The Running of Time for the Filing of Liens
and Release of Holdback
|11.1||What is the relationship between the time for the filing of liens
and the time for the release of holdbacks?
Time periods generally
Commentary: the purpose of requiring the retention of holdbacks from a contractor or subcontractor is to protect persons lower in the construction pyramid and provide additional security for their liens. It follows that the release of the holdback should not be permitted until the possibility of lien claims against it is exhausted. Time limits for the filing of liens and the release of holdbacks have been set so that the release of a holdback will be permitted only after the time for filing liens has expired. The time for releasing a holdback, therefore, is somewhat longer than the time within which a lien must be filed.
For this principle to operate consistently, in both cases, the beginning of the time period, in both cases, must be triggered by the same event.
|11.2||What are these time periods?|
The basic time periods
| Commentary: the time for filing a lien is no later than 45 days after the event which “triggers” the running of time. The period during which a holdback must be retained expires 55 days after the “triggering” event.
[See sections 8 and 20]
In reckoning these time periods, the first day is excluded and the last day is included.
[See Interpretation Act, section 25*]
|11.3||What event or events will trigger the running of time?|
| Commentary: the Act identifies three different events that may trigger the running of time. Which of these events is applicable will depend on the circumstances of the individual project or contract.
Which of these events is applicable will depend on the circumstances of the individual project or contract.
|11.4||What is the role of the certificate of completion?|
Certificate as trigger
|Commentary the issuance of a certificate of completion will trigger the running of time with respect to the release of the holdback.
[See section 8(1)]
A certificate of completion will also trigger the running of time for the filing of liens by the contractor or subcontractor whose work is being certified and any person claiming under that contractor or subcontractor.
[See section 20(1) and paragraph 10.6*]
|11.5||What if time had already started to run when a certificate is issued?|
Certificate where time
has begin to run
Commentary: a certificate may be issued after time has already began to run by the operation of another triggering event. This might occur where some event other than the issue of a certificate has acted as a trigger, or an earlier certificate that started time running.
[See Figure 14* for an example where this might occur]
The Act is clear that the issue of a certificate of completion does not operate to extend or renew the time for filing of a lien for time would otherwise be determined with reference to
[See section 20(3)]
What about the other events that will trigger the running of time?
Completion, abandonment, termination
|Commentary: where no certificate of completion has been issued, the event which starts the running of time will depend on whether or not the owner has engaged a head contractor.
[See definition of “head contractor” in section 1(1) and paragraph 3.3*]
Where a head contractor has been engaged, time runs from when “the head contract has been completed, abandoned or terminated.”
Where the owner did not engage a head contractor, time begins to run from when “the improvement has been completed or abandoned.”
What does completion mean in this context?
|Commentary: the meaning of completion will depend on whether the word is used with reference to the head contract or the improvement.
So far as the head contract is concerned, completion is determined with reference to financial criteria. These were discussed in the context of certification.
[See definition of “completed,” section 1(2) and paragraph 10.4*]
Section 1(3) of the Act deals with the completion of an improvement:
|11.8||When is a contract or an improvement abandoned?|
|Commentary: this is dealt with in section 1(5):
When will the head contract be “terminated?”
|Commentary: the Act provides no guidance on the meaning of “terminated.” Generally speaking, a contract or subcontract may be terminated by agreement of the parties to it, when one party is entitled to treat the contract as terminated owing to substantial non-performance by the other, or where the agreement is frustrated in some fashion. These are concepts drawn from the law of contract generally and are applicable here.