The Cost to Lien: Lessons from Capital Excavating v Sandlot, 2025 ONSC 6424

A recent Ontario decision is a sharp reminder that registering a construction lien isn’t risk-free, especially when your client’s paperwork can’t support it.

In Capital Excavating Corp v Sandlot Capital Inc. et al, 2025 ONSC 6424, the defendants sought an order for substantial indemnity costs against, among others, the plaintiff’s lawyer.

Background

Capital Excavating and Sandlot Capital had a verbal agreement for excavation work. Sandlot alleged deficiencies; Capital claimed extra costs to fix them. Capital then issued two invoices on the same day; one for $6,500 (noting $50,500 already paid), and one for $67,235 plus HST. The combined amount, $73,735, became the lien amount.¹

Counsel registered and later perfected the lien.

At discoveries, Capital admitted that it didn’t intend to charge the extras until issuing the invoices and wouldn’t have issued the second invoice had the first been paid. Capital also failed to produce proof of payment for its alleged costs. Eventually, Capital sought to discontinue the action after failing to comply with s. 37 of the Construction Act. The court allowed the discontinuance with prejudice and found the lien “clearly without foundation.”

The issue

The court was asked; should the registering lawyer personally pay costs for registering the baseless lien?

Section 86(1) of the Construction Act permits such an order, though courts use it sparingly.

The court surveyed a lawyer’s dual obligations:

1. the duty to zealously advocate for the client; and
2. the duty to the administration of justice.

The minimum expectation is a basic gatekeeping function – lawyers must not knowingly preserve or perfect a lien that is without foundation. The threshold is low. A lawyer isn’t liable for taking on a weak case or even for negligence.

In this matter, the court held that the plaintiff’s lawyer failed to fulfill his gatekeeping function by failing to make inquiries of his client. The lawyer failed to ask essential questions or request documents that would have revealed the lien’s lack of foundation. The lawyer did not probe the basis for the extras, whether Sandlot knew about or approved the work, or whether documentation existed to support the claimed amounts.

Takeaways

Key takeaways for lawyers:

1. Confirm quantum and lienability before registering a lien.
2. If time constraints make pre-registration review difficult, investigate promptly after registration.
3. Request supporting documentation from the client – do not assume they exist.
4. Review the supporting documentation to ensure it supports quantum and lienability.
5. Inquire with the client if you notice red flags (i.e. invoices dated on the same date, no written contract, no support for costs incurred, etc.)
6. Make inquiries into the core merit of the claim.

Takeaways for clients who wish to lien:

1. Know the value of the contract, inclusive of all change orders and taxes.
2. Know what is owed.
3. Gather documents to support the unpaid amounts.
4. Provide the information to your lawyer early (not on day 59) to allow for appropriate review.

Conclusion

Lien registration isn’t a formality. Lawyers must fulfil their gatekeeping role by verifying the foundation of a claim before acting. Diligence up front protects the client and counsel from professional and financial exposure.

If you’re a contractor, consultant, or subcontractor facing tight deadlines or uncertainty around lien rights, we can help you navigate the process with confidence. If you have any questions regarding the information discussed in this article, or for practical, timely guidance on protecting your interests, please contact Dylan Dilks.

¹ All amounts in CAD.