Copyright (

c) Queen's Printer,

Victoria, British Columbia, Canada

License

Disclaimer

1997 Legislative Session: 2nd Session, 36th Parliament

THIRD READING

The following electronic version is for informational purposes only.

The printed version remains the official version.

Certified correct as passed Third Reading on the 28th day of July, 1997

Ian D. Izard, Law Clerk

MINISTER OF EMPLOYMENT AND INVESTMENT

BILL 38 – 1997

BUILDERS LIEN ACT

Contents

Section

Definitions and

interpretation

Lien for work and material

Deemed authorization

Holdback

Holdback account

Prohibited application of holdback

Certificate of completion

Holdback period

Rights on payment of holdback

Contract money received constitutes trust fund

Certain applications of trust fund deemed not to be appropriation or conversion

Crediting of money earmarked for particular improvement

Garnishment and money in court

Limitation period

Claim of lien to be in prescribed form

General lien

No claim under $200

Procedure to file a claim of lien under the Mineral Tenure Act

Liability for wrongful filing

Time for filing claim of lien

When claim of lien takes effect

Lien extinguished if not filed as required by Act

Removal of claims of lien by payment of total amount recoverable

Cancellation of claim of lien by giving security

Powers of court, registrar or gold commissioner to remove claim of lien

Enforcement of claim

Local venue for proceedings under this Act

Proof of filing of claim of lien

Evidence of delivery of material

Counterclaim and judgment for creditor

Court may order sale

Priority of secured lender

Limitation and notice to commence an action

Limit of claims

Maximum claim against purchaser's interest

Allocation of proceeds from sale

Distribution among claimants not engaged by owner

Distribution among claimants engaged by owner

During continuance of lien, property not to be removed

Subcontractor's lien enforceable despite noncompletion by another

Right to information

Certain acts, agreements, assignments void

Lien may be assigned

Insurance money

Offence

Application of Offence Act

Power to make regulations

Transition

49-53

Consequential Amendments

Repeal

Commencement

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province

of British Columbia, enacts as follows:

Definitions and

interpretation

(1) In this Act:

"certificate of completion" means a certificate under

section 7 stating that work

under a contract or subcontract has been completed and includes an order made

under

section 7 (5);

"claim of lien" means a claim of lien in the prescribed form;

"class of lien claimants" means all lien claimants engaged by the same person in

connection with an improvement;

"completed" , if used with reference to a contract or subcontract in respect of an

improvement, means substantially completed or performed, not necessarily

totally completed or performed;

"contractor" means a person engaged by an owner to do one or more of the

following in relation to an improvement:

(

a) perform or provide work;

(

b) supply material;

but does not include a worker;

"court" means the Supreme Court;

"head contractor" means a contractor who is engaged to do substantially all of the

work respecting an improvement, whether or not others are engaged as subcontractors, material suppliers or workers;

"holdback period" means the period of time calculated under

section 8;

"improvement" includes anything made, constructed, erected, built, altered,

repaired or added to, in, on or under land, and attached to it or intended to

become a part of it, and also includes any clearing, excavating, digging, drilling,

tunnelling, filling, grading or ditching of, in, on or under land;

"land title office" means the land title office for the land title district or districts in

which the land or any part of it is located and on which the improvement is made

or is being made;

"lien claimant" means a person who files a claim of lien under this Act;

"lien holder" means a person entitled to a lien under this Act;

"material" means movable property that is delivered to the land on which the

improvement is located and is intended to become part of the improvement,

either directly or in a transformed state, or is consumed or used in the making of

the improvement, including equipment rented without an operator;

"material supplier" means a contractor or subcontractor who supplies only material

in relation to an improvement;

"notice of certification of completion" means a notice in the prescribed form

stating that a certificate of completion or a court order to the same effect has been

issued;

"notice of interest" means a notice in the prescribed form warning other persons

that the owner's interest in the land described in the notice is not bound by a lien

claimed under this Act in respect of an improvement on the land unless that

improvement is undertaken at the express request of the owner;

