It is well established law that builders lien actions in British Columbia are special cases that require expeditious prosecution.1 In the recent decision of Tam v. PD Plumbing & Heating Ltd.2 ("Tam"), the British Columbia Court of Appeal has confirmed that lien claimants must be prepared to prosecute their claims diligently, failing which they could face severe consequences. Below, we consider the case, provide our key takeaways and provide an update on the recent developments in the law surrounding applications for want of prosecution.
The Facts
In Tam, Betty Sui Fan Tam and Alexander Ming Tam (the "Tams") entered into a contract with PD Plumbing & Heating, doing business as Kmpas Plumbing Ltd ("PD Plumbing") for the provision of plumbing work and the installation of air conditioning ("the Work") in a home owned by the Tams. After PD Plumbing completed the Work, a dispute arose due to the alleged non-payment by the Tams, and PD Plumbing registered a Claim of Lien against the title to the home. Approximately one year later, PD Plumbing sought to enforce its lien by filing a Notice of Civil Claim and Certificate of Pending Litigation. 3
After the Tams delivered a response to the claim, the litigation stalled. PD Plumbing delivered its list of documents in the months that followed. However, after that, no steps were taken in the litigation for six years, at which point PD Plumbing filed a notice of intention to proceed. The Tams subsequently brought an application to dismiss the claim for want of prosecution. 4
British Columbia Supreme Court Analysis
In the Supreme Court, the Application Judge, Justice Sharma, began by outlining the factors the Court will consider in an application for a want of prosecution, which are:
- The length of delay and whether it was inordinate;
- Any reasons for the delay;
- Whether the delay has caused prejudice or made a fair trial impossible; and
- Whether, on balance, justice requires dismissal of the action. 56
With respect to the first factor, the Court observed that a delay is inordinate if it is uncontrolled, immoderate, or excessive. The starting point for determining delay is generally considered from the time an action is commenced. 7 PD Plumbing admitted that the delay was inordinate but attempted to justify its delay in litigating the action.8 The Court then turned to consideration of the second factor: whether the delay was inexcusable in this case. PD Plumbing took the position that the cost of the litigation, relative to the amount of the claim, did not make it financially feasible to move forward with the litigation. In response, the Tams referred to prior authority that indicated that a litigant hoping to settle a claim as a reason for not moving forward with the litigation is not a reasonable excuse for delay.9 However, Justice Sharma distinguished the prior authority primarily on the basis that there was evidence that the Tams had previously acknowledged it owed money to PD Plumbing. As a result, the Court concluded that it was not unreasonable for PD Plumbing to have delayed the litigation in the hope the Tams would pay the amount owing, given the cost of moving the litigation forward relative to the size of the claim.10
Justice Sharma then went on to examine the third factor, prejudice. Once a defendant has established that there was an inordinate and inexcusable delay, a rebuttable presumption of prejudice arises that the plaintiff must rebut.11 When considering prejudice, the primary consideration is a defendant's ability to develop a defence.12 However, previous jurisprudence has also found that the presence of a Certificate of Pending Litigation can lead to a presumption of prejudice.13 Despite such authority, the Justice Sharma was unconvinced and was of the opinion that the mere existence of a Certificate of Pending Litigation was not sufficient to demonstrate prejudice and found that the Tams had not proven any actual prejudice. She suggested that while a rebuttable presumption of prejudice could be raised if the first two factors of the test were met, the entire burden was not shifted onto PD Plumbing. Instead, she opined that the case was to be looked at as a whole.14
In deciding not to dismiss the action, Justice Sharma found that the interests of justice could not justify the use of such a draconian remedy. She was of the opinion that the reason for the delay put forward by PD Plumbing was not so inexcusable and that the delay itself did not give rise to a presumption of prejudice. Moreover, Justice Sharma was of the view that even if a presumption of prejudice was raised, there was insufficient evidence to demonstrate actual prejudice, which ultimately was "problematic in terms of the ultimate balancing" of the interests of justice. Justice Sharma dismissed the Tams' application for want of prosecution. The Tams appealed the decision to the British Columbia Court of Appeal.15
British Columbia's Court of Appeal's Analysis
At the Court of Appeal, the primary issue on appeal was whether Justice Sharma erred in her application of the test for want of prosecution.16
Although it served as obiter dictum, the Court of Appeal discussed the inordinate delay in this case. The Court of Appeal found that the actions by PD Plumbing had not only shown an inordinate delay in prosecuting the action but demonstrated an overall lack of commitment to moving the action forward in accordance with the Supreme Court Civil Rules. More specifically, the Court of Appeal highlighted the lien claimant's delay in commencing the action until just shortly before the limitation period expired and their failure to participate in the appeal process.17
The Court of Appeal then considered whether the delay was inexcusable and found that Justice Sharma had erred in accepting PD Plumbing's explanation for delays in the litigation. PD Plumbing had essentially admitted that it never intended to proceed with the action, and in the Court of Appeal's opinion, attempting to leverage a settlement was not an excuse for unduly dragging out litigation.18
In considering prejudice, the Court of Appeal observed that although there may have been no prejudice to the Tams' ability to develop a proper defence, the interference in property rights created by the Claim of Lien and Certificate of Pending Litigation gave rise to a presumption of prejudice that PD Plumbing failed to rebut.19
The Court of Appeal concluded that the interests of justice weighed in favour of dismissing the claim given the amount of time that had passed since the completion of the Work, the delays in prosecuting the action, the admissions by PD Plumbing that it never intended to proceed with the claim, and PD Plumbing's failure to appear at the appeal. 20
The Court of Appeal ultimately overturned the Application Judge's ruling and ordered that the action be dismissed for want of prosecution. 21
Takeaways
This decision provides some key takeaways for lien claimants prosecuting lien actions in British Columbia.
