Relief from strict compliance with timelines under builders’ liens legislation
With limited exceptions, those who are unpaid for the performance of work, provision of services or delivery of materials to a construction project have the right to register a builder’s lien against the legal title of the owner of the land on which the work, services or materials were performed, supplied or delivered. Typically, the lien is registered for the value of the unpaid work, services or materials. Once the lien is proved, the lien claimant may take steps to sell the owner’s interest in the land in order to be paid.
The provincial builders’ liens statutes set out rigid timelines for filing the liens, as well as filing actions to prove the liens, and registering certificates of pending litigation (“CPLs”) against title to the affected land. The rationale for rigid timelines is that the timely administration of the construction lien process provides certainty for lenders who are financing the project, as well as subsequent purchasers of the property, all of whom rely on the accuracy of title information when advancing funds or closing a purchase. For this reason, courts have typically taken a hard line when it comes to compliance with the statutorily imposed timelines. However, two recent decisions from the Alberta courts suggest that strict compliance with these timelines can sometimes be avoided.
Case one
In TRG Developments Corp. v. Kee Installations Ltd., Kee Installations (“Kee”) and Universal Properties Inc. (“Universal”) worked on land owned by TRG Developments (“TRG”). In August 2013, Kee and Universal filed builders’ liens against the land. The question before the Alberta Court of Appeal was whether the liens ceased to exist because no CPL had been registered against title within 180 days from the date the liens were registered, as required by section 43 of the Alberta Builders’ Lien Act.
What makes the case unique is that, while the lien claimants did indeed fail to file a CPL within 180 days, there were a series of applications within that timeframe related to the liens.
In October 2013, TRG filed an application to discharge the liens and a Notice to Prove Lien, on the basis that the liens were invalid because TRG was not a landowner and did not request the work. Kee and Universal responded by filing affidavits proving the liens, upon which they were cross-examined. In the meantime, the hearing of the application was adjourned, at TRG’s request. By all accounts, this piece of litigation was proceeding in the normal course.
Several months later, Kee and Universal brought applications seeking a declaration that their liens were valid, but without also filing the CPL. These applications were adjourned at TRG’s request.
Immediately after the 180-day period to file a CPL had expired, TRG had the Registrar of Land Titles cancel the lien registrations on the basis of the missed timeline. Kee and Universal brought an application to restore the liens.
The Court of Appeal held that where an application is brought by an owner under s. 48 of the Act, which challenges the validity of the lien based on non-compliance with the Act, “[t]here is no question of non-compliance with s. 43” (para. 9). In other words, in these particular circumstances where the owner had attempted to have the liens declared invalid, and therefore clearly had actual notice that the liens had been registered, there was no need for the lienholders to register a CPL within 180 days.
This decision is contrary to the strict language of section 43 that a lien that has been registered “ceases to exist” after 180 days unless a CPL has been filed.
In sidestepping the strictures of the Act, the Court of Appeal was quick to note that no third party rights were affected by its decision and that TRG’s position would have been the same had the Act been strictly complied with.
Case two
In another recent Alberta decision – Boulevard Real Estate Equities Ltd. v. 1851514 Alberta Ltd. – Master Prowse relied on the TRG case to hold that a lien may validly be filed out of time in certain circumstances.
1851514 Alberta Ltd. (“185”) provided work and materials at two projects owned by Boulevard Real Estate Equities Ltd. (“Boulevard”). When 185 went unpaid, it filed liens against both properties. At this point, Boulevard’s representatives contacted 185, promising payment and requesting that 185 remove the liens so that Boulevard could secure financing. On the faith of this promise, 185 discharged the liens.
Shortly thereafter, Boulevard went silent and stopped paying contractors on other projects. 185 then attempted to re-register its liens against title to the projects. However, sections 41 and 42 of the Alberta Act require that a lien be filed within 45 days of completion of the work or the abandonment of the contract, failing which the lien “ceases to exist,” and more than 45 days had passed. Boulevard sought to have the liens removed on the basis that they were filed after this statutorily prescribed timeline.
Master Prowse held that the law of Alberta allows “the doctrine of promissory estoppel to prevent an owner whose false representations have prevented the timely registration of a lien from asserting that the lien was filed out of time, provided that no third party rights are adversely affected” (para. 38). In other words, Boulevard made a false promise that affected 185’s decision regarding the filing of the lien.
As no third party rights were involved and Boulevard plainly made false representations to 185, which 185 relied upon in discharging the original liens, the Court held that the doctrine of promissory estoppel prevented Boulevard from asserting that the re-registered liens were filed out of time.
These two decisions illustrate that all is not what it seems when it comes to timelines under builders’ liens legislation. Readers should be aware that there are significant differences in the lien legislation from province to province, and that these Alberta decisions may have little impact in other provinces. That said, recently the courts do seem more inclined to grant relief from what are otherwise clear legislative requirements to allow the court to reach what it considers to be a just result in a particular case. If a timeline is missed, contractors would be wise to obtain legal advice before simply assuming that their lien claims are invalid.
Jason E. Roberts is a lawyer at Fillmore Riley LLP who practises in the area of general civil litigation with a focus on construction, insurance and condominium law. You may reach him at 204-957-8356 or jroberts@fillmoreriley.com.
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