OSHAWA COURT FILE NO.: CV-23-001399-00 DATE: 20231026 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Gay Company Limited Plaintiff – and – 962332 Ontario Inc. Defendant
Counsel: Richard J. Mazar, for the Plaintiff John W. Montgomery, for the Defendant Brendan Bowles, for Edward G. Spong, previous counsel for the Defendant
HEARD: October 5, 2023, via video conference
RULING ON MOTION TO DISCHARGE CLAIM FOR LIEN
Sutherland J.:
Introduction
[1] The plaintiff brings a motion to discharge the claim for lien of the defendant on the basis that the defendant’s claim for lien was discharged when the defendant “registered” an application to delete construction lien.
[2] The defendant, through counsel for previous counsel of the defendant, argues that the claim for lien of the defendant has not been discharged, as claimed by the plaintiff. Mr. Bowles argues that there was no “registration” of the application to delete construction lien.
[3] For the reasons that follow, I agree with the submissions of Mr. Bowles and dismiss the motion of the plaintiff.
Brief Factual Background
[4] On June 30, 2023, the defendant retained Edward Spong to register a construction lien against title to the property municipally known as 132 Burleigh Street, Apsley, Ontario (the Property) for $767,327.52. The deadline to register the lien was July 10, 2023.
[5] At the time, Mr. Spong was in the process of winding up his practice. As such, Mr. Spong originally contacted Mr. John Montgomery a lawyer who said he would be willing to take on the defendant as a client. However, Mr. Montgomery was going on holiday that weekend and could not undertake to register the Claim for Lien by July 10, 2023. He stated that if Mr. Spong could register the Claim for Lien, he would then assume carriage upon his return.
[6] Mr. Spong is a sole practitioner who shared office space with Goodaire Pilgrims Law office from 1989 to 2019. During this time, he became acquainted with Angel Pitters a law clerk at Goodaire Pilgrims Law Office. Ms. Pitters has been working as a law clerk for about 20 years and has predominantly worked in real estate matters and is less familiar with construction lien registrations.
[7] Mr. Spong is not a registered Teraview user and as such, retained the services of Ms. Pitters who is a registered Teraview user.
[8] On July 6, 2023, Ms. Pitters met with the duly authorized agent of the defendant at the Goodaire law office to sign an Authorization and Direction to register a construction lien for $737,327.52. That same day, Ms. Pitters registered a construction lien for $737,327.52 as instrument No. PE401012 (the “First Claim for Lien”).
[9] On July 7, 2023, Mr. Spong advised Ms. Pitters of a typographical error in the lien claimant’s name in the First Claim for Lien. Specifically, the First Claim for Lien named the lien claimant as “962332 Ontario Inc., trading as Liberty Metal Fabrications ”. The correct name is “962332 Ontario Inc., trading as Liberty Metal Fabricators ”. Mr. Spong gave Ms. Pitters general instructions but left the manner of correction up to her.
[10] Due to her previous experience in real estate, Ms. Pitters prepared an Application to Delete Construction Lien in draft in Teraview because she believed this document was required to delete the registration of the incorrect First Claim for Lien from title. In real estate matters, when a mistake is made in a mortgage instrument, a discharge to delete the erroneous mortgage instrument from title is registered in order to allow a corrected mortgage instrument to be registered. Ms. Pitters had the Application to Delete Construction Lien signed by a partner at the Goodaire law office named David Goodaire.
[11] That same day, Ms. Pitters spoke to Mr. Spong to confirm how to proceed with correcting the First Claim for Lien. She advised him that she intended to register a second Claim for Lien and an Application to Delete Construction Lien in order to clear title of the erroneous First Claim for Lien.
[12] Mr. Spong agreed with registering a second Claim for Lien but disagreed with registering an Application to Delete Construction Lien, and instead instructed her to allow this issue to be dealt with by another lawyer who would be assuming the carriage of the matter going forward.
[13] During that conversation with Ms. Pitters, Mr. Spong was not aware that Ms. Pitters had already prepared the Application to Delete Construction Lien.
