By Matthew T. Potomak and Liam Robertson, Kuhn LLP
Securing a claim through a builders lien can often be the difference between getting paid for your work or eating the cost yourself. However, builders liens expire after a certain duration of time unless specific steps are taken. If those steps are not followed precisely within the time limit allowed, your builders lien (and the security that comes with it) can be extinguished.
The recent case of Triad Mechanical Inc. v. Maple Leaf Green World Inc., 2021 BCSC 1865 provides an example where the enforcement provisions were not followed and a builders lien was extinguished, leaving the contractor with an unsecured claim.
Primer on Expiry of Builders Liens
To fully appreciate the weight of this decision, two things must be understood about builders liens generally in British Columbia:
- A builders lien registered against title to lands will expire after one year from the date of registration unless, generally speaking, two things occur: (1) the lien claimant commences an action in the BC Supreme Court to enforce the builders lien; and (2) the lien claimant files a certificate of pending litigation against the subject property.
- That one-year expiry date can be accelerated by the owner of the lands or by another lien claimant by serving a “notice to commence action” on all lien claimants, which has the effect of accelerating that one-year expiration period up to 21 days from the date of “deemed service” of the notice.
Facts of the Case
In January 11, 2019, Triad Mechanical Inc. (“Triad”) registered a claim of builders lien (the “Lien”) against title to lands owned by Woodmere Nursery Ltd. (“Woodmere”), wherein Triad claimed that Maple Leaf Green World Inc. (“Maple Leaf”) owed Triad the sum of $717,346.60 for the supply and installation of mechanical, plumbing, water, gas lines, HVAC equipment, and underground work.
On October 23, 2019, another lien claimant deposited with Canada Post a “Notice to Commence Action” to be delivered to Triad.
Pursuant to the Builders Lien Act, the Notice to Commence Action was “conclusively deemed” to be served on the eighth day after deposit with Canada Post, which was October 31, 2019. This meant that Triad had to enforce its lien claim and file a certificate of pending litigation within 21 days from that date (i.e., by November 21, 2019).
Although Triad was made aware of the incoming Notice to Commence Action, interestingly, the physical notice that the other lien claimant deposited with Canada Post did not get delivered to Triad. That notice was instead “returned to sender”.
Triad did commence their lien enforcement action on November 21, 2019, but failed to file its certificate of pending litigation until November 29, 2019.
As a result, Woodmere (the owner of the lands) took the position that the lien was expired and demanded that Triad remove their lien.
Triad argued that they were not served with the notice, effectively arguing that they could not be “deemed” to have been served by mail if they never actually received the notice in the mail.
In response to the impasse, Woodmere applied to court to extinguish and cancel the lien filed against their lands.
The Decision
The Court ultimately held that the lien was extinguished for failing to file the certificate of pending litigation in time. As a result, Triad lost its lien claim and its claim for $717,346.60 became unsecured.
Lessons Learned
- Contractors are not expected to be experts in technical requirements of the Builders Lien Act. However, contractors should be aware that there are strict requirements of timeliness that are not limited to the oft-discussed time periods for filing the claim of lien itself, but also the relevant time periods that follow the registration of the claim of lien.
- Although legal services can sometimes be a significant upfront expense, engaging a lawyer early to protect your secured claims can be a worthwhile endeavour. Contractors should consider retaining legal counsel promptly when considering securing their claims through a builders lien for unpaid construction workmanship, services, and materials. ■
This article was written by Matthew T. Potomak, lawyer, and Liam Robertson, articled student, who practise in construction law with the law firm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. It is important to get legal advice for specific situations. If you have any questions or comments about this case or other construction law matters, please contact us at 604.864.8877 (Abbotsford) or 604.684.8668 (Vancouver).
