The Construction Lien Act of Ontario gives every Person the right to register a construction lien if that person "supplies services or materials to an improvement for an owner, contractor or subcontractor". Many business people who supply services to real estate may be under the impression that one has to be a contractor or tradesman to have construction lien rights.

While that is usually the norm it is not necessarily always the case. In a construction project, all the suppliers of materials such as glass concrete, heavy equipment, plumbing fixtures, electrical fixtures and so on have lien rights. All the persons who supply services such as the electricians, plumbers, labourers and any other trades also have lien rights.

Even the architect and land planners have lien rights. But construction lien rights are not limited to construction sites. Even if no construction is actually taking place, a supplier of services may still have lien rights.

In a recent Court case an insolvent company had set up an illegal dumpsite on rented land. It had arranged for the dumping of hundreds of thousands of used tires on the land.

The tenant made a great deal of money but once the Ministry of the Environment became aware of the use of the land, the tenant quickly closed up shop and for all practical purposes, became insolvent. The Ministry of the Environment once it became involved ordered the clean up of the dumpsite. The owner of the land retained the services of a waste management company to remove all the tires intending to back-charge the tenant.

The waste management company did the work and cleaned up the site. The tenant defaulted on the lease, became insolvent and was both unable and unwilling to pay the bill of the waste management company. The owner was reluctant to pay the waste management company's charges.

As a result the waste management company registered a construction lien for the full value of its services. The owner disputed the right to lien the property. The basis of its argument was that the waste management company did not repair anything on the land did not build anything, did not install anything, did not alter the land and did not even touch the land. All it did was remove the garbage from the land and so the owner reasoned how could the waste management company be entitled to a construction lien.

Unfortunately for the owner, the Court ruled that the waste management company was entitled to a construction lien. The reasoning of the Court being that the services provided by the lien claimant had actually improved the value of the land. Even though the lien claimant did not build anything, did not tear down any structure, did not remove any soil, nevertheless, the services it performed actually added value to the land.

Because the determining factor is improving or adding value to the land, it had construction lien rights. If your business provides services to real property even though you are not in the construction business, you too may have construction lien rights. If the services or materials you supply increase the value of any real estate then you may have the right to register a construction lien.

The purpose of proceeding with a construction lien is that it may improve your bargaining power, give you some security and improve your chances of collecting on a difficult account.

If the situation arises where you believe your services have improved the value of land even though you were not involved in any construction project, you should not dismiss out of hand your right to register a construction lien. You should consult a lawyer who has some experience in registering and prosecuting construction lien actions.

Garth Walkden is a partner with the law firm of Keyser Mason Ball, LLP and is the head of the firm's litigation department. He practices in the area of commercial litigation and construction law. He can be reached by email at walkden@kmblaw.com or at 905-276- 0419.

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