[14] In accordance with Mr. Spong’s instructions, Ms. Pitters did not prepare an Acknowledgement and Direction for the Application to Delete Construction Lien and did not present any such document to the defendant’s representative for signature.
[15] On July 7, 2023, Ms. Pitters met with the defendant’s representative again at the Goodaire law office where he signed another Acknowledgement and Direction to register a second Claim for Lien with the correct name.
[16] Later that same day, Ms. Pitters registered a second Claim for Lien as Instrument No. PE401087 (the “Second Claim for Lien”) in the same amount as the First Claim for Lien.
[17] Unfortunately, when Ms. Pitters registered the Second Claim for Lien, she also inadvertently registered the Application to Delete Construction Lien which was registered as Instrument No. PE401088 (“Delete the First Claim for Lien”). Ms. Pitters did not notice at the time when she clicked on the “Register” icon in Teraview, but the signed Application to Delete the First Claim for Lien was also in the list of documents to be registered.
[18] Since she did not notice that the Application to Delete the First Claim for Lien was also in the queue to be registered, when she clicked “ok”, she registered both the Application to Delete the First Claim for Lien and the Second Claim for Lien.
[19] On or about July 11, 2023, Ms. Pitters received a message in Teraview from the Land Registry Office stating that the Second Claim for Lien could not be registered until she corrected the lien claimant’s name. She had entered the Lien Claimant’s name as “962332 Ontario Inc., trading as Liberty Metal Fabricators”. The Land Registry Office requested that she remove the “trading as” from the claimant’s field. [^1]
[20] On July 13, 2023, Ms. Pitters emailed the Land Registry Office explaining that she had made a typographical error in the First Claim for Lien and an error in registering the Application to Delete the First Claim for Lien. She then asked the Land Registry Office if they could withdraw the First Claim for Lien and the Application to Delete the First Claim for Lien.
[21] Mr. Spong first became aware of the Application to Delete the First Claim for Lien on July 13, 2023. That day, Mr. Spong received a message from the Goodaire law office stating that the plaintiff’s counsel had called him. Mr. Spong returned Mr. Mazar’s call, and Mr. Mazar informed him that the original Claim for Lien had been discharged and that it was his position that the defendant’s lien rights had been lost.
[22] After receiving the call from Mr. Mazar, Mr. Spong notified Ms. Pitters of the error. On July 17, 2023, Ms. Pitters followed the Land Registry Office’s instructions and corrected the error in the Second Claim for Lien.
[23] That same day, Ms. Pitters responded to the Land Registry Office confirming that the Second Claim for Lien was to remain registered and that the First Claim for Lien and the Application to Delete the First Claim for Lien should be withdrawn.
[24] On August 1, 2023, Ms. Pitters emailed the Land Registry Office to confirm the withdrawal of the First Claim for Lien and the Application to Delete the First Claim for Lien, and the certification of the Second Claim for lien. On August 3, 2023, the Land Registry Office confirmed that the Registrar had certified the Second Claim for Lien and withdrawn the First Claim for Lien and the Application to Delete the First Claim for Lien.
[25] The title of the property indicated on August 3, 2023, that the only registered instrument dealing with the defendant’s claim for lien is the Second Claim for Lien.
[26] The defendant’s Second Claim for Lien, I have been advised, has been vacated and perfected which bears Court File No. CV-23-00278-00.
The Legislation
[27] The Construction Act (the Act) is remedial legislation that provides security for payment for contractors and subcontractors that provided labour and material for construction or demolition on the property.
[28] This statutory remedy requires that lien claimants, be they contractors or subcontractors, comply with specific criteria to qualify. This criterion includes:
(a) That the material and/or labour provided for construction or demolition comply with the definition of improvement as defined in section 1(1).
(b) A claim for lien is preserved by registration of that claim for lien on the title of the property within 60 days, as described by section 34.
