A recent case from Alberta, Boulevard Real Estate Equities
Ltd. v. 1851514 Alberta Ltd., 2015 ABQB 619, applied an old,
but still valid, legal exception to the strict interpretation of
the Construction Lien Act: the effect of a promise to pay
in exchange for a promise not to lien the property.
In Boulevard, the defendant 1851514 ("185")
supplied labour and materials to the plaintiff owner
("Boulevard") on two Alberta projects. 185 was
unpaid and registered builders' liens against both projects
under Alberta's Builders' Lien Act. After
registration, Boulevard promised to pay 185 after a meeting where
they would "sit down and reconcile all of the accounts"
and on the condition that 185 remove its builders' liens, so
that Boulevard could obtain financing. 185 relied on this
promise, removed its liens and then, of course, nothing
happened. Boulevard not only didn't pay 185, it
didn't even schedule a meeting. 185 re-registered the liens it
previously discharged (which were now out of time) and Boulevard
brought a motion to discharge them.
Master Prowse of the Court of Queen's Bench of Alberta
dismissed the motion for discharge relying upon two thirty-year-old
Ontario cases: Valo and Valo v. 430327 Ontario Inc.
(1982), 29 C.P.C. 1 (Ont. Master) and Soo Mill Lumber Co. v.
499812 Ontario Ltd. (1984), 17 C.L.R. 306 (Ont. S.C.).
In each case, the court dismissed motions to discharge a
construction lien registered after the expiry of the time to lien
(then 37 days). In each case, the court ruled that the defendant
owner was estopped from claiming that the lien was out of
time because of a specific promise made to the lien claimant that
if it didn't lien, that it would be paid.
In Valo, the owner's husband, a lawyer, responded
to the lien claimant's concern that his lien rights were about
to expire by telling him that his lien rights "were not a
problem because we are mutually extending time for payment in order
to allow him to complete the calculations at which time he expected
to be able to pay the moneys owing...". In Soo Mill,
the owner of the project asked the lien claimant not to lien the
job and in exchange, provided a series of post-dated cheques and a
promise to pay the lien claimant's material supplier directly.
The material supplier was not paid and the owner stopped payment on
the second post-dated cheque. In both cases, a construction lien
registered after the expiry of the time to lien was found to be
In all three of the above cases, the court was careful to state
that it was not extending the time to file a lien, but
rather refusing to discharge a lien that otherwise would have been
statute-barred but for the conduct of the owner. This conduct
estopped the owner from receiving the benefit of the
legislation limiting the time to lien.
The court in Soo Mill reaffirmed the law that parties
cannot "contract out" of the provisions of the
Construction Lien Act, which is set out in section 4
of the Act and in case law applying it. Rather the
courts in the above cases applied their equitable jurisdiction to
"do justice" in the face of dishonest owner conduct that
was relied upon by the lien claimants.
This equitable jurisdiction cannot be used to affect the rights
of third parties that may have relied upon the expiry of the lien
period. Master Prowse in Boulevard specifically stated,
relying on Valo and Soo Mill, that the estoppel
is personal to the litigants who were parties to the promise to pay
and not to anyone else. If a lender, for example, advanced funds
relying on clear title, the lender's rights could not be
prejudiced by the lien.
In summary, the law remains that, if an owner promises a
contractor that it will get paid as long as it doesn't lien the
property, that owner will not be able to later discharge a lien as
out of time if the contractor relied upon that promise.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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