Builders Liens: Can you Lien for Planned Work?
Under the Builders Lien Act (“BLA”) a statutory right is created to filed builders liens for work performed and/or materials supplied to an improvement. Understanding this seemingly simple concept requires applying the following terms defined in the BLA:
- “work” means “…work, labour or services, skilled or unskilled, on an improvement…”;
- “materials” means “…movable property that is delivered to the land on which the improvement is located and is intended to become part of the improvement, either directly or in a transformed state, or is consumed or used in the making of the improvement, including equipment rented without an operator…”; and
- “improvement” is given a non-exhaustive definition of including “…anything made, constructed, erected, built, altered, repaired or added to, in, on or under land, and attached to it or intended to become a part of it, and also includes any clearing, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land.”
The recent decision of Shelly Morris Business Services Ltd. v Syncor Solutions Limited, 2020 BCSC 2038 (CanLII) is illustrative of some of the difficulties that can arise in the interpretation and application of the definitions of the BLA.
In Shelly Morris the defendant had contracted with the plaintiff to provide interior design and construction management services for two office buildings. Pre-construction work including site visits, design and tendering was performed before further work was put on hold due COVID-19. The defendant issued two invoices for its work, which were not paid in full. In July 2020, the plaintiff advised that it would not continue with the contracts. In August 2020 the defendant filed builders liens for its unpaid invoices against the project lands.
The decision in Shelly Morris came about as a result of the plaintiff seeking to have the builders liens on title cancelled. In rendering its decision, the Court first went through the definitions detailed above. It held, per earlier case law, that the object of the BLA was to “… prevent owners of the land getting the benefit of buildings erected and work done at their instance on their land without paying for them…”. The Court also found, based on previous case law, that “Because a builders lien is a creature of statute, the legislation must be interpreted strictly, insofar as it creates a preference in favour of one creditor over another…”
The Court noted that “improvement” was inclusive in that the examples of improvements given in the legalisation did not preclude additional meanings to the word. The Court also noted previous case law that had held that “improvement” means an improvement to the property itself; work and construction must commence. Similarly, “improvement” does not include intended construction.
The Court ultimately determined that, since the improvement didn’t commence, the defendant’s pre-construction efforts and preparation did not constitute an improvement and, therefore, were not lienable. The Court did observe that the defendant’s work not being lienable did not mean that it was not recoverable in contract.
Shelley Morris is illustrative of how the strict requirements of the BLA can be difficult to understand and difficult to follow. While the defendant’s work was certainly intended to become part of an improvement, it had not become part of an improvement yet and was not lienable. As may be discerned from the decision, had a shovel hit the ground of a nail been hammered that required planning, such planning would be lienable (although there would still be a question of how much planning/pre-construction related to an actual improvement).
For related cases about some of the strict requirements of the BLA, please also consider the following articles: