Builders lien claims are on the rise. The builders lien is a powerful tool to secure payment but it must be filed correctly. Section 22 of the Builders Lien Act, SBC 1997, c. 45 (the “BLA”) requires strict compliance with the manner and form prescribed by the BLA otherwise the lien can be extinguished. The BLA contains no curative provision in the event of a mistake on the lien claim form.
The strict adherence required by the BLA stands in contrast with section 28(1) of the Interpretation Act, R.S.B.C. 1996, c. 238 (the “IA”), which says:
If a form is prescribed under an enactment, deviations from it not affecting the substance or calculated to mislead, do not invalidate the form used.
In the recent B.C. decision, Yongfeng Holdings Inc v Zheng, 2019 BCSC 1534, the BC Supreme Court weighed the strict compliance required by the BLA and the curative provision in the IA.
In this case, Yongfeng Holdings Inc. (“Y Holdings”) entered into a construction contract to build a house for the owner, Ms. Zheng. A claim of lien was filed by the corporate entity, Y Holdings, in the amount of $174,308. Ms. Zheng alleged the following deficiencies in the lien claim and argued that the lien should be extinguished:
- The signature of the person signing the claim of lien was illegible;
- The claimant’s address for service erroneously identified Ms. Zheng’s address instead of that of Y Holdings; and
- The claim of lien identified Y Holdings as the party making the claim rather than a “natural person acting as the agent of the plaintiff”.
Y Holdings argued that the deficiencies were inconsequential since there was ultimately no prejudice suffered by Ms. Zheng.
Crossin J. found that the claim that the signature was illegible was without merit.
When examining the claim that the address for service was incorrect, Crossin J. considered the objective of strict compliance under the BLA and reiterated that it is to provide certainty in relation to rights and obligations arising in the construction industry and security in relation to the performance of a contract. He also considered the type of deviation contemplated by section 28(1) of the IA. He relied on the example set out by Rogers J. in 581582 B.C. Ltd. v. Habib, 2013 BCSC 378, that putting the date money comes due in the space allotted for sum claimed and putting the sum claimed in the space where the date ought to be is a deviation that can be remedied by section 28(1) of the IA.
Crossin J. held that the error in the address for service of the lien claimant was not a curable deviation contemplated by the IA Little analysis is provided in the reasons, but arguably the substance of the lien claim form is affected by this mistake as the lien claimant cannot be properly served if the address for service is incorrect. On this basis, Crossin J. ordered the lien extinguished under section 22 of the BLA.
With respect to the last argument that the lien claimant was listed as Y Holdings rather than a natural person, Crossin J. declined to consider the issue as he already found the lien claim was extinguished. It is noteworthy, that the BC Builders Lien Practice Manual states that a “corporate claimant can only claim by an agent”. Indeed the prescribed form requires an individual’s name to be inserted as the agent of the lien claimant. Is failing to name an agent a deviation that could be remedied by section 28(1) the IA?
This issue has not been considered in a reported case to date. Our courts have both extinguished and upheld liens where mistakes in names have been made on the lien claim form. For instance, a lien was struck where the construction manager was named as the debtor instead of the owner. On the flip side, a lien was upheld where the subcontractor improperly named the property owner as the debtor rather than the contractor.
Strict compliance with the BLA would require a natural person to be listed as agent of the lien claimant Y Holdings. Unfortunately, judicial consideration of mistakes on the lien claim form has not been consistent. Lien claimants should ensure the claim form is completed by experienced counsel and those seeking to defeat lien claims should note that the claim form may contain fatal errors.