25 Powers Of Court, Registrar Or Gold Commissioner To Remove Claim Of Lien

PRACTICE

Discharge of Lien Extinguished under Section 22: Section 25(1)(a)

Section 25(1)(a) authorizes the registrar to cancel a claim of lien if satisfied that the lien is extinguished under s. 22 for failure to file the claim in the manner and within the time provided by the Act. This practice involves a quasi-judicial function, requiring that the registrar rule on a question of determinant rights based on facts outside the land title office. In practical terms, it is unlikely the registrar could do this on the basis of affidavit evidence alone; a hearing into the matter would likely be required in order for the registrar to determine whether the lien has been extinguished. The Builders Lien Act does not provide the registrar with the authority to hold a hearing, and there is some doubt as to whether or not the registrar can use the powers conferred under s. 382 of the Land Title Act to determine a matter under another enactment. Accordingly, all applications for cancellation based on extinguishment under s. 22 will be referred to the registrar. On a referral, the best evidence of extinguishment would be a court order. However, the registrar will review and consider the sufficiency of the evidence accompanying each application regardless of whether or not it includes a court order.

Discharge of Lien Extinguished under Section 33: Section 25(1)(a)

Expiry of One-Year Period

The registrar must be satisfied that the claimant has not filed a certificate of pending litigation within one year after the date the claim of lien was filed.

Submissions

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Claim of Builders Lien by Effluxion of Time.

If Applicant Has Given 21-day Notice

The registrar must be satisfied that the claimant has not filed a certificate of pending litigation

• within the 21-day period running from the date of personal service of the notice, or
• if the notice was mailed or delivered, within the 21-day period under s. 33(2), plus the additional eight days of deemed service under s. 33(4).

The definition of “mail” in s. 29, Interpretation Act includes “deliver”:

• “mail” refers to the deposit of the matter to which the context applies in the Canada Post Office at any place in Canada, postage prepaid, for transmission by post, and includes deliver;

“Deliver” is also defined in s. 29 of the Interpretation Act:

• “deliver”, with reference to a notice or other document, includes mail to or leave with a person, or deposit in a person’s mailbox or receptacle at the person’s residence or place of business;

Submissions

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Claim of Builders Lien Notice to Commence an Action, and attach an image of:

1. a statutory declaration confirming that the applicant has:
   1. served the required notice on the claimant; or
   2. delivered the required notice to the address for service given in the claim of lien; or
   3. mailed the required notice to the address for service given in the claim of lien by depositing it in the Canada Post Office at any place in Canada; and
2. a copy of the Form 6 notice as an exhibit to the statutory declaration.

Discharge of Claim of Lien if Action Dismissed: Section 25(1)(b)

Submissions

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Claim of Builders Lien by Court Order, and Certificate of Pending Litigation Builders Lien Act, and attach an image of a certificate of the registrar of the court that issued the certificate of pending litigation in which the registrar certifies that the action has been dismissed, that the time for appeal has expired and no appeal was filed, or that a notice of appeal has been filed and finally disposed.

Discharge of Claim of Lien if Action Discontinued: Section 25(1)(c)

Submissions

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Claim of Builders Lien by Court Order, and Certificate of Pending Litigation Builders Lien Act, and attach an image of the certificate of the registrar from the court that issued the Certificate of Pending Litigation in which the registrar certifies that the action has been discontinued.

Discharge of Claim of Lien if Claim Satisfied: Section 25(1)(d)

The registrar accepts an application to cancel a claim of lien under this subsection if the applicant produces a properly executed discharge in Part 1 of Form C.

Submissions

On the Form C Release, select Nature of Interest, Claim of Builders Lien. This form is available in Web Filing using a myLTSA Enterprise account.

Discharge of Lien by a Partnership

With respect to a release of a claim of lien under s. 25(1)(d) where the claim of lien was registered in the name of a partnership, the registrar must be satisfied that the claim has been satisfied. This must be done by providing a properly completed and executed discharge on an electronic Form C Release.

The electronic Form C Release should reflect that the transferor is the partnership and the individual executing it is a partner in that partnership. It must be clear on the face of the discharge that the individual executing the discharge:

1. is a partner to the partnership; and
2. did so on behalf of the partnership and the other partners.

Where the execution does not make this clear, the registrar will require proof of these facts in the form of a letter from a partner of the partnership. The letter is submitted by attaching an image of the original to an electronic declaration and submitting immediately following the Form C Release.

In those cases where the claim of lien is registered in the name of a partner, the registrar will accept a discharge executed by that partner.

