Construction lien legislation is designed to protect individuals and entities that contribute to the improvement of land or property by granting them a statutory interest, subject to clearly defined legislative limits. This principle was reinforced in Homes by Hendriks Inc v Honsberger, 2025 ONSC 2237 (“Honsberger“).
The Facts
The homeowners retained a contractor to construct a detached garage for approximately $1.1 million. By the time the relationship deteriorated, the owners had paid about $749,000 toward the project.
In January 2023, the contractor registered a lien for $299,000. The homeowners brought a motion under the Construction Act (Ontario) (“Construction Act“) to either:
- discharge the lien; or
- reduce the amount of the lien.
In this blog, we will be focusing on the reduction of the amount of the lien.
Jurisdiction to Reduce the Lien
The contractor argued that the court could not reduce the lien unless money had been paid into court or security posted. The court rejected that position and held that section 35 of the Construction Act gives the court authority to reduce a lien that is wilfully exaggerated, regardless of whether any funds have been paid into court.
Recalculation of the Lien Amount
The court reduced the lien by $145,121.47 after concluding that significant portions of the $299,000 claim were not legally lienable.
First, the contractor claimed over $58,000 for materials that were never delivered to the project. Under section 14 of the Construction Act, a lien arises only for services or materials actually supplied to the improvement. Materials that are merely ordered or invoiced, but not delivered to the site, do not support lien rights.
Second, the contractor included a 20 percent “builder markup” totaling more than $86,000. The markup covered project management and administrative tasks such as coordinating trades, scheduling work, reviewing invoices, and preparing accounts. Justice Reid held that these charges constituted general overhead and were not lienable. Relying on Selectra Inc v Penetanguishene, 2016 ONSC 2293 (“Selectra“), the court confirmed that off-site administrative work is too remote from the physical improvement to ground a lien, even where such charges may be recoverable in contract.
Together, these amounts accounted for the $145,121 reduction.
However, the court still upheld the portion of the lien attributable to the project manager’s logged hours, as those hours were specifically tracked to the project and involved direct oversight of construction work. Consistent with Selectra and Marino v Bay-Walsh, [2002] OJ No 2211 (SCJ), supervision that is demonstrably connected to the improvement qualifies as lienable.
Comparable Law in Alberta
In parallel, Alberta has adopted a similarly principled approach to defining the scope of lien rights and to assessing the proper valuation of lien claims.
In Welcome Homes Construction Inc v Atlas Granite Inc, 2024 ABKB 301, the Court of King’s Bench held that an adjudicator’s determination of contractual payment under the Prompt Payment and Construction Lien Act does not depend on the validity of a lien. The court confirmed that lien rights and contractual rights are separate legal concepts, even where they arise from the same underlying facts.
The decision reinforces that entitlement to payment under a contract does not automatically establish lien rights. The validity of an amount claimed under a lien must be assessed independently under the applicable construction lien legislation. As in Ontario, the analysis focuses on whether the statutory requirements for lien protection are met, not merely whether the amounts are recoverable in contract.
Action Points
While Honsberger originates from Ontario, its reasoning on lien valuation, wilful exaggeration, and the separation of lienable from non‑lienable amounts offers instructive authority for assessing lien amounts beyond the province.
Contractors and subcontractors should take care to ensure that any lien claim is rigorously reviewed to confirm that the sums claimed correctly reflect only lienable services or materials as defined by the applicable legislation. Claims that are inflated or improperly categorized risk judicial reduction, adverse cost implications, and potential attacks on the lien’s validity. Given these risks, parties involved in advancing or defending lien claims should consider obtaining timely legal advice to ensure their positions are properly assessed and strategically presented.
If you have questions about lien valuation or require assistance in registering or defending a construction lien, please contact:
- Peewara Sapsuwan at peewara.sapsuwan@nicol.law
- Angelo Merani at angelo.merani@nicol.law