2 Lien For Work And Material

CASE LAW

Act Inapplicable to Airport Lands

The Vancouver International Airport Authority applied for a declaration that persons who supplied materials or labour for improvements undertaken by the authority were prohibited from filing builders’ liens against the authority’s leasehold interest in property that belonged to the federal Crown and was used for the purpose of operating the Vancouver International Airport. The court found that the operation of the airport goes to the core of a federal undertaking. As that undertaking was exclusively within the legislative competence of the federal Crown, ss. 2, 15, 16, 21, and 31 of the Act were constitutionally inapplicable or inoperative to the extent that they purported to apply to the leasehold interest of the authority in the airport lands (Vancouver International Airport v. Lafarge Canada Inc., 2009 BCSC 961, affirmed (sub nom. Vancouver International Airport v. British Columbia (Attorney General)) 2011 BCCA 89, leave to appeal refused 2011 CanLII 52133 (SCC)).

In Relation to an Improvement

The plaintiff installed three kilometres of conduit, inside and outside the boundaries of the defendant’s property, to carry fibre optic cables to the property. When the defendant defaulted on the contract, the plaintiff applied for a declaration of lien against the property for the value of the work performed and materials delivered both inside and outside the property boundaries. In granting a declaration of lien for the full amount claimed, the court found that all of the work performed and material supplied by the plaintiff was of direct benefit to the property and an integral and necessary part of the actual physical construction of the improvement. The conduit constituted a single improvement providing an extremely valuable direct and essential benefit to the defendant. Without the off-site conduit, the fibre optic system would not be functional. The phrase “in relation to an improvement” in s. 2 of the Act means “in direct relation to” or “in relation to an integral part of the improvement”. In this case, the work performed and the materials supplied by the plaintiff both on and off site were directed to, or done to advance, work that was being carried out on the very property the plaintiff sought to charge with the lien (Pedre Contractors Ltd. v. 2725312 Canada Inc., 2004 BCSC 1112).

For a further interpretation of the phrase “in relation to” as it is used in s. 2(1), see the annotations for Northern Thunderbird Air Ltd. v. Royal Oak Mines Inc., 2002 BCCA 58, under s. 1(1) of this Act.

Coal Leases

The respondents were mining contractors engaged in providing explosives for a coal mine located on untitled Crown land. In a proceeding under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, the petitioners applied for a declaration that the respondents had no valid or enforceable lien against any of the petitioners’ assets, property, or interests at the coal mine. Section 18 of the Builders Lien Act permits the filing of a lien in relation to a mineral title held under the Mineral Tenure Act, R.S.B.C. 1996, c. 292. However, as the Mineral Tenure Act specifically excludes coal mines, the respondents contended they had a valid lien under s. 2 of the Builders Lien Act that could be enforced at common law. The court found that the registrar of land titles cannot accept a lien for filing where, as in this case, there is no title. Without a certificate, there is nothing to register a lien against. Further, in the absence of regulations about the registration of coal leases, the registrar had no power to create a title and thus no power to register liens against untitled Crown land. In dismissing the respondents’ argument that they were entitled to enforce a lien at common law, the court affirmed that, at common law, there were no builders’ liens, that it was unlikely the legislature intended to create a parallel system of liens outside the registration system under the Builders Lien Act, and that the Builders Lien Act constituted an entire statutory code. The court granted the petitioners’ application for the declaration (Re Pine Valley Mining Corp., 2007 BCSC 812).

The Meaning of “Improvement”

In May 2019, the parties entered into an agreement whereby the respondent would provide interior design and construction management services for the renovation of two office premises of the petitioner located in Vancouver and Richmond. The respondent performed some services under the contract such as site visits, design work, issuing tender documents to sub-trades, and ordering materials from sub-trades, but before any physical alterations were made to the premises, the COVID-19 shutdown occurred. As a result, the petitioner instructed the respondent that the project was on hold. The respondent issued two invoices for the project. It was paid a portion of the amount billed relating to interior design fees. Some of the fees were paid by the landlord of the Vancouver premises as part of the tenant improvement allowance, and the rest were paid by the petitioner directly. By July 2020, the petitioner elected not to proceed with the project due to a loss of revenue and the ongoing economic uncertainties in its business. In August 2020, the respondent filed claims of builders liens in the amounts of $46,332 and $47,180 against title to the lands in which the two office premises were located. The petitioner applied for an order removing the liens. Held, application allowed. Pursuant to s. 2 of the Builders Lien Act, a lien may be filed for the price of work and material supplied in respect of an improvement. An “improvement” is defined in s. 1(1) of the Builders Lien Act as including “anything made, constructed, erected, built, altered, repaired or added to, in, on or under land, and attaches to it or intended to become a part of it, and also includes any clearing, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land”. The object of the Builders Lien Act is to prevent owners of the land getting the benefit of buildings erected and work done at their instance on their land without paying for them. Here, the parties intended for there to be an improvement of the petitioners’ premises, but due to COVID-19, the improvement did not commence. The case authorities that have interpreted and applied the statutory definition of “improvement” did not support the respondent’s position that providing services and obtaining materials for planned renovations in the absence of physical alteration to the premises constituted an “improvement”. Although the petitioner might be liable under contract, it was plain and obvious that there was no improvement within the meaning of s. 2 of the Builders Lien Act. The petitioner did not receive the benefit of an improvement because the improvement did not commence. There was no improvement and therefore there could be no lien (Shelly Morris Business Services Ltd. v. Syncor Solutions Ltd., 2020 BCSC 2038 (Master)).