"notice to commence an action" means a notice in the prescribed form requiring a

claim holder to commence an action to enforce a claim of lien;

"operator" means an individual who operates equipment at an improvement site but

does not include an individual who temporarily or periodically is present at the

improvement site to install, inspect, service, empty or remove equipment;

"owner" includes a person who has, at the time a claim of lien is filed under this Act,

an estate or interest, whether legal or equitable, in the land on which the

improvement is located, at whose request and

(

a) on whose credit,

(

b) on whose behalf,

(

c) with whose knowledge or consent, or

(

d) for whose direct benefit

work is done or material is supplied, and includes all persons claiming under the

owner, but does not include a mortgagee unless the mortgagee is in possession

of the land;

"registrar" means the registrar of a land title office;

"required holdback" means, in relation to a contract or subcontract, the amount

required under

section 4 to be retained from payments under that contract or

subcontract, less any payments made under an entitlement to payment arising

under

section 9;

"services" includes

(

a) services as an architect or engineer whether provided before or after the

construction of an improvement has begun, and

(

b) the rental of equipment, with an operator, for use in making an

improvement;

"subcontractor" means a person engaged by a contractor or another subcontractor

to do one or more of the following in relation to an improvement:

(

a) perform or provide work;

(

b) supply material;

but does not include a worker or a person engaged by an architect, an engineer

or a material supplier;

"wages" means money earned by a worker for work and includes

(

a) salaries, commissions or money, paid or payable by an employer to an

employee for work,

(

b) money that is paid or payable by an employer as an incentive and that relates

to hours of work, production or efficiency,

(

c) money, including the amount of any liability under

section 63 of the Employment Standards Act , required to be paid by an

employer to an employee under that Act,

(

d) money required to be paid in accordance with a determination

or an order of the tribunal under the Employment Standards Act ,

(

e) money required under a contract of employment to be

paid, for an employee's benefit, to a fund, insurer or other person and includes

money payable under Parts 10 and 11 of the Employment Standards Act ,

and

(

f) money required to be paid under a collective agreement;

"work" means work, labour or services, skilled or unskilled, on an improvement;

"worker" means an individual engaged by an owner, contractor or subcontractor for

wages in any kind of work, whether engaged under a contract of service or not,

but does not include an architect or engineer or a person engaged by an architect

or engineer.

(2) For the purposes of this Act, a head contract, contract or subcontract is substantially performed if the work to be done under that contract is capable of

completion or correction at a cost of not more than

(a) 3% of the first $500 000 of the contract price,

(b) 2% of the next $500 000 of the contract price, and

(c) 1% of the balance of the contract price.

(3) For the purposes of this Act, an improvement is completed if the improvement or

a substantial part of it is ready for use or is being used for the purpose intended.

(4) For the purposes of this Act, the construction of a strata lot is completed, or a

contract for its construction is substantially performed, not later than the date the

strata lot is first occupied.

(5) For the purposes of this Act, a contract or improvement is deemed to be

abandoned on the expiry of a period of 30 days during which no work has been

done in connection with the contract or improvement, unless the cause for the

cessation of work was and continued to be a strike, lockout, sickness, weather

conditions, holidays, a court order, shortage of material or other similar cause.

(6) Anything that may be done under this Act by or with reference to an owner,

contractor, subcontractor, worker or mortgagee is valid if done by or with

reference to an agent of that person.

Lien for work and material

(1) Subject to this Act, a contractor, subcontractor or worker who, in relation to an

improvement,

(

a) performs or provides work,

(

b) supplies material, or

(

c) does any combination of those things referred to in paragraphs (

a) and (

b) has a lien for the price of the work and material, to the extent that the price

remains unpaid, on all of the following:

(

d) the interest of the owner in the improvement;

(

e) the improvement itself;

(

f) the land in, on or under which the improvement is located;

(

g) the material delivered to or placed on the land.

(2) Subsection (1) does not create a lien in favour of a person who performs or

provides work or supplies material to an architect, engineer or material supplier.

