As reported earlier, the Supreme Court of British Columbia held that, when making a “section 24 application” to remove a Claim of Builders Lien by substituting security for the land, there is no need to post any additional funds to stand as security for costs. This was a departure from the generally accepted practice that the amount of security was the face amount of the lien plus 10 – 15% as security for costs.
The contractor sought leave to appeal the decision, but the Court of Appeal dismissed its application. The Court of Appeal held that the “issue of posting security for costs” in such applications is a “matter of significance to the profession”. This is one part of the test for determining if leave to appeal will be granted. However, the Court of Appeal also considered the other parts of the test, including the strength of the case and the amount in issue, and held that an appeal would not be allowed.
The end result, then, is that the law in British Columbia is that no additional funds to represent security for costs are required to be posted when making a section 24 application. The section 24 application is often used by an owner when a Claim of Builders Lien has been placed on title, and the owner does not agree that the amount (or often any amount) claimed is owing to the claimant. In these circumstances, when the owner requires clear title for financing or to complete a transfer, we will make a section 24 application to clear title so that the required transaction may complete. The owner and claimant can then negotiate or litigate the amount claimed without holding up the completion of construction or sale.