Lessons Learned
Don’t overplay your leverage: recognize in advance of applying for relief what you are capable of achieving with the hand you’ve been dealt.
Construction
Green Blvd. Construction Ltd. owns two lots in Coquitlam: 1405 and 1407 Pipeline Place. It entered into a contract via text message with BSSD Excavating & Landscaping Ltd. for construction services of a contested scope, but that in essence amounted to lot digging, extraction, soil and dirt removal, road cleaning, backfill, and drain installation on the two lots.
The parties agreed by text message on a price of $32,000 per lot, although there are now claims of undocumented terms, including payments to be made by installment and hauling dirt from site being an extra.
BSSD began work in November 2022 and provided two estimates matching the contracted price. In December, Green Blvd. paid BSSD $10,000 per lot, and in January 2023, BSSD invoiced Green Blvd. for $23,000 per lot – essentially (but not quite) the original contract price minus the $10,000 payments already made.
In February, BSSD’s principal stated in a text message that the work was 90% done and demanded further payment toward the agreed price. Green Blvd. objected, and BSSD conceded that Green Blvd. could withhold payment of the $46,000 outstanding under the contract until the job was done.
Later that month, Green Blvd. instructed BSSD to stop work. Green Blvd., alleging deficiencies, informed BSSD that it was fired and demanded that BSSD remove its equipment from site.
Litigation
In April, BSSD registered two builders’ liens in the combined amount of $124,000, nearly double the contracted amount. BSSD’s affidavit evidence claims that the overage is the result of the expense of dumping the soil excavated from site, which was not included in the lump sum contract.
Green Blvd. applied to cancel the liens pursuant to sections 22 and 25 of the British Columbia Builders Lien Act, which state inter alia that a lien is extinguished if not filed in the manner required by the Act. Green Blvd. specifically claimed that, as section 2 of the Act establishes only the right to a lien “for the price of the work and material, and the extent that the price remains unpaid,” BSSD’s claim for an uncontracted sum, as well as for the entire sum contracted when some work remained incomplete, vitiates the lien.
Analysis
Cancellation via Improper Filing
The Court reasoned from the common dictionary definition of the word “manner”, which refers to the way in which a thing is done. Here, there was no suggestion that BSSD failed to follow procedure, and the Court concluded that neither the price of the work nor the amount owing are captured by section 2 of the Act such that an incorrect amount claimed extinguishes a lien.
Consequently, the Court determined that the only potentially available grounds for cancellation were found in s. 25(2)(b): “the claim of lien is vexatious, frivolous or an abuse of process”. Of those possibilities, the only serious question arising was whether BSSD’s claim was frivolous. The Court cited West Fraser Mills Ltd. v. BKB Construction Inc., 2012 BCCA 89, on this point, in which the Court of Appeal wrote that a lien claimant must only clear a low bar in defence of an accusation that their claim is frivolous. If it is not “plain and obvious” that pleadings should be struck – if there is apparently a question to be tried – then a lien claim is not frivolous.
While the Court agreed with Green Blvd. that the conduct of the parties was more consistent with an all-inclusive price than with the final amount claimed by BSSD, the Court concluded that a section 25 application to cancel the lien was not the appropriate procedure to contest a lien’s quantum, and that Green Blvd. should have applied for a summary trial, or utilized section 24 (via which a lien may be cancelled upon deposit of adequate security) to apply for a reduction in the security required of it.
Cancellation via Security Deposit
The Court went on to consider arguments under section 24, but Green Blvd. once again made an aggressive demand – that the security ordered be a merely nominal amount – and once again, the Court relied on the appellate decision West Fraser Mills to explain to Green Blvd. why its demand was inappropriate:
Section 24 is no more a means of conducting a summary trial than is s. 25… It is perhaps theoretically possible for the court to find under s. 24 that it is “plain and obvious” that a lien claim is not provable, and to order nominal security on this basis. However, it seems to me that if the evidentiary record (despite being not fully developed, as it would be in the context of an action) led to such a conclusion, it would be appropriate to find under s. 25(2)(b) that the lien claim was vexatious, frivolous, or an abuse of process. Had the Legislature intended s. 24 to be used as a means by which the court can fully and finally determine the factual or legal merits of a lien, it would have said so in the section. I think the scope of enquiry under s. 24 should be approached with caution in order to avoid injustice to lien claimants who, generally speaking, have the right to have their claims fully adjudicated at trial. [emphasis added]
The Court did, however, reduce the amount of security ordered to the textually-supported agreement of $32,000 per lot. The Court cited Strata Plan LMS2262 v. Belgrove Construction Ltd., 2003 BCSC 535, for the principle that “[w]hen the question arises at the time of posting security with respect to the amounts claimed, the onus shifts to those who want full security posted to provide at least the barest of details, which would be something more than a bald statement that the monies are owing and something less than prima facie proof of the claim.”
Cancellation via the Land Title Act
Green Blvd. attempted a final hail mary by making application pursuant to sections 256 and 257 of the Land Title Act, arguing that it would experience hardship and incovenience from the registration of BSSD’s liens, namely its inability to sell the properties in question until trial.
The Court nixed this argument decisively: it held that the Builders Lien Act sets out a comprehensive code for liens filed by construction trades, and that an owner experiencing hardship or inconvenience from a builders’ lien must find its remedy in that act, not in Land Title Act remedies created for a different purpose and that would, if Green Blvd.’s interpretation were to be accepted, conflict with the outcome of the process created by the Builders Lien Act.
Costs
Both parties arguably had the opportunity – BSSD before filing an inflated lien claim and Green Blvd. when fashioning its application – to present themselves as the reasonable party and ensure a clean win, with the associated material benefit of a costs order in their favour. Instead, the Court deemed success on the application to have been divided and ordered each party to bear its own costs.