Contributors: Sharn Mashiana (articling student), Andrew Wilkinson and Catriona Otto-Johnston
Do you know if the nature of your construction work on a project allows you to register a valid builders’ lien? You might be surprised to hear that not all types of work give rise to lien rights. In order for you to register a valid lien, the Builders’ Lien Act (the “BLA”) requires that the work you performed or the materials you supplied improve the lands on which the construction occurs. If your work or materials do not relate to an improvement, you will not be able to lien. It is therefore very important that you understand from the outset whether the work you are doing will allow you to register a lien against the project lands in the unfortunate event that you are not paid for your work.
Under the BLA, the definition of “improvement” generally includes anything constructed on the land but excludes those things not affixed or intended to become part of the land. There have been many Court decisions dealing with whether certain work or supply constitutes an improvement. In the right circumstances, the work of architects and engineers can be considered an “improvement”. Even the removal of land, through excavation, has been held to be an “improvement”.
Trotter and Morton Building Technologies Inc. v Stealth Acoustical & Emission Control Inc., 2017 ABQB 262 is a recent Alberta decision in which the Court considered whether pumphouse buildings were “improvements”. The buildings were designed so that, after they were affixed to the land, they could later be moved without damaging them. Given this potential for removal, the owner of the oilsands project argued that the buildings did not relate to an “improvement”.
The Court considered the following factors in finding that the pumphouse buildings were “improvements” and thus the liens were valid:
- Location and function of the buildings
- The buildings were to be placed at known and specifically designated and prepared locations
- The buildings were fully integrated into the larger oilsands project
- Size and weight of the structures
- The buildings were large (their weight ranged from 200,000 to 260,000 pounds)
- Degree of affixation of the structures
- The building and its structural base were then anchored to 12-14 concrete piles, with a minimum pile depth of 72 feet
Additionally, the Court considered the likelihood of the pumphouse buildings staying on site. While the Court declined to assign a percentage to the likelihood that the pumphouse would stay on the site, it noted that the buildings were very large and heavy structures and were currently affixed to the land. They were intended to be put in place and operated as part of the overall project. Even if the buildings were moved, it was possible that they would simply be moved to another part of the site.
The Court held that even though the pumphouse buildings could be moved after being put into operation, that possibility was not sufficient to prevent them from being improvements.
The subcontractors in this case made an alternative argument that if the pumphouse buildings were not an improvement, the oilsands project to which the pumphouse buildings were to be supplied, was the improvement. The Court agreed with this argument and held that it is the improvement of the overall project that must be considered.
How does this decision affect you? Work or material furnished with respect to a moveable structure can still be an “improvement” so long as certain factors are met. This analysis requires a careful examination of the facts of each case and consideration of the criteria the Court will apply. For more information on requirements for lien registration, contact Andrew Wilkinson or Catriona Otto-Johnston, lawyers and Partners at Field Law, to discuss your options.