( Disponible en anglais seulement )
The recent decision of the British Columbia Supreme Court in Frontier Kemper Constructors, Inc v Rio Tinto Alcan Inc[1] clarified the timeline for filing a builders lien when the 45-day deadline falls on a weekend and revisits the limited scope afforded to the court under sections 24 and 25 of the British Columbia Builders Lien Act (BLA).[2]
Background
Rio Tinto Alcan Inc. (“Rio Tinto”) brought an application for an order to cancel a $96 million claim of lien that was filed by Frontier Kemper Constructors, Inc. (“Frontier Kemper”) with respect to a tunnelling project for the Kemano power generating station owned by Rio Tinto. Some of the issues before the Court were:
- Whether the lien should be cancelled because it was filed out of time; and
- If the lien is not cancelled:
- whether security in an amount less than the lien should be posted to discharge the lien; and
- whether the court should apportion the lien amount among the various land parcels subject to the lien.
Rio Tinto’s application to remove the lien was brought on a summary basis pursuant to section 25 of the BLA. Justice Lamb made her decision within the limited scope afforded to her under section 25 of the BLA, as held by the British Columbia Court of Appeal in West Fraser Mills Ltd v BKB Construction Inc[3] in which the Court of Appeal determined that the validity of a lien itself is not in issue on an application pursuant to section 25.[4] Similarly, Justice Lamb also noted that the court’s discretionary power to order security less than the full lien amount under section 24 of the BLA should be exercised cautiously to avoid injustice to lien claimants who have the right to have their claims fully adjudicated at trial.[5]
Timeline for filing
The BLA allows contractors, subcontractors, workers, and material suppliers 45 days from a “triggering event” to file a claim of lien. Failure to file a claim of lien within this timeline is fatal to a claimant’s lien rights.
In this case, pursuant to a head construction contract between the parties, Rio Tinto sent notice to Frontier Kemper on April 21, 2020 that it was terminating the contract effective immediately.[6] As the notice was received after business hours, it was deemed to have been received on April 22, 2020. The 45-day time limit would have ended on Saturday, June 6, 2020. Frontier Kemper filed its builders lien against 14 land parcels owned by Rio Tinto on Monday, June 8, 2020, through myLTSA, the Land Title Survey Authority’s online database and electronic filing system.
myLTSA accepts applications for lien claims Monday – Saturday between 6 a.m. – 11 p.m., whereas the Land Title Office (LTO) accepts submissions in person during its business hours, Monday – Friday between 9 a.m. – 3 p.m.
In November 2020, the Director of Land Titles directed that a builders lien must be filed electronically via myLTSA, subject to several exemptions.[7] The British Columbia Builders Liens Practice Manual further clarifies that a claim of lien filed by a lawyer must be submitted electronically through myLTSA, and that only a lien claimant not represented by legal counsel may file a lien in person or by mail.[8]
The BC Interpretation Act[9] provides that where a deadline for doing an act in a “business office” falls on a day which the office is not open, that deadline is determined to be the next day that the office is open during its regular business hours.
For the purposes of the BLA, the parties agreed that the 45-day time limit would have ended on Saturday, June 6, 2020. However, Justice Lamb held that despite the fact that myLTSA is open and accepts applications on Saturdays, the “office” contemplated in section 15(1) of the BLA, is the physical LTO, not myLTSA. She explained that if the “office” was interpreted to mean myLTSA, the result would be different lien filing deadlines for those who file claims of lien electronically with a lawyer and those who file in person or by mail, stating that “this inconsistency would be contrary to the commercial certainty objective that underlies the BLA.”[10]
Posting of lesser security
Rio Tinto alternatively sought an order for the discharge of the lien upon the posting of security in an amount less than the stated lien amount. As a further alternative, it sought to apportion the lien amount among the various land parcels subject to the lien and to order the posting of a proportionate amount as security to remove the lien from the “Terminal B Lands,” one of the parcels of land against which it was filed.
