Lien on Me: B.C. Court Cancels Builder’s Lien Due to Procedural Misstep
In Scandia Paving Ltd. v. Bengag (Scandia Paving), the Supreme Court of British Columbia (Court) cancelled the plaintiff’s builder’s lien because the plaintiff commenced its enforcement action in the wrong court registry. The Court had discretion to preserve the lien by transferring the action to the correct court registry, but declined to do so, principally due to the plaintiff’s failure to act swiftly to correct the procedural error once it became known. The Court’s decision illustrates the importance of lien claimants complying with all of the technical and procedural requirements for perfecting and preserving their lien claims.
In May 2015, the defendants hired the plaintiff to perform paving work at their property located in Keremeos, B.C. The plaintiff carried out the work at the defendants’ property, but a dispute arose between the parties. The plaintiff took the position that it was owed additional monies for the work and materials provided, while the defendants argued that no additional amounts were owed and that there were deficiencies with the plaintiff’s work. The plaintiff filed a builder’s lien against the defendants’ property (Lien) within the time frame required by the Builders Lien Act (Act).
In August 2015, the plaintiff commenced legal proceedings to enforce its Lien and registered a certificate of pending litigation (CPL) on the defendants’ property, as required under the Act to preserve the Lien. Although the plaintiff started the proceeding well within the time limit under the Act, it started the action in the court’s New Westminster registry. However, the Act requires that an action to enforce a lien be commenced in the court registry located in either the municipality or the judicial district where the property subject to the lien is located, depending on where the property is situated. In this case, the plaintiff was required to commence the enforcement action in the court’s Kelowna registry since the defendants’ property is located in Keremeos.
The defendants filed a response to the plaintiff’s action in October 2015, in which they pleaded that the Lien was invalid because the action had been brought in the wrong court registry. The plaintiff took no steps for more than 14 months to have the action transferred to the Kelowna registry or to otherwise address the allegation that its Lien was invalid.
In January 2017, the defendants filed an application to have the Lien and CPL cancelled. After some delays, the plaintiff filed a cross application seeking to have the action transferred to the Kelowna registry in order to preserve the Lien.
The Court determined that it was not appropriate to preserve the Lien in the circumstances and instead ordered that the Lien and CPL be cancelled. In its decision, the Court noted that it had discretion to preserve the Lien by transferring the action. The Court considered other cases in which similar actions that were initially filed in the wrong court registry were transferred in order to preserve the underlying lien. However, the Court distinguished those decisions primarily on the grounds that the plaintiffs in the other cases acted swiftly to address their filing error once it was discovered. By contrast, the plaintiff in the Scandia Paving case took no steps to bring itself into compliance with the Act for well over a year, despite having been notified by the defendants of the filing error.
The plaintiff’s tardiness in seeking to have the action transferred to the correct court registry was the primary factor in the Court’s decision to cancel the Lien and CPL. The Court stated that since lien claimants have the “extraordinary remedy” of securing their claims before they are proven, there is an “expectation of expediency” in pursuing lien claims that the plaintiff did not meet. The Court also noted that the Lien and CPL had prejudiced the defendants because their lender withheld an advance of their business loan as security against the Lien.
This case is a useful reminder that lien claimants must be diligent to ensure that they comply with all of the technical and procedural requirements that are necessary under the Act to perfect and preserve their claims. A failure to comply with a technical requirement under the Act will often be fatal to the claim of lien. Even if the error is one that may be cured, such as filing the enforcement action in the wrong court registry, it is important that lien claimants act swiftly to correct the error once it is discovered. As the decision in Scandia Paving illustrates, any failure on the part of a lien claimant to promptly address errors may increase the risk of losing the lien and the powerful leverage that comes along with it.
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