33 Limitation And Notice To Commence An Action

REGULATIONS AND FORMS

Notice to Commence an Action

The form of notice prescribed by B.C. Reg. 1/98 is Form 6.

PRACTICE

Discharge of Lien Extinguished under Section 33

See s. 25 of the Act at “25 Powers of court, registrar or gold commissioner to remove claim of lien” in this chapter for practice with respect to the discharge of a claim of lien where the lien is extinguished under s. 33 of the Act.

CASE LAW

The appellant filed a claim of builders lien after an owner failed to pay for flooring installed by the appellant on the owner’s property. The owner then made an assignment in bankruptcy. The trustee ordered the sale of the property and disallowed the lien claim because the appellant had not filed a certificate of pending litigation within the time required in s. 33 of the Act. In allowing the appeal, the court held that the trustee was required to assess the validity of claims against the bankrupt estate as of the date of the bankruptcy and that the trustee was not entitled to take into account the running of time following the bankruptcy. The lapse of a limitation period following a bankruptcy does not affect the trustee’s assessment of a claim valid at the date of the bankruptcy (Re Forsyth, 2011 BCSC 1203).

In the case of service by mail, whether regular or registered, the date to file a notice of civil claim and to file and register a certificate of pending litigation is calculated based upon the deemed date of service under s. 33(4) of the Act (that is, eight days after notice is deposited in the Canada Post Office), regardless of when, or indeed whether, the notice is actually received. Earlier actual receipt does not cause the 21-day limitation period in s. 33(2) to run sooner. Accordingly, the plaintiff’s certificate of pending litigation was filed in time (Amplified Electric Inc. v. Husch, 2018 BCSC 969 (Master)).

In Alan Jones Construction Ltd. v. Hicks, 2019 BCSC 568 (Chambers), the appellate court overturned a master (now “associate judge”)’s decision it considered “plainly wrong” in law and ordered a rehearing. The proceeding concerned s. 33(5), which extinguishes a builders lien if an action to enforce the lien and a certificate of pending litigation are not filed within the 21-day period required by s. 33(2). The plaintiff had commenced its action within the required 21 days but had not filed the certificate of pending litigation until several months later. In dismissing the defendant’s application to discharge the lien and CPL, the master found two lines of authority that she considered irreconcilable: the first a strict line, and the second a more liberal line giving the court discretion to waive the time limit. The master took a discretionary approach based on a theory that the defendant had had notice of the plaintiff’s intention to enforce the lien. The appellate judge rejected that there were two lines of authority as to the time limit itself, saying there is only one, and it is a strict requirement—as supported by various authorities, including the British Columbia Court of Appeal. He said the discretionary or remedial cases concerned the substance or content of the lien itself and not the issue of time.

A master (now “associate judge”) considered the impact of two ministerial orders (M086 and M098) made as a result of the COVID-19 pandemic in finding that there was a 20-day suspension of the running of the limitation period, which meant that the limitation period for filing a claim of builders lien and certificate of pending litigation in the plaintiff’s circumstances would be May 27, 2020. The plaintiff, accordingly, had filed within time. The appellate judge concluded that the master’s analysis and conclusion were correct and dismissed the appeal (Canada Hanjiang Construction Ltd. v. Lee’s Noodle House Ltd., 2021 BCSC 219).

The plaintiff filed a claim of lien in February 2020, having a face value of $92,309. Despite the differences between the parties, negotiations continued through April 2020. The defendants sent a notice to the plaintiff dated March 31, 2020 pursuant to s. 33 of the Builders Lien Act, requiring the plaintiff to commence an action and file a certificate of pending litigation within 21 days. The plaintiff commenced an action but failed to file a CPL, citing closure of the land title office due to COVID-19 as the reason. In July 2020, the plaintiff filed a second lien claiming the sum of $92,309. The defendants applied for an order discharging the liens. They cited defects in the first lien and said the second lien was clearly out of time. Held, second lien claim struck. The court found the first notice was in the prescribed form, but valid service was not effected; hence the failure to file a CPL was not fatal to the validity of the lien. The court found the second lien to be an abuse of process, saying the law is clear that a claimant cannot file a second builders lien in an attempt to recover from a failure to file a CPL. The second lien was based on the same work and was in the same amount as the first lien (Toska Woodworking Inc. v. Balazadeh-Nayeri, 2020 BCSC 1378 (Master)).

On appeal by a defendant general contractor, the court set aside a master (now “associate judge”)’s order permitting the addition of a property owner to the subcontractor’s action and amendment of the notice of civil claim to enforce the underlying builders lien. A claim of lien is a claim in rem (against the land), and the owners are necessary parties to any action to enforce the lien. An action for contractual damages alone is not sufficient to meet the requirements of s. 33 of the Builders Lien Act; the claimant must assert a claim to enforce the lien, including seeking the requisite declarations to entitle it to the lien it claims. The court declared the lien extinguished pursuant to s. 33(5) (Trans Canada Trenchless Ltd. v. Targa Contracting (2013) Ltd., 2022 BCSC 438).

COVID-19 Ministerial Orders No Excuse for Late Filing

On March 22, 2019, the plaintiff in Peterson Custom Woodwork Ltd. v. Fu, 2022 BCSC 1767 filed a claim of builders lien against the defendant’s lands, seeking a declaration of entitlement to the lien and a personal judgment for the lien amount. The plaintiff filed a notice of civil claim nearly a year later on March 22, 2020 and registered a CPL on April 23, 2020.

The defendant now applied to cancel the claim of lien and the CPL, pursuant to s. 252(1) of the Land Title Act, arguing that no steps had been taken in the proceeding for a year, and that the lien became extinguished because the CPL was not registered within one year of filing the lien, pursuant to s. 33 of the Builders Lien Act.

The court did not exercise its discretion to cancel the claim on the first ground; see the annotation of this case under s. 252 of the Land Title Act at “252 Cancellation of certificate of pending litigation” in chapter 17.

Regarding the second ground, the court determined that the court’s suspension of operations during the COVID-19 pandemic did not excuse the delay in filing and registering the CPL. While the court accepted that in the unprecedented circumstances under which the court and the legal profession were operating at the beginning of the pandemic, the failure to file and register the CPL by March 22, 2020 (the one-year limitation date) was excusable, the circumstances did not explain the ultimate delay in filing and registering the CPL. As the CPL was registered after the expiration of the one-year deadline and before Ministerial Order No. M086 temporarily suspended all mandatory limitation periods, the court canceled the lien and CPL pursuant to s. 33(5) of the Builders Lien Act.