More Time Than You Think - Understanding the Limitation Period for Filing Builders' Liens

In cases involving the discharge of a builder's lien, a critical question often becomes whether or not the lien was filed within the applicable time period under the Builder's Lien Act. A recent case from the BC Supreme Court suggests that a trade may still file a lien even where it has failed to work on an improvement for an extended period of time.

FACTS

In Sandhill Development (Langley) Ltd. v. Save On Black Top (2008) Ltd., the court considered a petition by a developer, Sandhill Development (Langley) Ltd. ("Sandhill"), to remove builder's lien registered by one of its trades, Save On Black Top (2008) Ltd. ("Black Top"). Black Top that had been engaged to provide off-site servicing for a 393 unit mixed residential commercial complex (the "Project") being developed by Sandhill. Sandhill and Black Top signed a contract (the "Contract"), whereby Black Top was responsible for constructing roads and sidewalks, a water drainage and sanitary system, and installing hydro, optical and telephone cables (the "Work") at the Project. It was a term of the Contract that Black Top would complete the Work in the period between August 15, 2010 and October 30, 2010.

However, as a result of delays stemming from internal disagreements within Black Top, the Work was not completed by the October 30th deadline. Sandhill and Black Top met in January 2011, and reached a supplementary agreement whereby Black Top would finish the Work by January 31, 2011 (the "Amended Deadline"). Black Top again failed to complete on time, instead stopping work several weeks after the passing of the Amended Deadline and not returning to the construction site until May 2011. Black Top eventually abandoned the work in June 2011.

Nevertheless, over 5 months later, Black Top filed a builder's lien on December 23, 2011, for monies owing under the Contract. Sandhill attempted to have the lien removed on the basis that Black Top had failed to file the lien within the 45 day statutory time limit under the Builders Lien Act.

ISSUES

  1. Was the Contract a head contract?
  2. What is the time limit for filing a lien where a trade stops work for an extended period of time?

 

COURT DECISION

Under section 20 of the Builders Lien Act, a builder's lien must be filed within 45 days of the issuance of a certificate of completion. If a certificate of completion has not been issued, a lien can still be filed within 45 days of the date on which a head contract has been completed, abandoned, or terminated, and in the absence of a head contract, the date on which the improvement itself has been completed or abandoned. Sandhill argued that the Contract was a head contract as it was hired by the developer and not a general contractor, and that Black Top had failed to file a builder's lien within 45 days of abandoning the Contract. The court disagreed.  Because Black Top was not engaged to do substantially all of the work on the Project, the Contract was not a head contract as defined under the Builders Lien Act.

In the absence of a head contract, Sandhill could only have the lien removed if the Project itself had been completed or abandoned for more than 45 days. In this case, there was no evidence that the Project as a whole had been completed or abandoned. As a result, Black Top's lien had been duly registered and could not be removed despite the fact that it had abandoned the Contract.

LESSONS LEARNED

  1. A contract is not necessarily a head contract simply because an owner contracts directly with a trade, if that trade's scope of work is actually part of a larger development.
  2. Even where a trade ceases to work for a long period of time, the time limit for filing a lien may not begin to run until much later.

 

 

This article was written by Ian Moes, a lawyer, and Andrew Delmonico, an articling student, both with the law firm of Kuhn LLP. It is only intended as a guide and it is important to get legal advice for specific situations. If you have questions or comments about this case or other construction law matters, please contact Ian at 604-682-886