Deemed authorization

(1) An improvement done with the prior knowledge, but not at the request, of an

owner is deemed to have been done at the request of the owner.

(2) Subsection (1) does not apply to an improvement made after the owner has filed

a notice of interest in the land title office.

Holdback

(1) The person primarily liable on each contract, and the person primarily liable on

each subcontract, under which a lien may arise under this Act must retain a

holdback equal to 10% of the greater of

(

a) the value of the work or material as they are actually provided under the

contract or subcontract, and

(

b) the amount of any payment made on account of the contract or subcontract

price.

(2) The obligation to retain the holdback under subsection (1) applies whether or not

the contract or subcontract provides for periodic payments or payment on

completion.

(3) For the purposes of subsection (1), value must be calculated on the basis of the

contract or subcontract price or, if there is no specific price, on the basis of the

actual value of the work or material.

(4) Subject to

section 5 (4), if a mortgagee is a savings institution and is authorized

by the owner to disburse the money secured by a mortgage, the mortgagee may

retain as a holdback the amount required to be retained by the owner as the payor

on the contract and the retention by the mortgagee of that amount is deemed to

be compliance with this

section by the owner.

(5) Subject to

section 5 (4), a mortgagee who retains or agrees to retain a holdback

under subsection (4) of this

section

(

a) has the same rights and obligations in relation to the holdback as if it had

been retained by the owner, and

(

b) is liable to the owner or any lien holder who suffers loss or damage as a

result of the failure of the mortgagee

(

i) to retain the holdback as agreed, or

(ii) to fulfill the mortgagee's obligations in relation to the holdback.

(6) Despite subsection (1) (a), a holdback must not be retained from a worker,

material supplier, architect or engineer.

(7) A person who, in good faith, purchases an improvement, including a strata lot,

may, despite an agreement to the contrary, retain from the vendor a holdback

equal to 10% of the purchase price.

(8) A person is not entitled to retain a holdback under subsection (7) if the person is

already required to retain a holdback under

section 75 (2) of the Condominium

Act in respect of the strata lot.

(9) Subject to

section 34, a holdback required to be retained under this

section is

subject to a lien under this Act, and each holdback is charged with payment of all

persons engaged, in connection with the improvement, by or under the person

from whom the holdback is retained.

Holdback account

(1) Subject to subsection (8), an owner must

(

a) establish at a savings institution a holdback account for each contract under

which a lien may arise,

(

b) pay into the holdback account the amount the owner is required to retain

under

section 4, and

(

c) administer the holdback account together with the contractor from whom

the holdback was retained.

(2) Subject to sections 9 and 34, all amounts deposited into a holdback account

(

a) are charged with payment of all liens arising under the contractor from

whom the holdback was retained,

(

b) subject to paragraph (a), are held in trust for the contractor referred to in

paragraph (a), and

(

c) must not be paid out of the account without the agreement of all the persons

who administer the account.

(3) An administrator of a holdback account may apply to the court for directions

respecting administration of the account, and the court may make any order it

considers appropriate, including one or more of the following orders:

(

a) that the owner establish and maintain a holdback account as sole administrator;

(

b) that some or all of the money in the holdback account be paid into court

under

section 23 for the removal of claims of lien;

(

c) that an administrator be removed or replaced;

(

d) that a lien holder be paid.

(4) If the mortgagee retains a holdback under

section 4 (4), this

section other than this

subsection does not apply.

(5) If there is more than one owner, only one of the owners is required to establish

and administer the holdback account.

(6) Unless otherwise agreed, interest on the holdback account accrues to the owner

during the holdback period and after that accrues to the credit of the contractor

from whom the holdback was retained.

(7) Failure by the owner to comply with subsection (l) (

b) constitutes

an act of default

under the contract and the contractor, on 10 days' notice, may suspend operations

for as long as the default continues.

(8) This

section does not apply to

(

a) the government, if the government is an owner, or

(

b) a contract in respect of an improvement, if the aggregate value of work and

material provided is less than $100 000.