Discharge of Claim of Lien if Court Orders Cancellation

Submissions

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Claim of Builders Lien by Court Order, and Certificate of Pending Litigation Builders Lien Act, where applicable, and attach an image of the court certified copy of the court order which includes the legal description and states that the claim of builders lien is cancelled.

CASE LAW

Abuse of Process

The petitioner, the owner developer of a construction project, sought cancellation, on the posting of security, of builders lien claims filed by the respondents, the trade contractor on the project and a subcontractor. A number of deficiencies had come to the attention of the owner developer after the contractor reported that its work was substantially complete. No certificate of completion was issued with respect to the contract or any of the subcontracts. However, the parties had met and agreed in writing on the extent of the deficiencies and on a payment schedule that included a final payment only after the contractor had completed all of the work to the satisfaction of the owner developer, its construction manager, and the project architect. Although there was no evidence that the contractor corrected the deficiencies to the satisfaction of the parties to the agreement, the contractor and the subcontractor subsequently filed lien claims. Section 25(2)(b) of the Act permits a court to cancel a claim of lien where the claim is frivolous, vexatious, or an abuse of process. Section 24(1) provides for cancellation where an owner posts sufficient security for the payment of the claim. In applying s. 25(2)(b), the court found that the contractor showed a callous disregard for the process established by the legislation by settling the amounts owing with the owner developer and by then filing lien claims well in excess of the amounts agreed to be paid under the agreement. In ordering the owner developer to post security in the amount agreed to be paid under the agreement, the court relied on s. 24(3) and set the amount at less than the amount of the lien claims (Henderson Land Holdings (Canada) Ltd. v. Micron Construction Ltd., 1999 CanLII 5251 (BC SC)).

Development Services Not an Integral and Necessary Part of Physical Construction

The respondent provided development consulting services to the petitioner for a senior citizens centre. The respondent asserted that, of the total amount owing, $165,000 accrued in a manner entitling the respondent to a builders lien. It filed a claim of lien against the petitioner. The petitioner applied under s. 25(2) of the Act to have the lien removed, claiming that the respondent could not show that its work was “an integral and necessary part of the physical construction of the project”. The court granted the petitioner’s application. It found that, while the services of architects and engineers are included within the definition of work, the Act has the effect of separating promotional development of the kind the respondent undertook from site planning and preparation and from construction. The court also found that because certain creditors are given statutory protection they would not have at common law, the court must cleave closely to the narrow view of what is meant by “physical construction”. In canceling the lien, the court concluded that the respondent’s claim of lien did not relate to the land in the necessary manner (“E.C.R.A.” Elderly Citizens Recreation Assn. v. Loeppky Consulting Ltd., 1999 CanLII 5631 (BC SC)).

The petitioners applied for cancellation and removal of a builders lien for services provided by the defendants in relation to the development of the petitioners’ land. The services included assisting the plaintiffs in dealing with architects, arranging for financing, dealing with real estate agents and others, attending public meetings, and performing other executive services. The court found that the services did not give rise to a claim of lien. The services performed by the defendants were not engineering or architectural services, were not so directly related to the construction process as to fall within the definition of “work”, and were not an “integral and necessary part of the actual physical construction of the project”. As such, the court ordered cancellation and removal of the lien (Tuscany Village Holdings Ltd. v. Conquest Development Corp., 2005 BCSC 1392).

Test for Whether Claim is Frivolous Imposes Low Threshold on Lien Claimant

Evidence should not be weighed on an application under s. 25(2)(b) to cancel a builders lien. These arguments are better dealt by way of a summary trial application or as part of the court’s exercise of discretion under s. 24 setting an appropriate amount of security (West Fraser Mills Ltd. v. BKB Construction Inc., 2012 BCCA 89).

Grossly Inflated Claim of Builders Lien Cancelled in Pre-trial Stage

On application by an owner developer, Glenaire, the court ordered lien security previously posted in the lien amount of $3,085,612.93 to be reduced to $500,000, in the context of the court’s “limited confidence” in the competing claims of the parties. Glenaire had requested that the security be reduced to $1.00, alleging that it was plain and obvious that Darwin’s claimed lien amount was grossly overstated. However, the court adopted the approach taken in previous cases that ordering nominal security would be tantamount to declaring a lien invalid. In substantially reducing the security, the chambers judge relied in part on the absence of evidence to support the contractor’s claims for extra work. Darwin appealed that order, and Glenaire cross-appealed. Held, appeal dismissed, cross-appeal allowed. The appellant Darwin put forward no evidence to explain the basis of its excessive lien claim. The lien claim was an abuse of process pursuant to s. 25(2)(b) of the Builders Lien Act and should be cancelled (Darwin Construction (BC) Ltd. v. PC Urban Glenaire Holdings Ltd., 2023 BCCA 436).