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Note: When Owner (Surety) failed to pay for construction work on property, liens were filed. As permitted by statute, Surety obtained an LC to post as security to replace liens. When his claim was finally settled, John A. Morley (Beneficiary) asked the court that the LC remain in place as additional security for the full amount of the lien claim, plus 25% of that amount not to exceed US$50,000. Beneficiary also claimed that by choosing to use an LC, Applicant caused prejudice to Beneficiary because as provided in the statute, the LC does not include any provision for interest.

The Ontario Superior Court of Justice, J.R. Henderson, J., dismissed the prejudice claim and ruled that Beneficiary was "asking for security that [was] beyond its right set out in the [Construction Lien Act]" and ordered the LC be returned to Applicant for cancellation.

[JEB/jmf]

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