Prohibited application of holdback

(1) If a contractor or subcontractor defaults under a contract or subcontract, the

required holdback must not be applied to the completion of the contract or

subcontract, or for the payment of damages, or for any other purpose until the

possibility of any lien arising under the person in default is exhausted.

(2) A payment applied contrary to this

section does not reduce the liability under this

Act of the person making the payment.

(3) This

section does not apply to money held in excess of the required holdback.

Certificate of completion

(1) In this section, "payment certifier" means

(

a) an architect, engineer or other person identified in the contract or

subcontract as the person responsible for payment certification, or

(

b) if there is no person as described in paragraph (a),

(

i) the owner acting alone in respect of amounts due to the contractor, or

(ii) the owner and the contractor acting together in respect of amounts

due to any subcontractor.

(2) A lien holder in respect of an improvement may, by making a written request,

require that the payment certifier for the improvement deliver to the lien holder

(

a) particulars of any certificate of completion issued under this

section before

and after the request, or

(

b) particulars of certificates of completion issued, before and after the request,

with respect to stipulated contracts or subcontracts.

(3) On the request of a contractor or subcontractor, the payment certifier must, within

10 days after the date of the request, determine whether the contract or

subcontract has been completed and, if the payment certifier determines that it

has been completed, the payment certifier must issue a certificate of completion.

(4) If a certificate of completion is issued, the payment certifier must, within 7 days,

(

a) deliver a copy of the certificate to the owner, the head contractor, if any, and

the person at whose request the certificate was issued,

(

b) deliver a notice of certification of completion to all persons who submitted

a request under subsection (2) in relation to the contract or subcontract, and

(

c) post, in a prominent place on the improvement, a notice of certification of

completion.

(5) If the payment certifier fails or refuses to issue a certificate of completion as

provided in subsection (3), the court may, on application by the person who

requested the certificate and on being satisfied that the contract or subcontract has

been completed, make an order declaring that the contract or subcontract has

been completed.

(6) An order under subsection

(5) considers just, and

(

b) has the same effect as a certificate of completion issued by a payment

certifier.

(7) If an order is made under subsection (5) declaring that a contract or subcontract

has been completed, the payment certifier must comply with subsection (4) as if

the order were a certificate of completion.

(8) A payment certifier who receives a request under subsection (3) and who fails or

refuses, without reasonable excuse and within the time specified in that

subsection, to issue a certificate of completion respecting the contract or

subcontract is liable to anyone who suffers loss or damage as a result.

(9) A payment certifier who fails or refuses to comply with subsection (4) or (7) is

liable to anyone who suffers loss or damage as a result.

(10) A certificate of completion may be in the prescribed form and, if it is in the

prescribed form, it is sufficient to comply with this Act.

Holdback period

(1) If a certificate of completion is issued with respect to a contract or subcontract,

the holdback period in relation to

(

a) the contract or subcontract, and

(

b) any subcontract under the contract or subcontract

expires at the end of 55 days after the certificate of completion is issued.

(2) The holdback period for a contract or subcontract that is not governed by

subsection (1) expires at the end of 55 days after

(

a) the head contract is completed, abandoned or terminated, if the owner

engaged a head contractor, or

(

b) the improvement is completed or abandoned, if paragraph (

a) does not

apply.

(3) If a holdback is retained by a purchaser under

section 4 (7), the holdback period

expires on the later of

(a) 55 days after the acceptance for registration at a land title office of the

purchaser's interest, and

(

b) the day the period would have expired if the holdback had been made with

respect to a contract to which subsection (2) applies.

(4) Payment of a holdback required to be retained under

section 4 may be made after

expiry of the holdback period, and all liens of the person to whom the holdback

is paid, and of any person engaged by or under the person to whom the holdback

is paid, are then discharged unless in the meantime a claim of lien is filed by one

of those persons or proceedings are commenced to enforce a lien against the

holdback.

