Fatal Errors: The small mistakes that can have a big impact on your lien claim

AUTHORED BY: Matthew Turzansky and Ryan Krushelnitzky

The scenario is a fairly common one: a contractor doesn’t get paid, and then proceeds to register a lien on a project, only to later discover a mistake in the Statement of Lien. It could be a typo in the name of the Owner; or it could be a failure to properly identify the interest being liened. While such errors may seem small, they could put the entire lien claim in jeopardy.

This scenario was addressed recently by the Court of Queen’s Bench in Encore Electric Inc. v Haves Holdings, 2017 ABQB 803. In that case, an electrical contractor was hired to perform certain electrical work in a Defendant tenant’s leased space. When a dispute arose about alleged deficiencies, the Contractor registered two liens valued at approximately $686,000.

When the liens were registered, the box for identifying the interest in the land was left blank. This resulted in the lien being registered against the property owner’s fee simple interest, rather than the Defendant tenant’s leasehold interest. In light of this, the Defendant applied to have the liens struck on the basis that they were not registered against the correct interest in the lands.

In response, the Contractor argued that the landlord’s interest could be liened (notwithstanding that the Contractor was hired by the Defendant tenant), since the landlord fell within the definition of “owner” under the Builders Lien Act. The Court rejected this argument. The Court relied upon the line of cases to the effect that the owner’s interest will not be lienable where work is performed for a tenant unless the owner becomes significantly involved in the design and/or construction, or where the landlord obtains a “direct benefit” from the work.

The Contractor also argued the error on the face of the lien could be cured by the Court. Section 37 of the Builders Lien Act allows a flawed lien to survive where there is “substantial compliance” and nobody is prejudiced by the failure. The Contractor argued that this was a situation where no prejudice was suffered as a result of the mistake, as the Defendant tenant had knowledge of the lien claim. Further it was argued that no party would have done anything differently had the proper interest been named.

Master Prowse considered his earlier decision in Norson Construction Ltd. v Clear Skies Heating & Air Conditioning Ltd., 2017 ABQB 188.  That was a case where the lienholder’s error was found to be curable. The Master distinguished between the type of mistake in the Norson and the mistake made by the Contractor in this case:

  1. In Norson, the lienholder correctly identified the interest being liened (fee simple), but simply identified the wrong company as owner;
  2. In the current case, it wasn’t simply a typo in the name; rather the Contractor registered a lien against an interest that was not properly lienable to begin with.

The difference between the two types of mistake makes all the difference. While a mistake in the name of the owner of the land may be cured, a failure to lien the correct interest cannot (on the basis there is no substantial compliance). Citing a string of authorities all pointing to the same outcome, Master Prowse found he had no choice but to strike out the Plaintiff’s lien. Master Prowse expressed sympathy for the Plaintiff’s arguments, but held that he was handcuffed by the binding authorities until a Queen’s Bench judge decided otherwise.

How does this decision affect you? A small mistake in your Statement of Lien may have big consequences. Until the Court decides to re-examine the established case law, an error in identifying the interest to be liened will continue to be a fatal one. The best way to ensure that your lien claim is not lost by such an error is to seek legal advice before the lien is registered. For advice and assistance in the registration of liens, contact Matthew Turzansky or Ryan Krushelnitzky at Field Law.

Termination Problems: when can you walk away from a contract?

AUTHORED BY: Leah McDaniel and Ryan Krushelnitzky

Construction projects don’t always go as planned. Delays, add-ons, and changes to plans are common. Parties can sue when losses occur. When this happens, the contract itself is the key guide to the parties’ obligations.

However, sometimes things go very wrong. There are times when matters go so far sideways that one of the  parties wants to bring the contract to an early end.  For example, by taking the position that the other side has “repudiated” the agreement and treating the contract as if it is at an end.

An Example – Fundamental Breach & Repudiation in the Construction Context

The Alberta Court of Queen’s Bench applied the principles of repudiation in the construction context in the recent decision of RPM Investment Corp v Lange, 2017 ABQB 305.  This was a case involving a construction agreement for a new home.

