No, this is not common. Someone denied tenure is generally allowed to stay in their current position for another year, to give some time to find a new job. However, it's not standard to offer them a non-tenure-track job as a replacement. Theoretically there's no reason they couldn't apply for such a job, but it sounds really awkward. I imagine most people wouldn't want to stay in the same department in a lower status position, and the department wouldn't want them to either; I've never seen it actually happen. When it does happen, I'd bet there's some compelling reason behind the scenes. (For example, perhaps the lecturer in your department has a strong personal reason to want to stay in the area, and there are no other suitable jobs available.)