CCS Contracting Ltd. v. Condominium Corporation No. 1520090 and certificates of Lis Pendens under the Prompt Payment and Construction Lien Act

Introduction

The Prompt Payment and Construction Lien Act (the “PPCLA”),[1] and it’s predecessor the Builders’ Lien Act, have a few overarching themes, one of which is efficient and streamlined dispute resolution both to ensure funds are promptly paid, and to ensure that land is not encumbered with the lien for unreasonable periods of time. One of the features of this legislation is that if a claimant wants the benefit of a lien, they must strictly comply with various deadlines, including those with respect to (i) the registration of a Statement of Lien (and supporting Affidavit) at the Land Titles Registry, (ii) the filing of a Statement of Claim at the Alberta Court of King’s Bench and (iii) the registration of a Certificate of Lis Pendens (CLP) at the Land Titles Registry.

These steps have not been significantly changed with the implementation of the PPCLA. However, Alberta counsel will be well aware that alongside the implementation of the PPCLA day-to-day practice has been impacted by changes to the Land Titles Registry, specifically the implementation of the Land Titles Office Pending Registration Queue (PRQ). Under this framework documents, including builders’ liens (now construction liens), once submitted, are entered in the PRQ (appearing on title) and are later reviewed by the registrar upon the order of their receipt. They will only be actually registered at a future date which is effectively dictated by the volume of the backlog faced by the registrar. Importantly, once submitted, the date on which a document is registered cannot be known ahead of time. This, of course, raises important questions for the Alberta lien framework, which depends upon registering documents by certain deadlines.

Where a lien claimant’s obligation to register a document by a certain deadline is concerned, Section 14.1(7) of the Land Titles Act[2] clarifies that the document will be deemed registered so long as it is entered in the PRQ by that deadline. However, what has been much less clear is how to calculate a lien claimant’s deadline for a subsequent registration where its timing depends upon that of a previous step. Specifically, the lingering question has been how this system applies to the deadline associated with a CLP, which is an important part of how the PPCLA ensures the prompt resolution of disputes, and which requires the CLP to be registered within 180 days of the registration date of the Statement of Lien failing which the lien will cease to exist.[3]

In CCS Contracting[4]the Alberta Court of King’s Bench recently weighed in on this question and provided an answer.

Facts

The matter before the Court in this case saw a lien having been submitted for registration by the lien claimant on April 8, 2022, but not registered on title until July 25, 2022 (109 days later). A Statement of Claim was filed as required in order to preserve the lien on October 5, 2022 (within 180 days of the lien being submitted for registration), however a CLP was not filed until November 21, 2022, within 180 days of the date of actual registration, but 228 days from the date the lien was submitted for registration.

The applicant owner brought an application to discharge the lien on the basis that the CLP was not registered within the 180 day period contemplated under the Act and that the lien had ceased to exist as a result. As such, the only issue before the Court was whether the 180 day period for registration of the CLP, began to run on the date that the lien was submitted for registration or from the date on which it was actually registered on title.

Decision

In a brief decision, Applications Judge Schlosser found that the period for the submission of a CLP begins from the date of registration of a lien and not merely its submission and entry into the PRQ. In reaching this conclusion, he reasoned that:

1. A registration request (being entry of a document in the PRQ) is not registration proper and means only that the registrar will examine the request at some future date, whereupon they can then refuse to register it or it can be cancelled prior to registration (among other things).[5]
2. Cases on the subject “uniformly” say that lien legislation is to be interpreted strictly “but not so as to prejudice the rights of owners and third parties, and not in a way that would be inconsistent with the intention of the legislation.”[6]
3. Section 14.1(7) of the Land Titles Actprovides that the time limit for registration of a lien is satisfied when the lien is entered in the PRQ. However, this step is still “only a request and the document is not registered until it is examined and placed on title.”[7]
4. The plain wording of the Act is such that the time for enforcement proceedings and a certificate of lis pendensruns from the date of “registration” and not from the date that the lien is put into the PRQ (although he did note that the effect of Section 14.1 of the Land Titles Act is to preserve the lien claimant’s rights in the interim).[8]
5. If there is any ambiguity from the wording of the PPCLA and the amendments to the Land Titles Act, this ambiguity should be resolved in favour of the lien claimant and (in this case) there is no prejudice to the owner and no third party rights affected by doing so.[9]

Impact and takeaways

At a practical level, the Court’s decision can be taken as a direction to lien claimants, owners and other impacted parties that the 180-day time period for registration of a CLP (or, potentially, any other lien document subject to a similar timing requirement) begins only when the lien is actually registered on title. However, reliance on the same prior to further judicial discussion is a recipe for lost claims.