While the relationship between the Owners and Contractor started off smoothly, frustrations soon developed. Among other things, the Contractor accused the Owners of seriously delaying making design decisions, resulting in construction difficulties. The Owners complained that the Contractor wasn’t doing the work based on their specifications.

Matters came to a head when the Owners sent an email to the Contractor stating that they were “giving notice of our intent to terminate effective November 8, 2010” saying that they believed that the Contractor had abandoned the contract and committed a fundamental breach.

The Contractor didn’t agree, but decided to treat this email as a repudiation and walked away from the contract. The Owner subsequently hired another builder to finish the job.

The Contractor then sued the Owner for its damages resulting from the repudiation. The Owners countersued, claiming the Contractor had abandoned the job and done substandard work.

The Decision – Who walked away first?

After assessing the evidence, the Court sided with the Contractor. While  parts of the work did not meet the Owners’ expectations, they were not so serious as to amount to a “fundamental” breach.  Further, the Court found that the Contractor did not abandon the project.

The result in this case came down to repudiation. The Court held that the Owners’ termination email repudiated the contract, by effectively indicating that the Owners no longer intended to be bound by it. This gave the Contractor the option to accept the repudiation, or reject it. The Contractor elected to accept the repudiation, and communicated this clearly within a reasonable time.

The Contractor was thus able to sue for damages resulting from the repudiation.

What does this mean for you?

Issues involving fundamental breach and repudiation are difficult – once you choose a position, it may be difficult to come back from it. Parties considering taking drastic steps should consider their options clearly before doing so.

The RPM Investment Corp case provides a cautionary tale – the Owners’ said that they didn’t mean to repudiate the contract, but the Court found that they had. This meant that their ability to sue the Contractor was limited to anything that happened before the repudiation. The Owners were also responsible for the costs of a new builder to finish the job, plus any damages that the Contractor suffered due to the early end of the contract.

If you think you may need to walk away from a contract, or you think that someone you hired may be abandoning their obligations, contact Ryan Krushelnitzky, lawyer and Partner with Field Law, to discuss your options.

Unilaterally amending payment terms by conduct alone…Nice try!

By: Catriona Otto-Johnston and Rob Watson

As a contractor, you might find yourself in a situation where the method for calculating payment originally agreed to in the contract becomes unworkable with the actual project scope or existing work-site conditions. Perhaps it would be beneficial to you if the contract contained different payment terms. While a contract can be changed through verbal or written agreement between the parties, can a party, by its actions alone, agree to revise payment provisions unilaterally imposed by another?

This issue was dealt with in Whissell Contracting Ltd v Calgary (City), 2017 ABQB 644. Whissell entered into a subcontract with SNC-Lavalin Graham Joint Venture (“SNC”) to perform certain work for the City of Calgary. The subcontract provided that payment would be calculated on a unit rate basis. Instead, Whissell began invoicing SNC on a force account basis claiming that soon after beginning work on the project, the scope of work and site conditions changed greatly from those anticipated at the time of its bid.  A number of force account sheets were signed by SNC field staff. SNC refused to pay Whissell based on Whissell’s force account rates, and Whissell applied for summary judgment. The Court dismissed Whissell’s application, taking issue with the fact that the wording on the force account sheets was never discussed with anyone at SNC who was involved in negotiating the original subcontract. The Court also noted that without additional evidence, change orders issued by SNC reflecting an increase in the value of the subcontract did not operate to amend the subcontract.

How does this decision affect you?

The lesson to be learned is that the Court isn’t likely to look kindly on contractors unilaterally taking matters into their own hands when trying to unilaterally change the payment terms of the contract. Clear communication, particularly with those involved in the initial contract negotiation, may save you from an uncertain contractual relationship and costly litigation.

If you are negotiating a contract, are in the process of attempting to revise the terms of a contract, or are involved in a dispute over a contract, Field Law can help. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, or Robert Watson, lawyer and Associate at Field Law, to discuss your options.

Time is Tickin’ — Limitation Periods and Your Lien

Contributors: Catriona Otto-Johnston & Kendra Heinz

You’ve registered a lien; now what? You have to preserve (and prove) your lien. The Builders’ Lien Act (the “BLA) is rife with limitation periods, many of which, if missed, could jeopardize your lien. However, recent case law suggests that in certain circumstances, failure to meet one or more of these limitations might not be fatal. As a current or future lien claimant, it’s important that you understand how to navigate the BLA and the case law, and Field Law can help you.