First, the Court of Appeal appears to have signalled that inordinance of delay in builders lien actions will be measured from the date a Claim of Lien is filed. In the oft-cited case of Wiegert v Rogers22, the Court of Appeal observed that when determining whether a delay is inordinate, although there is no universal rule when time starts to run, the date when the action is commenced is usually the starting point to measure delay.23 However, in Tam, when determining inordinate delay, the Court of Appeal specifically referred to PD Plumbing's failure to commence an action until just before the Builders Lien Act's limitation period expired in considering whether or not the delay was inordinate.
Second, the Court of Appeal confirmed that actual prejudice exists in lien actions due to the interference with a defendant's property rights. It is important to note that British Columbia's Court of Appeal subsequently revised the test for want of prosecution in Giacomini Consulting Canada Inc. v. The Owners, Strata Plan EPS 3173,24 and removed the requirement of establishing prejudice in relation to an application for a dismissal for want of prosecution 25 ("Revised Test"). The Revised Test now asks:
- Has the defendant established that the plaintiff's delay in prosecuting the action is inordinate?
- Is the delay inexcusable? 26
- Whether, on balance, justice requires dismissal of the action. 27
Notably, one of the factors the Court will consider in making a determination in relation to whether justice requires dismissal of the action is the "impact of the delay on a defendant's professional, business, or personal interests." The writers are, therefore, of the view that the substantial interference in property rights created by a Claim of Lien and Certificate of Pending Litigation is a consideration the Court will make when determining whether the interests of justice suggest dismissing an action for want of prosecution.
Lien claimants should be well prepared to prosecute their claim, including budgeting for the legal costs associated with doing so. In Tam, the Court of Appeal was unsympathetic about the fact that taking steps in the action would outweigh any potential recovery. Therefore, lien claimants would be well served by consulting counsel who has experience dealing with builders liens and can provide strategic advice on enforcing their claim as well as alternative means of resolving their disputes earlier in the litigation by way of alternative dispute resolution mechanisms, such as mediation or engaging in negotiations with the other party.
Footnotes
1 DEB Construction Ltd. v Mondiale Development Ltd., 2023 BCSC 1167 at para 26.
2 2023 BCCA 457 [Tam BCCA].
3 PD Plumbing & Heating Ltd. v Tam, 2021 BCSC 2078 at paras 2-7 [Tam BCSC].
4 Ibid at paras 7-9.
5 The most important factor to be considered in an application of want of prosecution are the interests of justice.
6 0690860 Manitoba Ltd v Country West Construction Ltd, 2009 BCCA 535 at para 27.
7 Callan v Cooke, 2020 BCSC 290 at paras. 74–75.
8 Tam BCSC at paras 13-14.
9 North Shore Law LLP v. Cassidy, 2020 BCSC 1658 [North Shore]
10 Tam BCSC at paras 16-19.
11 Canadian National Railway Company v. Chiu, 2014 BCSC 75 at para 13.
12 Tam BCSC at para 22.
13 North Shore, supra note 10 at para 26.
14 Tam BCSC at paras 26-28.
15 Ibid at paras 30-33.
16 Tam BCCA at paras 23-24.
17 Ibid at para 27.
19 Ibid at para 28.
19 Ibid at paras 29-30.
20 Ibid at para 31.
21 Ibid at para 32.
22 2019 BCCA 334.
23 Ibid at para 32.
24 2023 BCCA 473.
25 Ibid at para 65.
26 Ibid at para 69.
27 Ibid at para 70.
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