Rights on payment of holdback

(1) A contractor is entitled to receive, from the holdback retained by the owner from

the contractor, an amount equal to the holdback amount applicable to a

subcontract if

(

a) a certificate of completion has been issued in respect of the subcontract to

which the contractor was a party, and

(

b) the holdback period established under

section 8 (1) has expired without any

claims of lien being filed that arose under the subcontract.

(2) An owner is deemed to have complied with the requirements of

section 4 even if

the amount retained has been reduced to a lesser percentage than is required by

that

section if

(

a) an amount is paid to a contractor in accordance with subsection (1) of this

section, and

(

b) the amount retained by the owner would have complied with the requirements of

section 4 had no payments been made under this section.

(3) Subsections (1) and (2) apply if a certificate of completion is given in relation to

a subcontract to which a contractor is not a party.

(4) If a contractor is entitled to an amount under subsection (1), payment may be

made from the holdback account established under

section 5.

Contract money received constitutes trust fund

(1) Money received by a contractor or subcontractor on account of the price of the

contract or subcontract constitutes a trust fund for the benefit of persons engaged

in connection with the improvement by that contractor or subcontractor and the

contractor or subcontractor is the trustee of the fund.

(2) Until all of the beneficiaries of the fund referred to in subsection (1) are paid, a

contractor or subcontractor must not appropriate any part of the fund to that

person's own use or to a use not authorized by the trust.

(3) If the liens of a class of lien claimants are discharged under this Act by the

payment of an amount that is less than the amount owing to the person who

engaged the class, the members of the class are subrogated to the rights under

subsections (1) and (2) of the person who engaged the class.

(4) Subsections (1) and (2) do not apply to money received by an architect, engineer

or material supplier.

Certain applications of trust fund deemed not to be appropriation or conversion

(1) A contractor or subcontractor commits an offence if that person

(

a) appropriates or converts any part of a fund in contravention of

section 10, or

(

b) contravenes

section 13 (2).

(2) A person who commits an offence under subsection (1) (

a) is liable to a fine of

not more than $10 000 or to imprisonment for a term of not more than 2 years, or

both.

(3) If a contractor or subcontractor is a corporation, a director or officer of the

corporation who knowingly assents to or acquiesces in an offence under

subsection (1) (

a) by the corporation commits the offence in addition to the

corporation.

(4) Despite subsections (1) to (3),

(

a) to the extent that a contractor or subcontractor has paid for work or material

supplied under a contract or subcontract, the retention by the contractor or

subcontractor of trust money in an amount equal to the amount paid is not

an appropriation or conversion that contravenes

section 10, and

(

b) if money is loaned to a person on whom a trust is imposed by

section 10 and

is used to pay for all or part of work or material supplied, trust money may

be applied to discharge the loan to the extent that the lender's money was so

used by the trustee, and money so applied is not an appropriation or

conversion that contravenes

section 10.

(5) An information must not be laid in respect of an alleged offence under

subsection (1) or (3) more than 3 years after the alleged offence occurred.

(6) Subsection (4) (

b) does not limit the rights of a lender who, in the ordinary course

of business, receives money in good faith from a person on whom a trust is

imposed under

section 10.

(7) If a contractor or subcontractor commingles, with other money, any part of the

fund referred to in

section 10, that, of itself, does not constitute a breach of the

trust created under

section 10 (1) or a contravention of

section 10 (2).

Crediting of money earmarked for particular improvement

12 If a person makes a payment from money in a trust fund constituted in respect of a

particular improvement, a person who receives the money must credit it against the

debt in respect of the improvement.

Garnishment and money in court

(1) In the case of money owing to a contractor

or subcontractor that would, if paid to the contractor or subcontractor, be

subject to a trust under

section 10, the money, if it is paid into court under

an attachment under the Court Order Enforcement Act , is subject

to a trust as if it had been paid to the contractor or subcontractor, and the

interest of the garnishor is subordinate to the interest of the beneficiaries

of the trust.

(2) A garnishee under an attachment referred to in subsection (1) must, at the time of

payment into court, file in the court registry a notice in the prescribed form and

deliver a copy of the notice to the garnishor.