Do I have to commence an action?

Under s.43 of the BLA, a lien ceases to exist unless an action is commenced and the lien claimant registers a certificate of lis pendens (CLP) in the land titles office within 180 days.

Exceptions to the Rule

In the recent decision of Homes by Element Construction Ltd (Re), 2017 ABQB 442, the Court considered whether a builders’ lien should be declared invalid because the lienholder failed to register a CLP within 180 days. The lienholder, Lupien Woodwork Ltd. (“Lupien”), registered its lien on June 22, 2015 on property owned by David and Tricia Fiegel (the “Fiegels”). On November 10, 2015 Lupien filed a Statement of Claim and a CLP but did not register the CLP at Land Titles. The 180 day period expired on December 20, 2016.

Notwithstanding s.43 of the BLA, the Court sided with Lupien and waived the requirement to file the CLP.  In making this finding, the Court held that because the Fiegels represented that they did not dispute Lupien’s claim and their lawyer advised Lupien it was practically unnecessary for them to file and serve a defence in the action, the cost of registering a CLP and insisting upon a defence would have served no useful purpose and made no sense in the circumstances. The Fiegels were estopped from putting the validity of the lien in issue and thus lack of a CLP at land titles was not fatal to Lupien’s lien.

How does this decision affect you?

As a lienholder it is crucial to ensure you meet the requirements of the BLA as non-compliance could very likely mean your lien will have expired.  While the Court may step in to save a lien in certain specific circumstances, you should not rely on this as a general practice when embarking down the path of filing and proving a lien.

If you are a lienholder and are uncertain of what your next step should be in order to enforce your lien, Field Law can help. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, to discuss your options.

Tips & Traps – Partial Payment from the 10% Holdback

By Catriona Otto-Johnston and Rob Watson

Setting the lien fund can be a complicated and drawn out process. As a subcontractor lienholder, you may find you are standing idly by for payment while the owner and the GC fight amongst themselves. Can you receive partial payment for your work before the lien fund is finalized? Yes, although the “pot” may not be as big as you think.

It’s well settled in Canadian case law that subcontractors with clear entitlements do not have to wait until all issues are settled before receiving partial payment based on the minimum holdback to be retained by the owner, being 10% of the value of the work actually done or materials actually furnished by the GC.

In Trotter and Morton Building Technologies Inc. v Stealth Acoustical &Emission Control Inc., (Stealth Energy Services), 2017 ABQB 431, the subcontractor lienholders, Trotter and Hamil, were seeking interim payment from the owner, Canadian Natural Resources Limited (“CNRL”), pending final determination of the lien fund. Deciding in favour of the lienholders, the Court set the interim payment at 10% of the amount that Stealth (the GC) was paid by CNRL despite CNRL claiming Stealth overbilled them resulting in overpayment by CNRL and an inflated 10% holdback. The Court sided with Trotter and Hamil, but noted it is arguable the 10% should be reduced where it is proven the owner overpaid.  In Trotter, CNRL provided no documentary evidence of overpayment.

How does this decision affect you?

As a lienholder, you may not need to wait until the lien fund is finalized to receive partial payment from the 10% holdback; however, while it’s well-settled that the owner can’t set off against the 10% holdback, the door is open for owners to argue for a reduction of the 10% based on proven overpayment.

If you are a lien claimant waiting for payment and think you might be entitled to seek partial payment from the 10%, Field Law can advise you of your options.  For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law to discuss.

Things Left Unsaid – Determining Price Adjustment resulting from Scope Changes

By Matthew Turzansky and Catriona Otto-Johnston

It’s common for the parties to a construction contract to focus on the price of the work to be performed.  Less attention is often given to the method of calculating changes to the price for alterations to the scope of work.  Uncertainty in this area can lead to a major headache for a contractor trying to get paid, which all too often can lead to a trip (or two) to the Court house. So how can you avoid costly litigation and ensure you are paid for your work? We focus on the recent Alberta case of Architectural Millwork & Door Installations Inc v Provincial Store Fixtures Ltd, 2017 ABQB 390 to provide some helpful tips.

