a notice of application,

(d) an application for a certificate of appointment of an estate trustee,

(e) a counterclaim against a person who is not already a party to the main action, and

(f) a third or subsequent party claim,

but does not include a counterclaim that is only against persons who are parties to the main action, a crossclaim or a notice of motion. (Rule 1.03(1))"

A written notice of lien must now be served by personal service as provided for in rule 16.02 or by an alternative to personal service as provided for in rule 16.03. As most litigators will know, this means that the notice must find its way into an individual's hands, in order to be effective.

For service on corporations, the notice must be left with an officer, director or agent of the corporation or "with a person at any place of business of the corporation who appears to be in control or management of the place of business". A similar rule applies for partnerships. Municipalities must be served by leaving a copy of the document with the chair, mayor, warden or reeve of the municipality, with the clerk or deputy clerk of the municipality or with a lawyer for the municipality.

The goal is to stop the flow of funds, therefore timing is of the essence and so contractors, subcontractors and suppliers to a project would be well advised to seek out where the "paymaster" is located, prior to starting work. Their counsel would also be well-advised to have executed forms on file (which can be completed by counsel once they receive the proper information from their client) and a process server on stand-by, to serve the notice.

This article originally appeared on The Lawyer's Daily website published by LexisNexis Canada Inc. on Monday August 20, 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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