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Loose Promises Can Come Full Circle: Late-filed liens could be enforceable, if the facts are right

There are few, if any, cases in Alberta that directly answer the question: can an owner make a promise to a contractor to entice the contractor not to file a lien, only to later argue that the lien is out of time? Some jurisdictions have held that the contractor, in working with the owner and not filing a lien, will do so at its own peril and lose its lien right. However, a recent decision by Master Prowse, Boulevard Real Estate Equities Ltd. v. 1851514 Alberta Ltd., 2015 ABQB 619 (“Boulevard”), held that, on appropriate evidence, an owner of land can be estopped from asserting that a builder’s lien was filed out of time. The immediate concern is obvious: a purchaser of the land or 3rd party gaining an interest in the land would be subject to an unknown interest because the lien was not filed in the strictly required timeline. Master Prowse was cognizant of this and, after establishing that a contractor might retain a valid lien due to certain promises from an owner, if there are any third party rights involved, the contractor must lose its lien rights due to the missing of the applicable filing deadline. In doing so, Master Prowse went back to an examination of the heart and purpose of the Land Titles registry system as the starting point. From there, the examination turns to whether the Builders’ Lien Act allows for the filing of multiple liens (which it does - see: Tervita Corporation v ConCreate USL (GP) Inc., 2015 ABCA 80) and a consideration on the principles of equity, namely: can an owner, the party for whom the statutory filing provisions and limitations benefit, first make a promise to a contractor that a strict adherence to time limits is not required and then later use those same time limits against the contractor. Clearly, the intent of the legislation and the principles of equity provide a clear answer of “no”, as long as the contractor is not asserting or gaining a right over a third party. So, what “evidence” would be required to prevent an owner from relying on lien time limits? In Boulevard, the contractor had done work for which it had not been paid. The owner first made reference to a vague threat that if the contractor did not remove a lien that had been filed, the owner would “ruin” the contractor. The owner then said that it desperately needed financing, which the lien was preventing and that the contractor would be paid for work performed - all they had to do was sit down and reconcile all of the accounts. The contractor discharged the liens and the owner went silent. The contractor filed a lien again, but was outside of the statutory time period, resulting in the owner asserting that the lien was invalid. No third party rights were involved and the contractor was not going to be taking a priority position over other registered interests on the property. Some points to take away are that:

  • The door has been opened, on appropriate circumstances, to allow a contractor to file a lien outside what was once considered an absolute time period;

  • An owner or general contractor that makes loose or deceiving promises may still face repercussions under lien legislation, despite the time for filing a lien being long over;

  • Very specific facts and consideration to third party prejudice are still required if a contractor is seeking relief under the Builder’s Lien Act – it is still recommended that unpaid parties with a lien right ensure that they meet the time periods and file their lien; and,

  • It is also prudent to ensure that money has been received and cleared the bank account of the lien claimant prior to the lien claimant removing its lien.Sandquist Law is highly experienced in lien and construction dispute matters. Please contact us for further information or to discuss how we may be able to assist you in your dispute or how we can provide independent dispute counsel on an economical basis for both parties.

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