Further, there are some lingering questions and potential issues that remain with respect to this subject and, in particular, the Court’s decision in CCS Contracting:

1. The Court’s interpretation appears to prejudice the rights of owners and third parties (without avoiding any comparable risk of prejudice to lien claimants):

1. 1. The impact of a construction lien on a project (particularly one that is ongoing) can be significant. Ordinarily, once an owner receives notice of a lien they are best advised to stop all further payments and can either (i) wait to see if the lien claimant will take the necessary steps by their associated deadlines in order to preserve their lien, or (ii) take steps to have the lien removed from title by paying security into Court.
   2. A construction lien being entered in the PRQ and coming to the owner’s attention on this basis affects the owner the same way it would as if the lien was actually registered. Substantively, an owner cannot ignore it once they have notice that its registration is pending without the risk of greater exposure to liability itself. At this stage an owner is also disadvantaged as, while they know only of the lien’s existence, the PRQ entry does not disclose the amount or any detail regarding the lien and, unlike a registered document, a copy of a document entered in the PRQ cannot be requested and examined by an owner (or other affected party).
   3. Even more problematic for owners (and other affected parties) is the fact that until a lien is registered security cannot be paid into Court in order to secure its removal. These applications are typical and necessary to keep construction progressing. The framework for these applications requires the lien to be registered before it can be removed.
   4. By contrast, as at the date a construction lien is entered into the PRQ a lien claimant is not in any different position than they would be if the lien was actually registered on that date:
      1. They are aware of the claim and its particulars (even though the owner may not be) and would not appear to be in any way substantively disadvantaged if the time period for registration of a CLP (a not insubstantial period of 180 days) commenced on the date the lien was entered in the PRQ.
      2. Even if a lien registration is reviewed and rejected by the Land Titles Office (which will most likely be long after the original deadline for its registration has passed), a lien claimant is afforded the benefit of a 30-day period in which they can cure any issues identified and can resubmit the lien for registration where, if properly addressed, it will then be registered.[10] Meanwhile, during any such period an owner (or other affected party) must continue to wait and attempt to plan while still only having base knowledge that a lien is pending.
2. The Court’s interpretation could be considered to be inconsistent with the intention of the legislation:

• 1. It is generally understood that, among its other purposes, lien legislation such as the PPCLA provides a unique statutory framework for unpaid parties who supply work and services to improvements on land, as well as to facilitate an expedited and orderly handling and resolution of lien claims. Requiring a lien claimant to take steps by certain deadlines forms an important part of making this a streamlined and efficient system and allows an owner (and any other affected parties) to know about a lien claimant’s assertion of rights and to plan and respond accordingly.
  2. Having the clock for the registration of a CLP begin not 180 days from when a lien is entered in the PRQ (which is deemed to be registration under the Land Titles Act), but 180 days from actual registration, being some unspecified number of days after the entry of a lien in the PRQ, appears to actually be contrary to these purposes as its substantive effect is to introduce both delays (of as much as several months) and uncertainty into this framework.

While they are worthy of note for the time being, unless and until the Court has occasion to offer further clarity or insight, these questions regarding the interaction of the PPCLA and the PRQ system will remain.

Please contact a member of Miller Thomson’s Construction & Infrastructure group with any inquiries about PPCLA processes, or about construction liens generally.

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[1] Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4

[2] Land Titles Act, RSA 2000, c L-4 (the “LTA”)

[3] This requirement, and its implications, are set out under s. 43(1)(b) of the PPCLA

[4] CCS Contracting Ltd. v. Condominium Corporation No. 1520090, 2023 ABKB 147

[5] Ibid at para. 10

[6] Ibid at para. 11

[7] Ibid at para. 12

[8] Ibid at para. 13

[9] Ibid

[10] See LTA, ss. 14.1(6)(a)(i) and (ii) and the Pending Registration Queue Regulation, Alta Reg 43/2021, s. 2