Architectural Millwork & Door Installations Inc v Provincial Store Fixtures Ltd, involved a $19 million stipulated-price contract for the performance of tenant improvements in The Bow tower in downtown Calgary.  The owner issued three Change Directives significantly reducing the contractor’s scope of work, and the parties found themselves disagreeing over how to calculate the credit due to the Owner.

At first blush, the Contract seemed to address this situation.  After all, the Contract Appendix containing Price and Payment Provisions included a set of 4 scenarios for the calculation of price reductions for scope deletions, depending on the nature and timing of the changes.  It should have just been a matter of applying the correct scenario, right?

Wrong.  The two scenarios that were potentially applicable both referenced certain “Unit Prices” in the Tender Documents.  The problem was, the Schedule of Unit Prices was struck out of the General Contractor’s bid form and omitted from the final Contract.

On what basis then should the price reduction be calculated?  The Court was faced with three options:

  1. Internal Estimating Documents – The General Contractor urged the Court to accept its internal estimate materials as “Tender Documents”, and to apply the Unit Prices in those documents. The Court rejected this on the basis that the owner could not have agreed to prices on internal estimating documents which were not disclosed to it as part of the bidding process.
  2. “Identified Prices” – The owner pointed to a different Appendix to the Contract listing certain “Identified Prices” for other purposes under the Contract. The Court rejected this as well.  It reasoned that the Contract would not have referenced “Unit Prices” if what was intended was actually the schedule of “Identified Prices”.
  3. Net Cost – The approach favoured by the Court was to attempt to determine the net cost of the deleted items, and to calculate the price reduction form the scope deletion on that basis.

Unsurprisingly, calculating the Net Cost of the deleted items was not a straightforward task.  The contractor argued that once the scope of work was significantly diminished, it shouldn’t have to honour the “Incentive Pricing” feature of its tender, used to persuade the owner to award them the entire project.  The Court rejected this argument and applied the incentive pricing anyway, noting this was a risk the contractor accepted when bidding on a project subject to possible scope deletion.

Given that the Net Cost adjustment did not contain a deduction for overhead and profit, the Court next had to calculate what portion of the price was attributable to these items.  After considering the evidence as to the total materials and shop time for the fabricated products on the project, as well as other provisions of the Contract, the Court landed on the rate of 7.5%, noting that this matched the mark-up permitted to be added where Changer Orders resulted in a net increase to the contract price.

The final result was a credit to the owner for the scope deletion in the amount of $1,525,919.67.

How does this decision affect you? Parties embarking on a new project are planning on the project unfolding as planned, but it is nevertheless important to take precautions in the event that plans change.  In the case of a deletion in the scope of work, a clear and complete contract containing a pricing mechanism can give the parties certainty, and avoid messy disputes.  For advice and assistance on drafting and interpreting construction contracts, contact Matthew Turzansky, lawyer and Associate, or Catriona Otto-Johnston, lawyer and Partner at Field Law.

“A rose by any other name? Not so!”: The critical role of “improvement” in the Builders’ Lien Act

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.

Estimates: How Important Are They Really?

Ever found yourself in a situation where you have provided an estimate for your services, but felt uncertain if you underquoted your client? Maybe you didn’t have all the necessary information? Maybe your client requested additional work or changes to the work as the project progressed? Either way, will you be able to collect payment for amounts in excess of your original quote? The best answer: it depends.

While you may be bound by an estimate in some circumstances, the Supreme Court of Canada has said an estimate is not a guarantee or warranty at law. The Court will review each case on its unique facts. Some situations where a contractor might not be bound by an estimate include:

  • Where work is performed that is outside the scope of the contract at the customer’s request;
  • Where a client by its conduct increases the amount of work;
  • Where unforeseen circumstances add a new or unexpected dimension to the work; and
  • Where a contractor has insufficient information but clearly identifies the limitations of their estimate.

