Our Court of Appeal has said that the Builders Lien Act (the “Act”) is a statute that creates extraordinary remedies. Without the Act, there is no rule or precedent at common law that allows property to be encumbered by a builders lien. Accordingly, our Court of Appeal has said that the Act must be interpreted in a strict fashion. Our courts have no authority to add to the substantive rights of a lien claimant unless specifically provided for in the Act.
Recently, I brought an application to post security for a builders lien pursuant to section 24 of the Act. Our client was in agreement to deposit with the court the full amount of the lien as security. Normally these applications proceed by consent as the funds deposited in court simply substitute security against the land. In this particular case the lien claimant refused to consent unless our client produced an affidavit setting out the particulars of the payment issues. Issues had arisen on the project regarding deficiencies and incomplete work.
The lien claimant advanced a novel argument considering the fact that section 24, and the Act as a whole, does not allow for such relief. If a party seeks to post security to remove a lien from title to land, a contractor or subcontractor cannot oppose the application on the basis that it has not been provided with sufficient particulars regarding the payment issues.
The master hearing the application agreed that granting the relief sought by the lien claimant would add to the substantive rights of a lien claimant and our Court of Appeal has said the courts have no authority to do so. The Act does not allow for section 24 applications to be subject to conditions such as those sought by the lien claimant. The lien claimant was responsible for our client’s costs at the end of the day.
The lesson to take away is that a lien is a powerful tool and is often used as leverage in an effort to secure payment. It is important to remember that a lien claimant’s rights are restricted to what is set out in the Act. A lien claimant is treading on risky territory if it seeks to expand on those rights.
Join Clark Wilson LLP at Buildex Vancouver on February 14, 2013, for our seminar: The Straight Goods on Construction Risk Management (1 p.m. – 3 p.m.). I will be discussing builders lien issues, including the above noted example. Please do not hesitate to send me your comments and questions in advance of the seminar as I would be happy to discuss your builders lien queries.