What’s New in Builders Lien News in British Columbia & Yukon Territory?
Two Canadian Supreme Court decisions caught our attention this week; one in British Columbia and the other in Yukon Territory.
A Builder’s Lien in British Columbia is Invalidated Because Suit was Filed in the Wrong Jurisdiction
Bryan Hicks and Peter Rubin, authors of Lien on Me: B.C. Court Cancels Builder’s Lien Due to Procedural Misstep, reviewed the case, Scandia Paving Ltd. vs. Bengag.
Overview of Case & Authors’ Commentaries
Per the court opinion, Scandia Paving Ltd. was hired by Balbir Singh Bengag, for paving work. A dispute arose regarding unpaid claims for materials, as well as work deficiencies. Scandia filed a builder’s lien and when the two parties failed to come to an agreement, Scandia filed to suit to enforce its lien.
Unfortunately, Scandia did not adhere to B.C.’s statute and filed suit in the wrong jurisdiction. According to Hicks & Rubin, the Builders Lien Act requires the enforcement action to be filed in the jurisdiction where the improved upon property is located.
“[T]he Act requires that an action to enforce a lien be commenced in the court registry located in either the municipality or the judicial district where the property subject to the lien is located, depending on where the property is situated.”
Two months after suit was filed, Bengag moved to have the lien canceled, because the enforcement action was filed in the wrong jurisdiction.
It took over 14 months for Scandia to take any action to remedy its jurisdictional mistake. Hicks & Rubin advise there were previous cases where the court was willing to transfer a legal action to the appropriate jurisdiction, because the parties involved immediately took steps to fix mistakes. But, slow steps from Scandia didn’t score any points with the court.
“The Court considered other cases in which similar actions that were initially filed in the wrong court registry were transferred in order to preserve the underlying lien. However… the plaintiffs in the other cases acted swiftly to address their filing error once it was discovered. By contrast, the plaintiff in the Scandia Paving case took no steps to bring itself into compliance with the Act for well over a year, despite having been notified by the defendants of the filing error.
The plaintiff’s tardiness in seeking to have the action transferred to the correct court registry was the primary factor in the Court’s decision to cancel the Lien and CPL. The Court stated that since lien claimants have the “extraordinary remedy” of securing their claims before they are proven, there is an “expectation of expediency” in pursuing lien claims that the plaintiff did not meet.”
Yukon Territory & When Pay-When-Paid is Deemed Pay-It-Now
Thomas G. Heintzman O.C., Q.C., FCIArb, reviewed a “pay-when-paid case” which was recently before the Yukon Supreme Court.
In Payment Clause Held Not to Be A “Pay-When-Paid” Clause, Heintzman shared the clause in question:
“Payments shall be made monthly on progress estimates as approved by the Contractor covering 90% of the value of the Work completed by the Subcontractor to the end of the previous month; such payments to be made 7 days after the Contractor receives payment for such Work from the Owner.” (underlining added)
According to Heintzman, the court determined the clause did not contain conditional language, thus deciding the GC should pay the subcontractor, regardless of whether the owner paid the GC.
Heintzman added “This decision follows the trend of recent cases. Most of the recent court decisions have held that, unless the language of the contract makes it very clear that the contractor does not have to pay the subcontractor at all if not paid by the owner, the provision will not preclude the ultimate obligation of the contractor to pay the subcontractor.”
This week’s post reviewed a recent case which demonstrates the power of a properly perfected UCC. In this case, the Secured Party was granted the right to repossess its equipment because it had properly perfected its security interest via a UCC filing and had proven the debtor defaulted on the contract.
Learn more when you read Can a Properly Perfected UCC Really Give Me the Right to Repossess?
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