(3) If a notice is filed under subsection (2), the registrar of the court must not pay out

of court without an order of the court any money paid into court under

subsection (1).

(4) Money held in a holdback account established under

section 5 is not subject to

garnishment.

(5) If money is paid into court under this Act by a contractor, subcontractor or owner,

the money becomes or remains subject to the trust imposed by

section 10.

Limitation period

14 An action by a beneficiary or against a trustee of a trust created under

section 10 must

not be commenced later than one year after

(

a) the head contract is completed, abandoned or terminated, or

(

b) if the owner did not engage a head contractor, the completion or

abandonment of the improvement in respect of which the money over which

a trust is claimed became available.

Claim of lien to be in prescribed form

(1) Except as provided in

section 18, a claim of lien is made by filing in the land title

office a claim of lien in the prescribed form.

(2) An agent who represents more than one lien claimant may, with respect to a

particular improvement, make a single claim of lien on behalf of all of the lien

claimants represented, and the prescribed form may be altered accordingly for

that purpose.

(3) The registrar must not allow a claim of lien to be filed unless satisfied that the

land is adequately described.

(4) On the filing of the claim of lien in the land title office, the registrar must endorse

a memorandum of the filing on the register of title to the land or against the estate

or interest in the land described in the claim of lien.

General lien

(1) If an owner enters into a single contract for improvements on more than one

parcel of land, a lien claimant providing work or material under that contract, or

under a subcontract under that contract, may choose to have the lien follow the

form of the contract and be a lien against each parcel for the price of all work and

material provided to all of the parcels of land.

(2) If a lien is claimed under subsection (1) against several parcels of land, on

application to the court by any person with an interest in or charge on the land,

the court may apportion the lien among the parcels for the purpose of determining

the lien claimant's rights as against persons having rights in particular parcels.

No claim under $200

17 A claim of lien must not be filed if the amount of the claim or aggregate of joined

claims is less than $200.

Procedure to file a claim of lien under the Mineral Tenure Act

(1) In order to file a claim of lien in respect of a mineral title held under the Mineral

Tenure Act other than a Crown granted mineral claim, the lien claimant must

(

a) file in the office of the gold commissioner in which the mineral title is

recorded a claim of lien in the prescribed form, and

(

b) if the property that is the subject of a mineral title is registered in a land title

office, also file in the land title office a copy of the claim of lien.

(2) On the filing of the claim of lien under subsection (1), the gold commissioner

must endorse a memorandum of the filing on the record of the mineral title in the

gold commissioner's office.

(3) If the property that is the subject of a mineral title described in the claim of lien

is registered in a land title office, the registrar must endorse a memorandum of the

filing on the register of title to the land or against the estate or interest in the land

or mineral title described in the claim of lien.

Liability for wrongful filing

19 A person who files a claim of lien against an estate or interest in land to which the lien

claimed does not attach is liable for costs and damages incurred by an owner of any

estate or interest in the land as a result of the wrongful filing of the claim of lien.

Time for filing claim of lien

(1) If a certificate of completion has been issued with respect to a contract or subcontract, the claims of lien of

(

a) the contractor or subcontractor, and

(

b) any persons engaged by or under the contractor or subcontractor

may be filed no later than 45 days after the date on which the certificate of

completion was issued.

(2) A claim of lien that is not governed by subsection (1) may be filed no later than

45 days after

(

a) the head contract has been completed, abandoned or terminated, if the

owner engaged a head contractor, or

(

b) the improvement has been completed or abandoned, if paragraph (

a) does

not apply.

(3) Subsection (1) does not operate to extend or renew the time for filing of a claim of

lien if

(

a) that time would otherwise be determined with reference to the time an

earlier certificate of completion was issued, or

(

b) time had started to run under subsection (2).

(4) On the filing of a claim of lien under this Act, the registrar or gold commissioner

has no duty to inquire as to whether or not the lien claimant has complied with

the time limit for filing the claim of lien.

