Executive Summary: Key Legal and Evidentiary Issues

• The defendant sought to reduce lien security posted in response to a $1 million+ construction lien, challenging the legitimacy of a large “overage” invoice.

• The court found a genuine issue of fact regarding whether the overage was part of the agreed contract price, precluding full reduction of security.

• A partial reduction was granted for the undisputed 30% of the overage not payable due to incomplete performance.

• The claim for the entire overage was ruled excessive in part, leading to an award of damages to the defendant for bond interest costs.

• The plaintiff’s offer to settle exceeded the result achieved at the motion, strengthening its position on costs.

• Costs were awarded to the plaintiff, as it defeated over 70% of the defendant’s motion and acted reasonably throughout.

Background and lien registration
Maple Drywall Inc. was contracted by 485 Logan Developments Inc. to complete drywall and acoustics work on a stacked condominium project. The parties signed a fixed-price contract for $950,000 plus HST, but an additional "overage" of $501,193 plus HST was separately documented and referenced in red text as payable 60 days after substantial completion of Maple’s work. When Maple ceased work in mid-2023, it registered a claim for lien totaling $1,032,377.04 and Logan posted a lien bond of $1,282,377.07, including $250,000 for costs.

Motion to reduce lien security
Logan brought a motion under section 44(5) of the Construction Act to reduce the posted security by $566,348.09, arguing that the overage was clearly and unequivocally not owed since Maple never substantially completed its work—a condition for payment under the overage agreement. Logan also claimed damages for excessive bond interest incurred due to the inflated lien amount.

Disputed overage and contract interpretation
The central issue was whether the overage was part of the true contract price or a separate contingent entitlement. Logan claimed the overage was invalid because it was conditional on substantial completion, which did not occur. Maple argued the overage was a legitimate part of the contract, split into two parts to assist Logan in presenting lower project costs to its lender. Emails and affidavits from Maple supported this version of events, indicating a pre-arranged structure designed to misrepresent costs for financing purposes.

The court, applying the principles from Sattva Capital Corp. v. Creston Moly Corp., found that the overage documentation was at least ambiguous, and potentially part of the true contractual agreement. It concluded that there was a genuine issue of fact as to whether the overage was lienable, precluding the full reduction of lien security.

Partial reduction and damages for excessive lien
Despite the broader ambiguity, the court noted that Maple itself stated in its final billing that it had only completed 70% of the contract. It found it inconsistent for Maple to lien for 100% of the overage in that context. As a result, the court ordered a partial reduction in lien security and costs—specifically, $169,904.42 plus a proportional reduction in the cost security of $34,381.85, totaling $204,286.27.

Because Maple’s lien included a clearly excessive 30% portion of the overage, the court awarded Logan $5,807.58 in damages, representing the bond interest attributable to the excessive portion of the lien.

Costs and final order
Despite Logan’s partial success, the court found Maple to be the more successful party. Maple had defeated over 70% of Logan’s requested security reduction and had made a reasonable offer to settle, which Logan declined. The court also disapproved of Logan’s conduct in seeking to deny the overage after allegedly requesting it be structured in a way to mislead its lender. As a result, the court awarded Maple $12,000 in partial indemnity costs.

Conclusion
The case underscores how Ontario courts assess lien disputes involving layered or structured contract pricing, and how factual ambiguity and inconsistent conduct can affect both entitlement and costs. The ruling shows that even partial success in reducing a lien claim must be balanced against fairness, commercial realities, and prior offers to settle.