(c) A legal proceeding is commenced within 90 days from the commencement time required to preserve the claim for lien, commence an action and if applicable, registration of a certificate of action on the title of the property, as described in section 36.
(d) The action commenced is set down for trial within two years from the date that the proceeding was commenced, as described in section 37.
[29] The Act also provides a means for a registered claim for lien to be vacated from title by payment into Court the required sum of money or a form of financial security to act as the required security as described in section 44.
[30] Section 41 of the Act indicates that a perfected claim for lien that attached to the land may be discharged by the registration of a discharge of lien on the title of the property.
[31] A discharge of lien is irrevocable, and a discharged lien cannot be revived per section 48 of the Act.
[32] However, nowhere in the Act is there a definition of “registration” nor is there a mechanism or procedure outlined for the “registration” of the documents required by the Act on the title to property that labour or material were provided for construction or demolition.
[33] To determine the proper process to register a document on title, one must review the Land Titles Act (LTA) or the Land Registration Reform Act (LRRA), whichever is applicable. It is clear that the purposes of both statutes are to set out the criterion, procedure and forms required for the registration of instruments on the title of land in Ontario.
[34] Sections 19, 20 and 23 of the LRRA reads:
Designation of areas
19 Upon the designation of this Act, the Land Titles Act and the Registry Act under the Electronic Registration Act (Ministry of Consumer and Business Services Statutes), 1991, the Minister responsible for the administration of this Act may by regulation designate all or any part of land that has been designated under Part II as,
(a) an area in which documents may be registered in either an electronic format or a written form;
(b) an area in which documents must be registered in both an electronic format and a written form; or
(c) an area in which documents must be registered in an electronic format alone. 1994, c. 27, s. 85 (3); 1998, c. 18, Sched. E, s. 100 (1); 2001, c. 9, Sched. D, s. 13.
Electronic format
20 (1) An electronic document submitted for registration shall be in an electronic format approved by the Director and shall be completed in a manner approved by the Director. 1994, c. 27, s. 85 (3).
Delivery by direct electronic transmission
23 (1) Direct electronic transmission of an electronic document to the electronic land registration database is prohibited except as permitted by the Director of Land Registration. 1994, c. 27, s. 85 (3); 2000, c. 26, Sched. B, s. 11 (7).
Authorized persons
(2) A person shall not deliver an electronic document to the electronic land registration database by direct electronic transmission unless the person is authorized to do so by the Director of Land Registration. 1994, c. 27, s. 85 (3); 2000, c. 26, Sched. B, s. 11 (7).
Registration
(3) An electronic document delivered to the electronic land registration database by direct electronic transmission is not registered until the land registrar registers the document in the prescribed manner. 1994, c. 27, s. 85 (3).
[35] Concerning registration, section 78 of the LTA indicates:
Registration Time of receipt to be noted
78 (1) The day, hour and minute of the receipt of each instrument presented for registration and of each copy of a writ or lien received under section 136 shall be noted thereon by the officer or clerk receiving the instrument or copy. R.S.O. 1990, c. L.5, s. 78 (1).
Order of registration
(2) Subject to the regulations, an instrument received for registration shall be registered in the order of time in which it is so received, unless before registration is completed it is withdrawn or the land registrar decides that it contains a material error, omission or deficiency or that there is evidence lacking that the land registrar considers requisite or declines registration for any other reason, and notifies the parties or their solicitors accordingly within twenty-one days after being so received and allows a period of time not less than seven and not more than thirty days from the date of such notification for correction of the error, omission or deficiency or for furnishing evidence and, when the error, omission or deficiency is corrected or evidence furnished within the time allowed, the instrument has priority as if it had been correct in the first instance, but, if the error, omission or deficiency is not corrected or if evidence is not furnished within the time allowed or if the person desiring registration fails to appeal successfully from the decision, the land registrar may proceed with other registrations affecting the land as if the instrument had not been presented for registration, and the land registrar shall be deemed not to be affected with notice of the contents of the instrument. R.S.O. 1990, c. L.5, s. 78 (2); 1993, c. 27, Sched.
