Lawyer's legal misstep leads to construction lien expiry: Ontario Superior Court

The lawyer failed to set the action down for trial within the required two-year period

Lawyer's legal misstep leads to construction lien expiry: Ontario Superior Court

In a recent construction dispute, the Ontario Superior Court of Justice found that a lawyer breached the standard of care, leading to the client's loss of the ability to enforce a lien.

In Envirofix Corporation v. Faber, 2023 ONSC 7197, a plaintiff's construction lien expired, leading to the loss of the ability to enforce the lien against a property. The legal misstep occurred as the plaintiff's lawyer failed to set the action down for trial within the required two-year period under s. 37 of the former Construction Lien Act.

The case revolved around the expiry of the plaintiff's construction lien on March 20, 2010, with the plaintiff seeking to recover $697,197.66. The property owner sold the property in 2011 without paying the plaintiff. While acknowledging the lawyer's breach of the standard of care, the defendants contested the plaintiff's claim of damages, arguing that the plaintiff failed to demonstrate that it suffered any damages because of the lawyer's breach.

The Ontario Superior Court of Justice dealt with causation issues and quantum of damages. The court considered the priorities between the mortgage holder, CIBC Mortgages Inc., and the plaintiff, determining that the mortgage had priority over the lien to a certain extent. The court also examined the plaintiff's failure to enforce the judgment, with the defendants contending that the plaintiff's damages resulted from not acting on the lawyer's recommendation to enforce the judgment in 2008.

The court, however, found that the plaintiff's decision not to enforce the judgment was influenced by the lawyer's belief that the lien was a valid charge on the property. As a result, he believed that the plaintiff's judgment was "secured" by the lien. The court did not doubt that the lawyer's beliefs influenced the advice he gave the plaintiff. Accordingly, the court concluded that the plaintiff did not act unreasonably in not enforcing the judgment in 2008.

Ultimately, the court concluded that the plaintiff's lawyer breached the standard of care and contract. Although unable to precisely ascertain the property's value in 2011, the court found that the plaintiff had convincingly proven a real loss resulting from the lawyer's breach.

Despite challenges in quantifying the damages with mathematical precision, the court assessed the plaintiff's loss based on the available evidence and fixed the plaintiff's damages at $472,000. The court also awarded prejudgment interest at the rate of 0.8 percent from the date of the lien registration.

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