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A claim of builders’ lien is an extraordinary remedy. When a claim of builders’ lien is made, the lien claimant must strictly comply with the requirements of the Builders Lien Act.
Thereafter, the lien claimant must commence an action to enforce its claim within one year of filing the lien on title to the project lands.
In requiring all of this, the Builders Lien Act imposes an obligation on lien claimants to proceed expeditiously.
In a recent unreported case from the British Columbia Supreme Court, Doyle v. Polygon Meridian Gate Homes Ltd., (4 April 2012), New Westminster S117777 (B.C.S.C.), the obligation on a lien claimant to proceed with its builders’ lien action expeditiously was considered and underscored.
The pertinent facts of the Doyle case are straightforward.
The lien claimants filed a claim of builders’ lien against project lands in November 2008, and shortly thereafter the parties agreed, as many do, that cash security would be posted for the lien.
This resulted in the claim of builders’ lien being discharged from title.
In February 2009, the lien claimants commenced a debt action and sought a declaration that they had a builders’ lien.
Over the span of the next three years, the lien claimants failed to actively prosecute their case.
This resulted in the defendant bringing an application to the court to dismiss the lien claimants’ entire action.
The court refused to dismiss the debt claim because the delay had not affected the defendant’s ability to oppose the claim, however, the court did order that the lien claim be cancelled and the security returned to the defendant.
In considering the application to cancel the lien claim, the court emphasized that the Builders Lien Act provides an extraordinary remedy to a lien claimant in that it allows lien claimants to tie up property or other security in advance of a judgment. Because of this, lien claimants must pursue their lien claims expeditiously. Where they fail to do so, they run the risk that their claim of builders’ lien will be cancelled.
On the facts of the Doyle case, the court found that the claim of builders’ lien had become abusive.
The posting of cash security and the inability of the party who posted it to access such funds amounted to economic prejudice and the three year delay was inexcusable.
As a result, the claim of builders’ lien was cancelled.
It is clear from the Doyle case that the courts have a lower tolerance for delay with respect to claims of builders’ lien than with respect to other types of claims.
Lien claimants must proceed with due dispatch to advance their lien rights, and that obligation does not cease when the claim of builders’ lien and the court action enforcing it have been filed.
Where a lien claimant fails to move with dispatch in prosecuting its action, as was the case in Doyle, an otherwise valid claim of builders lien claim may be lost. This article is provided for general information only and may not be relied upon as legal advice.
Matthew G. Swanson is a partner at Borden Ladner Gervais LLP (BLG). Matthew practices in the area of commercial litigation with a particular emphasis on contract and construction disputes. Bill M. Woodhead is an associate lawyer at BLG. Bill practices as a solicitor in the areas of corporate commercial law and construction law. Send comments or questions to editor@journalofcommerce.com.
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