What Is a Prevenient Arrangement and What Does It Have To Do With a Text Message?
A prevenient arrangement occurs when parties enter “…into an ongoing relationship for the supply of services or materials over time, often at multiple locations.” This is according to Catriona Otto-Johnston, author of When Calculating Lien Periods, it’s Convenient to be Prevenient.
As an example, let’s say I own 5 separate properties and I hire ABC Contracting for improvements at each of these properties. ABC Contracting and I have an ongoing agreement of sorts. Generally, in the US, we would treat the improvement to each property as an individual project. Thus, there would be 5 first furnishing dates and 5 last furnishing dates (one for each project). However, in Alberta, under a prevenient arrangement, these 5 projects would be consolidated into one; meaning one first furnishing date and once all properties have been improved, one last furnishing date.
Clear as mud?
A Real-Life Example May Offer Clarity
In a case before the Alberta Queen’s Bench, Picturesque Landscaping Inc v Moderno Homes Inc, 2018 ABQB 5, Moderno Homes, Inc. (Moderno) hired Picturesque Landscaping Inc. (Picturesque) for landscaping services, apparently to multiple properties.
Picturesque registered a lien February 12, 2016. Obviously Moderno contested the lien and argued Picturesque failed to register its lien timely. The legal opinion indicates the “critical date” is December 27, 2015 — 45 days prior to the date of the lien filing.
Did Picturesque furnish on or after December 27? As you can imagine, Picturesque said it did furnish after December 27, whereas Moderno said Picturesque didn’t do any furnishing that late in December.
Picturesque stated its last furnishing date was January 4, 2016, when it had to do site cleanup. However, as you know, site cleanup doesn’t generally constitute as a substantial last furnishing (think punch list or warranty work).
So, if Picturesque’s last furnishing date of January 4, 2016, wasn’t substantial, why didn’t the judge invalidate Picturesque’s lien?
Because of a text message.
A Text Message Changed a Legal Decision?
Well, the text message didn’t turn the entire case upside down, but it certainly helped Picturesque. According to the court opinion, although work may not have been done at the property against which the lien was registered, Picturesque was still furnishing to a separate property owned by Moderno.
“Moderno says…no work was done at 1118 Premier Way that late in December. But the parties do not dispute that on December 29 Kory Scott of Moderno and Sansalone of Picturesque exchanged text messages about Picturesque finishing the backfilling at a different Moderno property.”
The text message revealed there was additional work performed by Picturesque, for Moderno, beyond the key date of December 27. Back to the legal opinion:
“The parties referred to it as “16A”. It appears that work was done after December 27, 2015, by Picturesque for Moderno at 16A. That work at 16A may be enough to render the lien valid in respect of 1118 Premier Way if there was the alleged Broader Arrangement. The work done on one property subject to a prevenient contract may operate to extend the time for registering a lien or liens against all such properties subject to that Broader Arrangement, and potentially by a single lien for all.”
This text, regarding additional work at a different property, indicates there may have been a continuous or ongoing contract between Picturesque and Moderno. And, in Alberta, that can extend the lien filing period.
Though, in her article, Otto-Johnston notes the judge didn’t specifically say whether a prevenient arrangement existed.
“While the Court did not ultimately decide whether a prevenient arrangement was in place, its decision shows that such an arrangement can have a significant impact on validity of a lien and the limitation period to register a lien.”
Based on the judge upholding Picturesque’s lien, it seems the judge did believe such agreement existed.
Are Prevenient Arrangements Only Applicable in Canada?
While I can’t say this with complete certainty, it appears prevenient arrangements are available in most of the provinces. Also, in my research, I can see parallels between prevenient arrangements and service contracts. (The lienability of service contracts and/or maintenance agreements is a forthcoming topic!)
Do you think you are furnishing under a prevenient arrangement? Obtain a legal opinion and, as Otto-Johnston states, know that it may require a trial to prove the existence of the arrangement.
“As this case shows, a prevenient arrangement can extend the time to register a lien against all properties, where work was completed or materials furnished at different times or locations. However, if there is a dispute as to whether your contract is in fact a prevenient arrangement, this case indicates that a full trial may be required in order to prove the nature of your agreement and validity of your lien.”