Pursuant to section 24 of the BLA, the Court has discretion to order security less than the full lien amount. Rio Tinto pointed to evidence that the value of the improvement on the Terminal B Lands was small compared to the $96 million lien amount, and that the value of the other liened lands was adequate to satisfy Frontier Kemper’s lien claim. Frontier Kemper submitted that Rio Tinto failed to meet the heavy onus on it to justify reduction of the security to be posted as Rio Tinto had not established that Frontier Kemper’s lien claim or any part of it was bound to fail, as mandated by the two-prong test articulated by the British Columbia Court of Appeal in Q West Van Homes Inc v Fran-Car Aluminum Inc.[11] Instead, Rio Tinto focused on the value of the other liened lands, which Justice Lamb held to be an “irrelevant factor” in setting the amount of security to be posted.[12]
Justice Lamb ultimately agreed that Rio Tinto had failed to meet the test required under section 24 of the BLA and as such, she was not inclined grant the order sought by Rio Tinto, noting that “one of the key objectives of the BLA is to protect those who supply work and materials to a construction project and the caution that applies to a determination of the appropriate amount of security.”[13]
Apportioning the lien between the 14 properties
Frontier Kemper had filed a general lien in accordance with section 16(1) of the BLA, such that one lien for the full amount owing was filed against all 14 land parcels, instead of separate liens against each parcel for the work undertaken on each individual parcel.
As a final alternative, Rio Tinto relied on section 16(2) of the BLA and asked the court to apportion the lien amount as between the Terminal B Lands and the remaining properties against which the lien was filed, such that 1/14 (or some other apportionment) of the lien amount would be adequate security to cancel the lien against the Terminal B Lands.
Section 16(2) of the BLA allows the court to convert a general lien filed against several parcels into separate liens that each apply to an individual parcel. However, Justice Lamb noted that this apportionment may only be done for the reason identified in section 16(2), that is, “for the purpose of determining the lien claimant’s rights as against persons having rights in particular parcels.”[14] She concluded that this purpose would not be accomplished here as Frontier Kemper’s rights against Rio Tinto were determinable by the lien and the claims advanced in this action.[15]
Conclusion and takeaways
Builders liens are creates of statute that require strict compliance with the BLA, which means the deadlines under the BLA are unforgiving. The court has no discretion to grant extensions to file a builders lien. As such, while this decision appears to buy a lien claimant more time to file a builders lien if the 45-day deadline falls on a weekend, it is better to file before the last day to do so if possible, as a calculation error could make the difference between a secured and unsecured claim.
In addition, before filing a builders lien, lien claimants who have entered into a single contract with an owner should always consider whether their improvements extended to more than one property and conduct title searches if the answer is uncertain. If more than one property of the owner is involved, it may be prudent to register a single builders lien against each parcel for the price of all work and materials provided. In doing so, lien claimants are able to maximize their security, while protecting themselves from the risk that the highest value work and material supplied was in respect of the least valuable or most encumbered property.
[1] Frontier Kemper Constructors, Inc v Rio Tinto Alcan Inc, 2022 BCSC 868 [FKC].
[2] Builders Lien Act, SBC 1997, c 45 [BLA].
[3] West Fraser Mills Ltd v BKB Construction Inc, 2012 BCCA 89 [West Fraser].
[4] FKC, supra note 1 at para 27.
[5] Ibid at para 105.
[6] Whether the contract was properly terminated remains a live issue between the parties to be decided at trial. Justice Lamb concluded that Rio Tinto could only deliver the termination notice in accordance with the termination provisions of the contract if Frontier Kemper breached the contract prior to April 2, 2020. Whether or not Frontier Kemper did so and then failed to adequately remedy such a breach “goes to the heart of the dispute between the parties and would require findings of fact that go far beyond the limited scope afforded under s. 25 of the BLA” as held by West Fraser – FKA, supra note 1 at para 60.
[7] Land Title and Survey Authority of British Columbia, Director of Land Titles Directions, “E-filing Directions”, Version 1.3, effective November 24, 2020.
[8] FKA, supra note 1 at para 75, citing Dirk H. Laudan, J. Marc MacWwing & David T. Mckenzie, eds British Columbia Builders Liens Practice Manual, (Vancouver: CLEBC, 2000) (loose-leaf updated 2020) at s. 2.8.
[9] Interpretation Act, RSBC 1996, c. 238.
[10] FKA, supra note 1 at para 85.
[11] Q West Van Homes Inc v Fran-Car Aluminum Inc, 2008 BCCA 366 at para 56.
[12] FKA, supra note 1 at para 100.
[13] Ibid at para 108.
[14] Ibid at para 121, citing BLA, supra note 2 at section 16(2).
[15] Ibid at para 126.
