Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff’s construction lien was discharged due to abandonment and prolonged inaction in the litigation.

• The lien security posted by a mortgagee to vacate the lien was ordered returned after the lien’s dismissal.

• The court distinguished lien procedure under the Construction Act from general civil rules on dismissal for delay.

• No legal basis was found to keep the lien security in court pending unrelated accounting disputes between co-defendants.

• The defendant’s continued breach of court orders and disengagement justified dismissal of the lien claim.

• Arguments about improvident power of sale and accounting were deemed irrelevant to the lien proceedings.

Background and procedural history

NDF Financial Inc. filed a lien action under the Construction Act relating to work it claimed to have performed on a property in Toronto formerly owned by Lidija Tomas. The lien was registered in 2019, and litigation commenced shortly after. In compliance with the Construction Act’s procedural requirements, the action was referred for trial later that year. However, the litigation stalled for years, with no meaningful steps taken by NDF to advance its claim. During this time, the second mortgagee, Theriault Holdings Inc., exercised a power of sale over the property and used part of the sale proceeds to post $14,015.73 into court to vacate NDF’s lien, as required by statute.

In 2020, Ms. Tomas challenged the sale process and sought preservation of the sale proceeds. That motion was dismissed. She later launched a separate non-lien action against Theriault, which was also dismissed, with costs awarded against her. Meanwhile, NDF failed to comply with multiple interlocutory orders and ceased participating in the litigation entirely.

Motion to dismiss and dispute over lien security

In 2025, Theriault moved to dismiss NDF’s lien action for delay and to obtain a payout of the lien security previously posted. Though not explicitly stated, this also entailed a request to discharge the lien. NDF did not oppose the motion and failed to appear at the hearing. Ms. Tomas, while consenting to the lien being discharged, opposed the return of the funds to Theriault, arguing the proceeds should remain in court due to her unresolved grievances with Theriault over the power of sale.

Theriault grounded its motion in Rule 24.01(2) and 60.12(b) of the Rules of Civil Procedure, citing NDF’s failure to prosecute the action and breach of prior orders. The court clarified that the Construction Act governs lien proceedings and takes precedence over general civil rules when inconsistent. In this case, the statutory scheme had been followed, with a judgment of reference and trial order properly obtained. However, NDF’s abandonment of the case justified dismissal under section 47 of the Construction Act.

Analysis of the competing claims

While sympathetic to Ms. Tomas’ concerns about Theriault’s handling of the power of sale, the court concluded that these issues had no bearing on the lien matter. There was no crossclaim between Tomas and Theriault in the lien action, and her separate lawsuit had already been dismissed. The lien security had been posted by Theriault solely to vacate NDF’s lien, and with that lien now discharged, the statutory presumption was that the funds be returned to the party who posted them.

The court rejected the notion of holding the funds pending further accounting between Tomas and Theriault, particularly as no new evidence had emerged to change the outcome of a similar request denied in 2020. As a result, the lien was discharged, the action dismissed, and the funds ordered returned to Theriault, without prejudice to any future rights Tomas may pursue in other legal proceedings.

Outcome and directions

The court issued a formal order discharging the lien registered by NDF, dismissing its lien action, and directing the Accountant of the Superior Court to pay out the lien security with interest to Theriault Holdings Inc. Ms. Tomas’ counterclaim against NDF and Nicholas Fiorini was permitted to continue. The court reserved its ruling on costs, pending proper submissions from Theriault, which had not been received by the deadline. Theriault was given two weeks to resubmit its materials or be deemed to have withdrawn its claim for costs.