A few recent cases from Alberta Masters show a trend towards a
less strict interpretation of lien deadlines and requirements. In
particular, these cases suggest that equitable considerations may
sometimes operate to avoid the strict interpretation of the
A lien claimant discharged its' lien when the owner promised
payment. When the owner failed to come through with payment, the
lien claimant re-registered a lien - even though it was out of
time. The owner applied to court to ask for the lien to be
discharged on the grounds that it was registered out-of-time. The
Master held that the promise to pay, which the lien claimant relied
on to miss the lien registration deadline, estopped the owner from
obtaining a discharge of the lien. The owner's promise created
a "promissory estoppel" that prevented the owner from
relying on the strict operation of the legislation. In effect,
equitable considerations overruled the strict interpretation of the
The Master made a point of observing that only the rights of the
owner and the lien claimant were in issue. If a third party would
be affected (prejudiced), then the Court would have to strictly
follow the legislation.
In that case, a lien was lost because the lien claimant did not
register a lis pendens within 180 days of lien registration as
required by the statute. But the court ordered the lien to be
restored because, even though the requirements of the legislation
were not strictly followed, the lien claimant had started a
proceeding in which the validity and value of the liens could be
determined, and nobody was prejudiced by the failure to register
the lis pendens. This decision was upheld on appeal.
The Problem With The Trend
At first blush, it is hard to argue against introducing
principles of equity and fairness into the interpretation of the
Builders' Lien Act, particularly when all the affected
parties are before the court. This trend certainly benefits the
lien claimant. But there are competing considerations – such
as protecting the rights of construction owners and lenders.
For one thing, a more relaxed interpretation of the legislation
is less predictable, and so we might see a corresponding increase
in lien litigation, at least until there are additional reported
cases to clarify the issue. More significantly, this development
may cause practical concerns for those who rely on the predictable
operation of the lien legislation to make lending and payment
decisions (owners, lenders and construction managers). There is
some comfort in the Master's assurance that the doctrine of
promissory estoppel will not operate if any third party would be
prejudiced. On the other hand, liens affect contractual rights in
addition to statutory rights. Lending and payment decisions are
made every day based on lien deadlines elapsing, and based on the
registration or non-registration of liens – in other words,
based on an assumption that the lien legislation will be strictly
enforced. The commercial consequences of allowing an expired lien
to be restored may therefore extend beyond the obvious.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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