ABANDONMENT ISSUES: WHEN DOES THE DEADLINE TO FILE A BUILDERS’ LIEN ARISE IN CASES OF ABANDONMENT?

By / Andrew D.R. Delmonico and Ted Lewis, Kuhn LLP

Many contractors are aware that when a project is completed within the meaning of the Builders Lien Act they only have 45 days to file a lien against the property they were working on. Perhaps less widely known is that a general contractor’s abandonment of their contract or the project as a whole is another triggering event that gets the 45 day lien period running. Also, under the Builders Lien Act, a project may be legally deemed to be abandoned once 30 days has gone by with no work being performed on site, unless this is due to certain causes such as: lockout, sickness, weather conditions, holidays, a court order, or a shortage of material.

The issue of when a contract stands abandoned for the purposes of the Builders Lien Act was recently considered in Cannex Contracting 2000 Inc. v. Eagle Ridge Land Sales Corp., 2019 BCSC 626.

The Facts

In this case, the defendant was the developer (the “Developer”) of a proposed subdivision in Cranbrook. The Developer retained the plaintiff as its general contractor (the “Contractor”). Under its general contract (the “Contract”), the Contractor was to provide the engineering, materials, labour, tools, and equipment necessary to develop and subdivide the Cranbrook property.

The Contractor began work on the subdivision in the summer of 2016 and invoiced the Developer three times in 2017. The Developer disputed several charges on the third invoice, issued in October 2017. It also alleged certain deficiencies in the Contractor’s work.

After this dispute arose, the Contractor’s employees and subcontractors continued to perform work in connection with the subdivision. This work was associated at least in part with non-physical work, including project management, coordination, and administration. It was also not concentrated work, but spread out here and there.

While the parties’ discussions continued after their dispute arose, payment of the disputed amounts was not made by the Developer and the Contractor filed a builders’ lien on March 21, 2018. The Developer then terminated the Contract on June 8, 2018, and applied to the court to have the Contractor’s lien found to be extinguished. The Developer’s primary argument was that the Contractor had not done any work on the project since October 31, 2017, which resulted in the Contract being abandoned 30 days later on November 30, 2018. As a result, the Developer argued the time period for filing a lien would have run out 45 days after this, on January 14, 2019.

The Decision

In its reasons, the Court disagreed with the Developer and refused to extinguish the Contractor’s lien, noting that while a project may be deemed (i.e. presumed) abandoned under the Builders Lien Act if no work is done for 30 days, the legislature did not intend this provision to override proof the parties actually intended to continue with construction.

Applying this principle, the Court found that, despite the ongoing invoice disputes, the Contractor continued to work on the project right up until the Developer terminated the Contract. The nature of the Contractor’s work was not required to be extensive or highly concentrated in order to count, as the Builders Lien Act only considers situation where “no work” is performed.

At any rate, the facts showed that the parties did not actually intend to consider the Contract abandoned, even if no work had been performed. While there were disputes about payment and deficiencies, the conduct of both parties demonstrated they were still contemplating that the work would be performed by the Contractor.

Lessons Learned

1. Among other events that cause the lien period to begin running, a lien must be filed within 45 days after “abandonment” of a project or general contract. Whether a specific project has been abandoned will depend on the circumstances applicable to an individual case.

2. If “no work” is performed on site for a period of 30 days, a specific project or general contract may be deemed to be abandoned for the purposes of the Builders Lien Act. However, it is possible to avoid a project being deemed abandoned even where only minor amounts of work continue to be performed. ▪

This article was written by Andrew D.R. Delmonico, Partner, and Ted R. Lewis, articled student, who practise in construction law with the law firm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. It is important to get legal advice for specific situations. If you have any questions or comments about this case or other construction law matters, please contact us at 604.864.8877 (Abbotsford) or 604.684.8668 (Vancouver).