Two unpaid construction lien claimants sought priority over a first mortgagee holding a $6.5 million vendor take-back (VTB) mortgage on a contaminated commercial property.
The court had to determine the actual value of the property on the date the first lien arose and whether the VTB constituted an 'advance' under section 78(3) of the Construction Lien Act.
The court found that the actual value of the property was at least $6.5 million, relying on arm's length offers rather than the lien claimants' expert opinion, and held that a VTB mortgage is an advance equivalent to an institutional mortgage.
Consequently, the mortgagee's interest took priority over the lien claimants.
