The Impact of COVID-19 on Construction Lien Limitation Periods

When the COVID-19 global pandemic hit, there was much confusion surrounding the Construction Act (the “Act”) construction lien timelines. This arose as a result of a limitation freeze on most limitation periods and deadlines in Ontario beginning on March 16, 2020 pursuant to the Emergency Management and Civil Protection Act.

For most matters proceeding under the Act, the freeze was lifted as early as April 16, 2020. However, there are specific limitation periods enumerated in the Construction Act (the “Act”) that must be strictly complied with in order for any claimant under the Act to be afforded protection. Specifically, a claimant must ensure that their lien is preserved, perfected, served, and set down for trial within rigid time periods. Failure to do so could result in a claimant’s rights being lost altogether.

What are the impacts of the construction lien limitation freeze?

Although brief, the effects of the limitation freeze are still being felt today, as it caused a great deal of confusion for lien claimants left wondering whether they should continue to abide by the Act’s strict limitation guidelines despite the freeze.

With a second lockdown hitting in December 2020 and a third lockdown in April 2021, much of the same confusion arose once again – although there were no limitation freezes enacted during these respective lockdowns.

Are there exceptions to revive lost rights due to the pandemic?

The courts are now forced to grapple with the issue of whether there are exceptions to revive lost rights during these unprecedented times, with little to no guidance from the Ontario legislature.

However, two recent decisions from the Ontario courts have shed some light on the subject.

1. In Encompass Construction Ltd. v. 2503147 Ontario Inc., 2020 ONSC 6283, the Plaintiff failed to keep its lien alive resulting from a misunderstanding as to the impact of COVID-19 on the Act’s limitation periods. The court determined that incorrect reliance on the limitation freeze and misunderstanding will not be enough to revive expired lien rights, but the courts are also not willing to use the claimant’s confusion to impose further punishment.
2. In Diamond Drywall Contracting Inc. v. Elderberry Enterprises Ltd. (“Elderberry”), 2021 ONSC 497, the Defendants brought a Motion to discharge a construction lien based on the Plaintiff failing to serve their Statement of Claim to perfect the lien within 90 days following issuance. The court noted that they will take judicial notice of the general interruption the pandemic has had on businesses and the effects of provincial stay-at-home orders. In Elderberry, the court ultimately granted leave to the Plaintiff to bring a Motion to extend the time of service for the Statement of Claim.

The foregoing provides some direction to lien claimants who are faced with the impacts of COVID-19, but the bottom line is to always ensure that you are complying with limitation periods under the Act to avoid the possibility of losing your lien claimant rights altogether.

If you have questions surrounding your lien claimant rights, contact the Construction Law & Liens team at Brown Beattie O’Donovan.