Court Clarifies When A Lien May Be Filed For Off Site Work

In Action Holdings Ltd. v. Trend Homes Ltd., 2011 BCSC 381, the Supreme Court of British Columbia clarified when a claim of builder’s lien may be filed for work that is not done on the land subject to the claim of lien. 

The plaintiff in Action Holdings was a subcontractor to Trend Homes Ltd. (“Trend”) for the development of a residential subdivision in New Westminster, British Columbia. The plaintiff contracted with Trend for road, sidewalk and curb work within the subdivision. The plaintiff alleged that Trend failed to pay an amount owed under that contract and filed a claim of lien against three of the 11 properties in the subdivision. The plaintiff did not perform any work on the properties subject to the claim of lien, but claimed that its work was done “in relation to” those properties vesting it with lien rights under the Builders Lien Act, S.B.C 2007, c. 45 (the “Act”).

Section 2 of the Act gives lien rights to workers, contractors, or subcontractors who have performed or provided work or supplied material, or both, in relation to an improvement on the land. This means that the work must relate to the land against which the claim of lien is filed and, typically, the work will be performed on those lands. However, as confirmed by our Court of Appeal in Kettle Valley Contractors Ltd. v. Cariboo Paving Ltd., (1986), 1 B.C.L.R. (2d) 236 (C.A), the words “in relation to” in section 2 of the Act expand the scope of work for which a lien may be claimed to encompass work performed off site, provided such work is “integral and necessary” to the construction of the on site improvement.

In Action Holdings, the Court held that the plaintiff’s work was not “integral and necessary” to the improvements on the properties subject to the claim of lien (at para. 51). The Court contrasted the plaintiff’s work from the work done in Pedre Contractors Ltd. v. 2725312, 2004 BCSC 1112, where the Court upheld a claim of lien for off-site manholes and conduits made to enable the connection of fibre optic cables to a high-tech centre on the land subject to the claim of lien. In Pedre, the Court found those works “directly connected services to the owners’ property and were only for that purpose” and that those works were integral to the functioning of the improvement as a whole (at para. 76). Conversely, the plaintiff’s work in Action Holdings did not exhibit the same degree of connection to the land and “did not benefit the subdivision lots in the same way that water, sewer, cable, and utility connections are brought to subdivided lots to facilitate the construction of homes” (at para. 51). The Court suggested that claim of lien for off site work is only valid where (a) work is necessary both on and off site for the functioning of the on site improvement; and (b) the off site work is not intended for a broad range of uses (at para. 52).

Action Holdings clarifies the degree of connection necessary for work to be made “in relation to” an improvement by (a) confirming that a claim of lien for off site work is valid only where work both on and off site is necessary for the functioning of the on site improvement, and (b) suggesting the work that typically falls within the scope of this phrase would be utility connections.

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