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Statutes of Newfoundland 1991


CHAPTER 49

AN ACT TO AMEND THE MECHANICS' LIEN ACT

(Assented to December 11, 1991)

Analysis

1. S.13(6) Amdt.
Holdback

2. Ss. Added
13.1 Holdback on large contracts
13.2 Notice
13.3 Expiry date of lien
13.4 Court proceedings

3. S.50 Amdt.
Regulations

4. Transitional

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:


RSN 1970 c.229 as amended

1. Subsection 13(6) of The Mechanics' Lien Act is amended by striking out the words and numbers "subsections (2) and (3)" and by substituting the words and numbers "subsections (2) and (3) and sections 13.1 and 13.4".

2. The Act is amended by adding immediately after section 13 the following:

Holdback on large contracts

13.1 (1) Notwithstanding subsections 13(2), (3) and (4), where

(a) a contract price is in excess of $20,000,000 or a greater amount that may be prescribed by the regulations;

(b) the contract provides for a completion schedule longer than 1 year;

(c) no proceedings have been commenced to enforce a lien or charge against the percentage required to be withheld under subsection 13(1) in accordance with sections 24 and 25; and

(d) notice of early release of holdback is given and posted in the manner provided for the giving and posting of notice under section 13.2,

the person primarily liable upon the contract or a subcontract shall, following each anniversary date of the day services or materials were first provided under the contract or subcontract, if the amount is otherwise owing to the contractor or subcontractor under the contract or subcontract, make payment of the amount that has been required to be retained under subsection 13(1), calculated as of the last anniversary date of the day services or materials were first provided under the contract or subcontract, 30 days after the day notice of early release is completed in accordance with section 13.2.

(2) Whether a contract price is in excess of $20,000,000 or a greater amount that may be prescribed, shall be determined on the day of the execution of the contract and not as a result of an amendment to the contract.

(3) Notwithstanding subsection (1), where the unexpired term of the contract is less than 1 year from the last anniversary date of the contract, subsections 13(2), (3) and (4) apply with the necessary changes to the contract.

Notice

13.2 (1) Where an anniversary date of the day services or materials were first provided under a contract or subcontract which meets the requirements of section 13.1 has passed, the person primarily liable on the contract or subcontract shall within 10 days after that anniversary date

(a) by personal service or by prepaid registered mail, give notice in writing to all persons providing services or materials in the performance of the contract or subcontract that the person primarily liable on the contract or subcontract intends to release the holdback under section 13.1;

(b) post a copy of the notice in a prominent place on the main job site; and

(c) publish the notice in the Gazette.

(2) Where a notice required by this section is given by prepaid registered mail, it is considered to be given when the addressee actually receives it or 2 days after the day of registration, whichever is earlier, which time shall be included in the days allotted for giving the notice.

Expiry date of lien

13.3 (1) The lien of a contractor or subcontractor for services or materials provided on or before the annual anniversary date of the day services or materials were first provided under a contract or subcontract which meets the requirements of section 13.1 expires 30 days after the day on which notice of release of the holdback is completed in accordance with section 13.2.

(2) The lien of a person other than a contractor or subcontractor for services or materials provided on or before the annual anniversary date of the day services or materials were first provided under a contract or subcontract which meets the requirements of section 13.1 expires 30 days after the day on which notice of release of the holdback is completed in accordance with section 13.2.

(3) Notwithstanding subsections (1) and (2), where a person has provided services or materials on or before the annual anniversary date of the day services or materials were first provided under a contract or subcontract which meets the requirements of section 13.1 and has also provided or is to provide, services or materials after those days, his or her lien in respect of the services or materials provided on or before any of those days expires without affecting a lien that he or she may have for the provision of services or materials after the applicable day.

Court proceedings

13.4 (1) Where proceedings have been commenced to enforce a lien, and where the person primarily liable under a contract or subcontract which meets the requirements of section 13.1 would otherwise be entitled under section 13.1 to pay out the holdback, the person primarily liable under the contract or subcontract may apply to the court for an order vacating the registration of the claim for lien on notice to the contractor or subcontractor otherwise entitled to payment under section 13.1 and to the persons who have filed claims for the lien in accordance with this Act.

(2) On an application under subsection (1) the court shall

(a) determine the amount then retained by the person primarily liable under the contract or subcontract under this Act;

(b) allow security for or payment into court of an amount equal to the total of the sums claimed as due or to become due under the claims for lien registered in respect of the contract or subcontract be paid into court together with security for costs in an amount equal to $50,000 for each claim for lien registered in respect of the contract or subcontract or 25% of the total of the sums claimed as due or to become due under the claims for lien registered in respect of the contract or subcontract, whichever is less; and

(c) order that the registration of the claim for lien be vacated;

and the court may

(d) make the order vacating the claim for lien on the condition that the person making the application provides security for or pays into court the amount referred to in paragraph (b);

(e) give directions respecting payment into court under paragraph (b); and

(f) have regard to an agreement between the parties as to the amount retained, in determining the amount retained under paragraph (a).

(3) Where it is proven at trial that a lien claimant unreasonably withheld his or her agreement as to the amount then retained by the person primarily liable under the contract or subcontract under this Act, the court may award costs against the lien claimant whether or not he or she has proven his or her lien.

(4) Where an order is made under subsection (2)

(a) the lien

(i) ceases to attach to the amounts subject to a charge under subsection 13(5),

(ii) in the case of a claim for lien registered under section 18, ceases to attach to the land, and

(iii) becomes instead a charge on the amount paid into court or security posted; and

(b) the person primarily liable under the contract or subcontract shall be, in respect of the operation of section 13, in the same position as if the claim of lien had not been registered and the person primarily liable under the contract or subcontract shall release to the contractor or subcontractor the amount of the holdback which would otherwise have been released to the contractor or subcontractor under section 13.1 less the aggregate of the amounts paid into court or in respect of which security is posted under paragraph (2)(b),

and the person primarily liable under the contract or subcontract under which payment is made under this section shall be discharged from all liability under this Act with respect to the amounts so paid except to the extent of the aggregate of the amounts paid into court or in respect of which security is posted under paragraph (2)(b).

(5) Where an order is made under subsection (2), the lien claimant whose registered claim for lien has been vacated may proceed with an action to enforce his or her claim against the amount paid into court or security posted in accordance with the procedures set out in section 25 or the court may make an order to facilitate the resolution of all claims, but no certificate of action shall be registered against the land.

3. Subsection 50(1) of the Act is amended by adding immediately after paragraph (b) the following:

(b.1) increasing the amount of a contract for which there may be early release of the holdback for the purposes of section 13.1;

Transitional

4. (1) Notwithstanding section 13.2 of the Act, where the anniversary date of the day services or materials were first provided under a contract or sub-contract falls between September 20, 1990 and the day that this Act comes into force, the person primarily liable on the contract or sub-contract shall, within 45 days after this Act comes into force,

(a) by personal service or by prepaid registered mail, give notice in writing to all persons providing services or materials in the performance of the contract or sub-contract that the person primarily liable on the contract or sub-contract intends to release the holdback under section 13.1;

(b) post a copy of the notice in a prominent place on the main job site; and

(c) publish the notice in the Gazette.

(2) Where a notice required by this section is given by prepaid registered mail, it is considered to be given when the addressee actually receives it or 2 days after the day of registration, whichever is earlier, which time shall be included in the days allotted for giving the notice.

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