Builders Liens: Strict Compliance or Lose Your Lien
While not guaranteeing the settlement of disputes, the Builders Lien Act, S.B.C. 1997, c. 45 (the “Act”) provides a powerful tool for contractors, subcontractors, workers and suppliers to enforce claims for unpaid work and materials supplied in respect of the improvement of real property. The Act does so through creating a statutory right of a lien -a right to encumber real property to secure a debt- where no such right is available under the common law. The trade-off of the Act creating a right to claim a lien is that strict compliance with the Act is required for a lien to be maintained.
The recent case of Omnique Construction Inc. v. Xu, 2017 BCSC 208 (CanLII) is illustrative of how careful lien claimants must be in complying with the Act.
In Omnique Construction, a contractor, Omnique, had done work improving a property owned by Ms. Dong. Ms. Sun was a director and officer of Omnique and apparently owned the company or owned it in partnership with her husband.
In May, 2015 Omnique was hired by Ms. Dong’s husband, Mr. Xu, to provide forming and framing service for a house being built on Ms. Dong’s property. By June, 2015, disputes had arising among the parties and Mr. Xu terminated Omnique.
The central issue in the case arose as a result of Ms. Sun registering a builders lien in her name rather than in the name of her company and the contracting party, Omnique. As is often the case where companies are managed and owned by one person, Ms. Sun apparently failed to consistently appreciate and maintain the legal distinction between herself and her company.
Ms. Dong sought to have the lien cancelled; arguing that the Act required strict compliance and that Ms. Sun issuing the lien in her name rather than in Omnique’s name failed that requirement. Ms. Sun argued that her claiming the lien rather than Omnqiue was a mere technical error and that the essential elements of the lien were accurate.
The Court noted that in 581582 B.C. Ltd. v. Habib, 2013 BCSC 378 (CanLII), the Plaintiff had registered the lien in its doing business as name (which was not a legal entity) and that that error was enough to cancel a lien. The Court in Omnique Construction noted a number of legal authorities which hold that strict compliance with the Act is required. The Court went on to find that Ms. Sun’s lien was invalid as the party claiming a right of lien was not the party actually possessing the right to make such a claim. Ms. Sun’s arguments that the lien form was confusing and that she intended to file the lien as agent for Omnique were also rejected.
The Court extinguished Ms. Sun’s lien and ordered her to pay costs and damages related to the wrongful filing of her lien.
Omnique Construction is a reminder of the long-held maxim in this province that builders lien claimants must strictly comply with the requirements of the Act or risk their lien being extinguish and the sanction of damages and costs against them (see also Nita Lake Lodge Corp. v. Conpact Systems (2004) Ltd., 2006 BCSC 885 (CanLII) and Framing Aces Inc. v. 0733961 B.C. Ltd. dba Omni Pacific, 2009 BCSC 389 (CanLII)).
While contractors, subcontractors, workers and suppliers can and do file builders liens properly without legal assistance, any such parties who have concerns about the strict compliance requirements of the Act or are inexperienced in filing liens should seek appropriate and timely legal advice. The strict requirements of the Act and the short timelines it imposes for claiming a lien necessitate a party seeking any required assistance at their first opportunity to do so as waiting in order to preserve and pursue that party’s lien rights.