When registration complete
(3) Registration of an instrument is complete when the instrument and its entry in the proper register are certified in the prescribed manner by the land registrar, deputy or assistant deputy land registrar, and the time of receipt of the instrument shall be deemed to be the time of its registration. R.S.O. 1990, c. L.5, s. 78 (3).
Effect of registration
(4) When registered, an instrument shall be deemed to be embodied in the register and to be effective according to its nature and intent, and to create, transfer, charge or discharge, as the case requires, the land or estate or interest therein mentioned in the register. R.S.O. 1990, c. L.5, s. 78 (4).
Exception
(4.1) Subsection (4) does not apply to a fraudulent instrument that is registered on or after October 19, 2006. 2006, c. 34, s. 15 (10).
Non-fraudulent instruments
(4.2) Nothing in subsection (4.1) invalidates the effect of a registered instrument that is not a fraudulent instrument described in that subsection, including instruments registered subsequent to such a fraudulent instrument. 2006, c. 34, s. 15 (10).
Priorities
(5) Subject to any entry to the contrary in the register and subject to this Act, instruments registered in respect of or affecting the same estate or interest in the same parcel of registered land as between themselves rank according to the order in which they are entered in the register and not according to the order in which they were created, and, despite any express, implied or constructive notice, are entitled to priority according to the time of registration. R.S.O. 1990, c. L.5, s. 78 (5).
Postponement of registered rights
(6) Upon registration of an instrument in the prescribed form, the rights of priority acquired by registration may be postponed to rights acquired or claimed under another registered instrument. R.S.O. 1990, c. L.5, s. 78 (6).
[36] Further in this decision, I will discuss the legislation.
Analysis
Principles of Statutory Interpretation.
[37] The modern approach to statutory interpretation was laid out in Bell ExpressVu Ltd. Partnership v. Rex. [^2] In Bell ExpressVu, the Supreme Court of Canada adopted Elmer Driedger’s formulation of the approach: “Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.” [^3]
[38] The Supreme Court of Canada recently reviewed the law of statutory interpretation in La Presse inc. v. Quebec [^4] reiterating that it is well established that the modern approach to statutory interpretation is to be utilized. The Court stated:
[22] It is well established that, under the modern approach to statutory interpretation, “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object 2023 SCC 22 of the Act, and the intention of Parliament” (E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87). Confusion as to what this might entail in practice endures, despite the apparent simplicity of Driedger’s influential words. For the sake of clarity, I will restate two principles that seem to be at the heart of this confusion.
[23] First, the plain meaning of the text is not in itself determinative and must be tested against the other indicators of legislative meaning — context, purpose, and relevant legal norms (R. v. Alex, 2017 SCC 37, [2017] 1 S.C.R. 967, at para. 31). The apparent clarity of the words taken separately does not suffice because they “may in fact prove to be ambiguous once placed in their context. The possibility of the context revealing a latent ambiguity such as this is a logical result of the modern approach to interpretation” (Montréal (City) v. 2952-1366 Québec Inc., 2005 SCC 62, [2005] 3 S.C.R. 141, at para. 10).
[24] Second, a provision is only “ambiguous” in the sense contemplated in Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, if its words can reasonably be interpreted in more than one way after due consideration of the context in which they appear and of the purpose of the provision (paras. 29-30). This is to say that there is a “real” ambiguity — one that calls for the use of external interpretive aids like the principle of strict construction of penal laws or the presumption of conformity with the Canadian Charter of Rights and Freedoms — only if differing readings of the same provision cannot be decisively resolved through the contextual and purposive approach set out by Driedger (ibid.).
[39] With these principles, I will turn to interpreting the meaning of “registration” in the LTA.
Registration
[40] There is no dispute that the meaning of registration is not contained in the Act. To register a document on the land registry, the governing legislation is the LTA or the LRRA. In the circumstances of this case, it is not contested that the LTA applies.