Transmission Line a Separate Improvement from Associated Power Plant on Unregistered Crown Land

The plaintiff JVD, respondent to this appeal, claimed against security lodged in place of builders liens that were cancelled by consent pursuant to s. 24 of the Builders Lien Act. The plaintiff had contracted to do construction work on a power plant and subcontracted the work to IDL, its subsidiary. The project’s owners had failed to pay in full for the work. Because the power plant was on unregistered Crown land, no builders lien could be filed against it. The subcontractor placed liens on third party lands over which another subcontractor had constructed a power transmission line associated with the project. While the defendants had provided security in the full amount of the liens in order to have them cancelled, the equity in the land was less than the liens. The trial judge held that the transmission line and power plant constituted a “single integrated improvement” and upheld the liens, allowing the full amount to be enforced against the security. The defendants appealed. In allowing the appeal, the appellate court said the trial judge had erred in upholding the lien claims. Contrary to the trial court’s determination, the power plant and the transmission line were separate improvements. Having performed no work on any improvement on the transmission line land, the plaintiff was not entitled to file liens against it. Had it been so entitled, the plaintiff would not have been precluded from filing liens simply because of its having subcontracted the work. Further, because financial security had replaced the liens, the value of the land was irrelevant and collection in full would have been possible against the security (JVD Installations Inc. v. Skookum Creek Power Partnership, 2022 BCCA 81, leave to appeal refused 2023 CanLII 8266 (SCC)).

No Claim of Builders Lien Absent Physical Construction

Application by defendants for order to cancel a lien and CPL placed on title by plaintiff. In 2019 and 2020, the plaintiff and one of the defendant property owners entered into an agreement to develop an East Vancouver property into a mixed residential/commercial space, with the owners contributing the land and the plaintiff providing certain development services, following which the beneficial interest in the completed project would be shared among them. The plaintiff did a number of things between 2019 and 2022, including applying for a development permit. In June 2022, the plaintiff issued an invoice for services rendered for just over $2 million for permits, consultants, legal and marketing, and development fees. In July 2023, the plaintiff filed a builders lien on title to the property for more than $2 million. Also in July, the mortgagee commenced a foreclosure action in respect of the property, and an order nisi was granted in September 2023. The plaintiff then commenced this action, claiming a constructive trust remedy for unjust enrichment, and filed a CPL. The defendants applied for an order to cancel the lien and CPL. Held, application granted. In regard to the builders lien, applying modern principles of statutory interpretation, the plaintiff's work could not be said to have been “in relation to an improvement” so as to give rise to a right to a lien under the Builders Lien Act. Citing John Perkins/Peter Wardle Partnership v. Domus Design Company Ltd., 1984 CanLII 747 (BC CA), the court here said the Court of Appeal has clearly articulated where the line should be drawn; it was clear that, without any physical demolition or construction work having begun, the preconstruction work the plaintiff claimed to have done could not be said to have been done “in relation to an improvement”. There was no valid claim for a lien under the Builders Lien Act in this case. As the CPL did not meet the requirements of s. 215 of the Land Title Act, it should be cancelled on that basis. Reviewing the notice of civil claim as a whole, there was no viable claim advanced for an in rem interest in the property. The plaintiff merely pleaded that it did work that had the effect of facilitating a development project on the property that never went ahead. That did not amount to a claim to an interest in land, particularly where the CPL was founded on an unjust enrichment claim that was, according to the claim itself, remediable in damages. The plaintiff was, in effect, seeking to maintain a CPL to sustain its defective lien claim in another guise. As a matter of policy, this should not be permitted (Cape Group Management Ltd. v. 0793231 B.C. Ltd., 2024 BCSC 493).