By HMC Lawyers LLP

Introduction

Members of the construction industry may be familiar with the lien process in Alberta and how it can give contractors security in the land when their invoices are not paid. However, a recent decision of the Alberta Court of King’s Bench (the “Court”) may impact just how “secure” a lien is for a contractor. This is an important development for the industry to be aware of moving forward.

Background: A Lien Claim

A lien can be filed on title to land by any member of the construction pyramid when they have not been paid for work that is considered an “improvement” to the land. Most industry members are likely aware of the strict timelines for filing a lien, which must be done within 60 days of their last date on site.

Once a lien is filed, the legislation allows for a process to discharge the lien from title if “security,” in the amount of the lien plus an allowance for legal costs, is paid to the Court. This can often be beneficial for the lien claimant because it allows for the outstanding money owed to be easily dispensed to the claimant, should they be able to successfully prove their entitlement to the money.

Moving a Lien Claim Forward

Lien claimants often feel secured in knowing that once they prove their entitlement to their outstanding invoices, they will either have a claim in the land through the lien or easily be paid through the security held by the Court. However, the Court’s recent decision of 1951789 Alberta Ltd v Britannia Block General Partnership Inc (“Britannia Block”) has placed a new burden on lien claimants to move their claims forward through the Court’s system after this first step has occurred.

In Britannia Block, a lien was first filed in June of 2020. Money for the lien was subsequently paid into Court. The defendant applied in July of 2024 to have the money paid into Court released on the basis that the lien claimant had delayed the action and failed to take steps to move the lien claim forward.

The Court ultimately decided the security paid into Court was to be released to the defendant due to the long delay in moving the claim forward by the lien claimant. The Court relied on the legislation in Alberta that if a trial has not occurred within two years of a lien claim beginning, an application can be brought to remove the lien or release the money previously paid into Court. The delay in Britannia Block was seen as too significant to allow the money paid as security for the lien to remain in Court.

While the filing of a lien, or the posting of security into Court, is a powerful mechanism for lien claimants, the Court noted it imposes a significant cost on the defending parties. They are required to have funds tied up in Court or have a charge on their land. A claim that is “significantly past” the two-year mark and nowhere near trial placed too high of a burden on the defending parties. The lien claimants could not explain why there had been such a significant delay. This delay without explanation meant the lien claimants had lost their right to rely on the security paid into Court.

Key Takeaways

This decision is a harsh reminder to lien claimants on the importance of promptly moving their claims forward. Failing to do so risks losing the lien or the money that has been paid into Court. This eliminates significant leverage for the lien claimant to ultimately receive payment. While the Court noted that the two-year mark for a trial is not mandatory but rather a “target,” it still highlights the need to take active steps to enforce on the lien. This can be done through document discovery, questioning, or other litigation steps.

Conclusion

This new decision of the Court highlights a key change and reminder for the lien claims process in Alberta. It emphasizes the importance of contacting a lawyer or legal representative to guide parties through the lien process and ensure they are promptly moving their lien claim forward so that their entitlement to the lien is secure. If you have questions about filing a lien, moving your lien claim forward, or generally need help enforcing the payment of your invoices, you should always consult a lawyer. You can contact the construction law team at HMC Lawyers to further discuss your situation at 403-269-7220.