[41] Furthermore, there is no dispute between the parties that if the First Claim for Lien of the defendant/lien claimant is deemed discharged, then the Second Claim of lien is not valid given section 48 of the Act and the requisite case law. [^5]
[42] Hence, it is for this Court to determine if the Delete of the First Claim for Lien by the lien claimant complies with registration under the LTA and whether that corresponds with the Act. If so determined, the First Claim for Lien is discharged, the lien claimant has no Claim for Lien, and the Second Claim for Lien must be discharged from title.
[43] It is the moving parties’ submission that the simple registering of the Delete of the First Claim for Lien, whether intended or not, has discharged the First Claim for Lien and as such the Second Claim for Lien is not valid. The intention of the defendant is irrelevant and there is no requirement of certification by the Land Registrar to complete the “registration”.
[44] The lien claimant argues that the First Claim for Lien and the Delete of the First Claim for Lien were never certified and as such the registration was never completed. The withdrawal of both is proper given that the withdrawal of both instruments took place before either was certified.
[45] First, I will review the methodology of registration as set out in the LTA, keeping in mind the modern approach that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act.” [^6]
[46] In examining the words of section 78 of the LTA, I determine that the words and their grammar are clear and unequivocal. The scheme of the LTA is to provide the methodology to register instruments on title of property registered under the Land Titles system.
[47] In so doing, the legislation sets out in section 78 of the LTA the procedure for registration of an instrument. I read that section to mean that the registration of an instrument is not complete until that instrument has been certified.
[48] The date of the complete registration of an instrument is the date of receipt of the instrument. Accordingly, when an instrument is received, it is dated and identified. Once received, that instrument is required to be certified. The Land Registrar has 21 days from receipt of the instrument to determine if that instrument will or will not be certified. If there is an issue with the certification, the Land Registrar sends a message to the person who sent the instrument setting out the reason why the instrument has not been certified or accepted. That person has 30 days to remedy the difficulty in order for that instrument to be certified or may appeal the decision of the Land Registrar. If the instrument is not remedied in that 30 days or appealed successfully, the Land Registrar may proceed as if that instrument had not been submitted for registration and the instrument may be withdrawn for it is not a completed registration, i.e., certified.
[49] Further, a party that has sent an instrument to be registered may withdraw that instrument before registration is completed, that is, before the registration has been certified by the Land Registrar.
[50] This procedure aligns with the format of the Parcel Register. The format of the Parcel Register is that of seven columns. These columns set out the information that is required for registration, including the registration number, the date of receipt, the particulars of the instrument, the amount, the parties, and certification. If the instrument has been certified a “c” is indicated in the certification column. If there is no “c” indicated, then the instrument has not been certified and is subject to withdrawal. If there is a “c”, the registration is complete.
[51] In addition, section 23 of the LRRA indicates that no electronic document delivered to the electronic registration is registered until the Land Registrar registers the document.
[52] Both the LTA and LRRA are consistent that a form of approval of the instrument is required by the Land Registrar before the registration of that instrument is completed.
[53] Consequently, reviewing the words and grammar, the purpose of the LTA, the format of the Parcel Register, and the consistency between the LTA and LRRA that the Land Registrar must accept or certify the instrument, I conclude that there is no ambiguity regarding the meaning of registration. I, therefore, conclude that the registration of a claim for lien or application to delete construction lien under the LTA, that instrument must be certified by the Land Registrar and not be withdrawn before it is certified.
The Act
[54] This leads me to the meaning of registration under the Act. Again, it is not contested that registration is determined by the LTA or LRRA, whichever is applicable. For the purpose of this motion, I am of the view that it would not be consistent and would lead to absurdity if the meaning of registration in the Act is not the same as in the LTA. I conclude that the presumption of consistent expression is applicable. [^7] The use of the word “registration” in the Act be consistent with the meaning of “registration” in the LTA. I see no reason why there should be a different meaning. There is no statutory principle of interpretation that I have been directed that will disallow the use of the presumption of consistent expression. Moreover, it is the LTA that determines the requirements and methodology for registration. The Act, in my view, by using the same word, “registration”, indicates the intention of the drafters to adopt the same meaning of registration under the LTA.
