Nothing can be more frustrating or financially devastating to a worker or a supplier, than to be denied payment for services and materials. In reference to the Mechanics Lien Act, which is the predecessor of Ontario's current Construction Liens Act, the court in Hickey v. Stalker (1923), 53 O.L.R. 414 C.A. recognized this unfairness by stating, "Speaking generally, the object of the Mechanics Lien Act (now known as the Construction Liens Act) is to prevent owners of land getting the benefit of buildings erected and work done at their instance on their land without paying for them."
Under the Construction Liens Act, a worker or supplier of materials is given a lien on land, as well as a right in the nature of a lien on monies paid by the owner of the land to the contractor; these rights are completely independent of one another.
Monies paid to a contractor or subcontractor by an owner give workers and persons who supply materials or services on account of the contract a right to be repaid as beneficiaries of a trust, which is created by the Act.
In Ontario, a lienholder's right extends to monies loaned to an owner to finance construction, monies owed to an owner to satisfy payment of an obligation under the terms of a contract, and proceeds of sale for the sale of land, not including monies paid to a mortgagee.
A lienholder's payment is ensured by requiring owners to retain a portion of all payments made to a contractor, based on the value of work performed. Monies which are retained, commonly referred to as a holdback, serve as a fund from which subcontractors and material suppliers can be remunerated.
If you have provided your labour or materials, only to be denied payment and wish to know your legal rights, do not hesitate to call us. We can advise you of whether you are legally entitled to compensation under the Construction Liens Act.