These factors were all at play in Pillar Resource Services Inc. v PrimeWest Energy Inc., 2014 ABQB 317. Pillar provided estimates to PrimeWest based on incomplete information and was hired to perform certain work. Pillar completed additional work and was forced to accelerate the schedule of the project at the request of PrimeWest. The amount invoiced by Pillar was significantly higher than their original estimate. PrimeWest refused to pay. The Court found that because Pillar’s estimates were based on limited information provided by PrimeWest, they were inadequate for a complete or specific estimate. In addition, PrimeWest was not induced by these estimates. In the end, Pillar was able to recover the total amount invoiced. The Court also explained that simply because an estimate is inaccurate does not expose a contractor to liability unless that estimate was made with a lack of skill, competence, or diligence.

How does this decision affect you?

Giving an inaccurate estimate does not necessarily limit your invoices to the estimated amount. Being open and forthright when providing an estimate, communicating any limitations or uncertainties, and providing regular updates to your client may protect you in the event your final invoice exceeds your original estimate.

If you find yourself in a dispute over an estimate or are in the process of preparing one, Field Law recommends speaking with a lawyer to ensure you are paid for your hard work. For more information on estimates or assistance with resolving estimate-related disputes, contact Catriona Otto-Johnston, lawyer and Partner with Field Law to discuss.

Summary Judgment: Shortcut to Payment?

By Catriona Otto-Johnston and Sheena Campbell

Trial dates are years away. The cost of full-blown litigation is foreboding. You can’t afford to wait years to be paid for your hard work on construction jobs. Are there options to obtain judgment for your claims without the delay and expense of a full trial? Field Law thinks so, in the right circumstances. In our experience, even a case with complex facts and extensive, largely contradictory, evidence can be successfully heard in a summary manner, absent a full trial. Summary judgment may be a shortcut to getting paid!

Summary Judgment: The Basics

An application for summary judgment is made before the Court on Affidavit evidence. The parties involved are questioned on their Affidavits. The transcripts of this Questioning are filed with the Court, and an afternoon-long application is often required.

The test for summary judgment in Canada has been evolving, starting with the Supreme Court of Canada’s (SCC) decision in Hryniak v. Mauldin, 2014 SCC 7.  The SCC encouraged a broad interpretation of the summary judgment rules with a view to avoiding full-blown trials where it is in the interest of justice to do so.  To achieve this, the court uses its “fact-finding” powers to weigh the evidence, including evaluating credibility based on Affidavits as opposed to live-witness evidence.

Hitting Close to Home – Summary Judgment on a Complex Pipeline Claim

The test for summary judgment was recently applied in Alberta in E.O.S. Pipeline & Facilities Inc. v. Sprague-Rosser Contracting Co. Ltd. (unreported).  E.O.S. was a subcontractor on a pipeline project. Sprague-Rosser failed to pay E.O.S. for its work. E.O.S. filed builders’ liens and applied to have its liens declared valid and for judgment.

This was a complex matter involving multiple issues, including:

  • Extra work signed off by an employee of Sprague-Rosser but not paid for;
  • Failure by Sprague-Rosser to sign off on E.O.S.’ daily tickets and later refusing payment on that basis;
  • Appropriate mark-up for third party charges under the subcontract;
  • Sprague-Rosser’s purported reliance on the “pay when paid” clause in the subcontract;
  • Proper characterization of and entitlement to payment for additional tie-in scope of work completed by E.O.S.; and
  • Set off claimed by Sprague-Rosser for delay purportedly caused by E.O.S. and for damages relating to welding deficiencies, costs of non-destructive testing and deficient work.

The Application – Contradictory Evidence a Bar to Summary Judgment?

Multiple Questionings on Affidavits was conducted, and the parties submitted many volumes of materials, including conflicting Affidavit evidence.  Before the Hryniak case, based on the volume of evidence and conflicting Affidavits, we may not have been so bold as to apply for summary judgment. Post-Hyrniak, the Master followed the direction from the SCC and the Alberta Court of Appeal, carefully examining all the evidence before him to determine whether a trial was required.

Some issues were decided easily; others required a more detailed analysis. The Master could have awarded summary judgment on some of the clearer issues and sent the more complicated matters for trial, but after considering and weighing the evidence of each party, including disputed facts, the Master sided with E.O.S. and granted summary judgment on all aspects of the claim.

