Invalid or Excessive Builders Liens

Potential remedies and sanctions

Invalid or Excessive Builders Liens

The British Columbia Builders Lien Act (“Act”) and the common law provide potential remedies and sanctions for dealing with invalid or excessive builders liens. However, the available procedures do not guarantee that invalid lien claims will be discharged, excessive liens will be reduced in amount or false lien claimants will be punished, at least in timely or economical ways. This is because the courts are restrained in determining lien rights summarily and imposing sanctions, except in obvious and compelling circumstances.

Section 25 of the Act allows an application to the court to cancel a lien which is filed late or with respect to which a legal action to enforce the lien is not commenced in time, is filed against the wrong property or is otherwise “vexatious, frivolous or an abuse of process.” The Court of Appeal has confirmed a restrictive view of the applicability of Section 25 to summarily attack alleged lien invalidity, and determined that the provision is limited to the specific lien defects referred to in the provision and otherwise only to circumstances in which it is plain and obvious that the lien cannot succeed.

A lien claimant who loses a Section 25 application by reason of filing an improper lien could be liable under the Supreme Court Civil Rules to pay the applicant special costs. However, the court has generally been reluctant to find that the filing of an invalid or excessive lien in itself constitutes sufficiently bad conduct to justify the imposition of special costs, except in egregious cases such as when a lien claimant was engaged in wilful deception and his conduct was found to be dishonest, reprehensible and worthy of the court’s rebuke.

Section 19 of the Act provides for liability for damages and costs of a person who wrongfully files a claim of lien that “does not attach” to an estate or interest in land. This provision is rarely utilized as a separate source of relief.

Section 45 makes it a quasi-criminal offence to file a lien containing a false statement, which offence is punishable by a fine not exceeding the greater of $2,000 and the amount by which the lien, as filed, exceeds the proper value of the claim. The writer is not aware of any prosecution of the quasi-criminal offence ever having proceeded in the province.

Finally, the wrongful filing of a lien can expose the claimant to liability for damages for the tort of abuse of process. However, since very few lien-related actions proceed to trial, a claim of abuse of process is typically regarded as mainly a tactical measure in the context of other claims and defences.

With respect to lien amount, Section 24 of the Act, which allows an application to the court to remove a lien from the property title by posting security in place of the land, empowers the court to order that the security be provided in an amount that is less than the amount claimed. The court has exercised somewhat inconsistently its power under Section 24 to order lien security in reduced amounts, generally restricting its application to clear cases of duplication of claims or the inclusion in the amount claimed of non-lienable components, such as damages or interest.

Except in those cases where the very existence or the amount of a disputed lien can successfully be attacked by way of the available procedures and sanctions, a property owner or person posting security for the lien will be faced with the more lengthy process of addressing those issues as part of the overall defence of the lien claim and lien enforcement action.

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