The applicants, a first mortgagee, sought a declaration that the priority of construction lien claims against unsold condominium units was limited to the statutory holdback amount, and authorization for the receiver to distribute net sale proceeds to the mortgagee.
Two lien claimants opposed, arguing for full priority based on alleged fraudulent conveyance and the nature of the mortgage advance.
The court found that the Construction Act's priority regime is a complete code, and since the lien claims were not preserved or perfected, nor was written notice provided to the mortgagee before the advance, the mortgage had priority over the liens beyond the statutory holdback.
The court also rejected arguments of fraudulent conveyance and the claim that the funds were not a proper "advance in respect of the mortgage." The motion was granted, allowing the receiver to distribute proceeds to the mortgagee while maintaining a holdback reserve for valid lien claims.