The Appeal – Was It Fair to Grant Summary Judgment in the Circumstances?

The Master’s decision was appealed (Sprague-Rosser Contracting Co. Ltd. v. E.O.S. Pipeline & Facilities Inc., 2016 ABQB 231), and while the appeal judge recognized there were multiple issues and disputed facts at play, he was able to make a decision on the evidence before him and agreed that a full trial was not required.  The Court cited the evolution to a more holistic approach. E.O.S.’ summary judgment was affirmed, and they were paid for their work.

How Does this Evolution Benefit You?

The Court’s job when deciding if a full trial is necessary is to ensure a fair process and just adjudication in the circumstances. As the E.O.S. case shows, under the new evolved process, summary judgment applications can be successful even when faced with complex issues and contradictory evidence.  This means costly and lengthy litigation can be avoided where summary judgment is appropriate.  With trial dates being two or more years in the future (depending on length of trial time required), the ability to have more matters decided summarily is a step in the right direction to providing a faster and more economical approach for clients.

If you would like more information on how to secure payment for your hard work, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, to discuss your options and whether summary judgment might be right for you.

Mistakes and Builders’ Liens: Fixable or Fatal?

By Catriona Otto-Johnston & Anthony Burden

Builders’ liens are a great tool for the unpaid contractor, subcontractor and supplier. It gives you leverage over a project, even if you’re only owed a small amount. But the simple one-page form is much more complicated than it appears, and what might be seen as a harmless mistake can be fatal to your lien. The wrong number or word might be enough to invalidate your lien, remove your leverage and catapult you into the pit with other unsecured creditors.

Builders’ Liens: the basics

The builders’ lien form is commonly used in the construction industry. The Alberta government has the form online. A lien claimant fills in the blanks:

  • Who did the work, the type of work they did, for whom, and how much they’re owed;
  • Legal (not municipal!) address of the land worked on and who owns that land;
  • Whose interest is being liened (is it the registered owner i.e. fee simple? Or the party leasing the land); and
  • Last day on site (if work is complete).

This seems simple enough, right?  But mistakes happen – especially when there’s a rush to get the lien registered in time. However, when there’s a mistake on the lien form, it isn’t always clear if the lien is invalidated.

Oops, I messed up the lien…now what?

The Act (section 37) has a provision that may save a lien that contains a mistake. It provides that “substantial compliance” with the list above is enough, unless, in the Court’s opinion, a party is prejudiced by the mistake. Great! But what is substantial compliance, and what is prejudice? Each case is decided based on its specific facts, but the Court in Norson Construction Ltd v Clear Skies Heating & Air Conditioning Ltd, 2017 ABQB 188 dealt with liening the right lands, but identifying the wrong owner.

The project in question was owned by Pattison. Norson was the general contractor, Whitemud was a subcontractor, and Clear Skies was a sub-subcontractor. Clear Skies hadn’t been paid, so it filed a lien using the form provided and filing in the information on its own. It had most of the correct information, but mistakenly listed Whitemud, not Pattison, as the owner.

Luckily for Clear Skies, the Court decided this was “substantial compliance” with the Builders’ Lien Act, and there was no prejudice to anyone resulting from the mistake. The lien was registered against the right lands and the right interest – i.e. Clear Skies didn’t mistakenly lien a leasehold interest rather than the fee simple.

How does this decision affect you?

Naming the wrong owner in your lien is not fatal, as long as the correct legal address is liened. However, liening the wrong interest will likely be fatal, as will liening the wrong legal address. These two scenarios are common: a given city block might have dozens of different legal addresses. How do you know the exact location you performed work? Other contractors, or the municipality, or online searches may help, but even they can be wrong.  “I tried my best to get it right” isn’t enough.

There’s no requirement to hire a lawyer to register a lien, but Field Law recommends doing so. We have qualified staff and lawyers that can perform the necessary searches, complete the lien forms, and take the required enforcement steps to maintain your lien. If you would like more information on how to ensure your hard work is protected by a proper lien, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, or Anthony Burden, lawyer and Associate with Field Law, to discuss.