[55] Accordingly, I determine that registration under the Act means that the instrument must be received, certified and not withdrawn before it is certified. Once an instrument is certified, then the registration is complete.
[56] How does that apply in the circumstances of this matter?
Application
[57] There is no doubt that the lien claimant sent the First Claim for Lien and the Delete of the First Claim for Lien electronically to the land title registry. There also is no factual dispute that the First Claim for Lien and the Delete of the First Claim for Lien were not certified. The Second Claim for Lien was received and certified.
[58] The First Claim for Lien and the Delete of the First Claim for Lien were received but were withdrawn before either was certified.
[59] Consequently, I am of the view that there was no registration of the First Claim for Lien or the Delete of the First Claim for Lien.
[60] Given that conclusion, section 48 of the Act and the requisite caselaw do not apply. The Delete of the First Claim for Lien registration was never complete and hence, was never registered on the title of the Property.
[61] I do wish to comment on the submission of the moving party that the integrity of the land title system is suspect if the users cannot rely on the registration. I do not agree with that submission. The methodology of registration encompasses a staged process: the electronic sending of the instrument to the land registry system (the receipt), the receipt is not withdrawn, and the receipt is certified (certification). Without both receipt and certification before any withdrawal, there is no registration. This makes perfect logical sense for the Land Registrar is the gatekeeper of the land registry system and this is necessary to prevent the land registry system from being improperly used which, in my view, will denigrate the integrity of the land registry system.
[62] The moving party also argues that owners and contractors may vacate a lien on the electronic registering before any withdrawal or any certification. This vacating is required to keep financing of the project flowing. It may not be a month or more before it is determined the said claim for lien is not certified but the owner or contractor has already incurred the costs and the expense of vacating the claim for lien. I agree with the moving party that such a result may happen in the rare circumstances. However, the owner or contractor is not without remedy.
[63] Section 86 of the Act permits the request for costs on a substantial indemnity basis which could include the costs incurred to vacate a claim for lien that was not certified or was withdrawn. In addition, the owner or contractor may claim for damages due to the conduct of the lien claimant such as the tort of slander of title.
[64] Neither of these submissions detracts from my view of the staged process of registration of an instrument, like a claim for lien or application to delete a claim for lien, on the title of land.
Disposition
[65] I order that:
(a) The motion of Gay Company Limited is dismissed.
(b) If the parties cannot agree on costs, the defendant to serve and file its submissions for costs within fourteen days from the date of this decision, and the plaintiff will have fourteen days thereafter to serve and file its submissions. The submissions are to be no more than three pages, double-spaced, exclusive of any cost outline and offers to settle. Any case law must be hyperlinked in the submissions. There is no right to reply. Submissions are to be filed with the court. If no submissions are received within the time set out herein, an order will be made that there will be no costs.
Justice P.W. Sutherland Released: October 26, 2023
Footnotes
[^1]: Ontario Teraview Enhancements- Bulletin No. 2023-02 dated May 30, 2023-relased June 3, 2023- concerning Block Party Descriptors. [^2]: See also Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 117. [^3]: Ibid, at para. 26. [^4]: La Presse inc. v. Quebec, 2023 SCC 22. [^5]: Southbridge Construction Group Inc. v. 667293 Ontario Ltd. et al, [1993] 12 O.R. (3d) 223 (Div. Ct.); 9585800 Canada Inc. v. JP Gravel Construction Inc., 2019 ONSC 7022 (Div. Ct.). [^6]: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42 and La Presse inc. v. Quebec, 2023 SCC 22. [^7]: Vavilov, 2019 SCC 65, at para. 44; R. v. Steele, 2014 SCC 61, [2014] S.C.J. No.61, at para. 51; Healey v. Gregory, [2009] O.J. No. 2562 at para. 79.