When claim of lien takes effect

21 A claim of lien filed under this Act takes effect from the time work began or the time

the first material was supplied for which the lien is claimed, and it has priority over all

judgments, executions, attachments and receiving orders recovered, issued or made

after that date.

Lien extinguished if not filed as required by Act

22 A lien in respect of which a claim of lien is not filed in the manner and within the time

provided in this Act is extinguished.

Removal of claims of lien by payment of total amount recoverable

(1) If a claim of lien is filed by one or more members of a class of lien claimants,

other than a class of lien claimants engaged by an owner, the owner, contractor,

subcontractor or mortgagee authorized by the owner to disburse money secured

by a mortgage may, on application, pay into court the lesser of

(

a) the total amount of the claim or claims filed, and

(

b) the amount owing by the payor to the person engaged by the payor through

whom the liens are claimed provided the amount is at least equal to the

required holdback in relation to the contract or subcontract between the

payor and that person or, if the payment is made by a purchaser to whom

section 35 applies, 10% of the purchase price of the improvement.

(2) Payment into court under an order made under subsection (1) discharges the

owner from liability in respect of the claims of lien filed and

(

a) the money paid into court stands in place of the improvement and the land

or mineral title, and

(

b) the order must provide that the claims of lien be removed from the title to

the land or mineral title.

(3) If an application has been made under subsection (1) and the claims of lien have

been removed under subsection (2), and if additional claims of lien are filed by

persons claiming through the same person engaged by the payor with respect to

the lien claimants whose claims of lien were removed under subsection (2),

application may be made under subsection (1) to have the additional claims of

lien removed under subsection (2) on payment into court of whatever additional

sum is necessary to bring the amount in court up to the amount that would have

been paid into court if the additional claims of lien had been filed at the time of

the prior application.

(4) An application under subsection (1) or (3) may be brought by interlocutory

application in proceedings that have been commenced to enforce a claims of lien,

or by an originating application, and the court may

(

a) hear and receive evidence, by affidavit or orally or otherwise, that it

considers necessary in order to determine the proper amount to be paid into

court,

(

b) direct the trial of an issue to determine the amount to be paid into court, and

(

c) refuse the application if it is of the opinion that the determination of the total

amount that may be recovered by lien claimants should be made at the trial

of the action.

(5) If the amount held back by the payor from the person engaged by the payor

through whom the liens are claimed exceeds the required holdback in relation to

the contract or subcontract between the payor and that person, and that person has

defaulted in completing or carrying out the contract or subcontract with the payor,

for the purposes of subsections (1) and (3) the amount owing by the payor to that

person does not include any amount that the payor is entitled to apply to remedy

the default or complete the contract or subcontract.

Cancellation of claim of lien by giving security

(1) A person against whose land a claim of lien has been filed, and a contractor,

subcontractor or any other person liable on a contract or subcontract in

connection with an improvement on the land, may apply to a court to have the

claim of lien cancelled on giving sufficient security for the payment of the claim.

(2) The court hearing the application under subsection (1) may, after considering all

relevant circumstances, order the cancellation of the claim of lien on the giving

of security satisfactory to the court.

(3) The value of the security required under an order under subsection (2) may be less

than the amount of the claim of lien.

(4) The registrar or gold commissioner in whose office a claim of lien is filed must,

on receiving an order or certified copy of the order made under subsection (2),

file it and cancel the claim of lien as to the property affected by the order.

(5) The giving of security for the payment of a claim of lien under subsection (1) does

not make the owner liable for a greater sum than provided for in

section 34.

Powers of court, registrar or gold commissioner to remove claim of lien

(1) An owner, contractor, subcontractor, lien claimant or agent of any of them may

at any time apply to the court, registrar or gold commissioner and the court,

registrar or gold commissioner may cancel a claim of lien if satisfied that

(

a) a lien is extinguished under

section 22 or 33,

(

b) an action to enforce the claim of lien has been dismissed and no appeal from

the dismissal has been taken within the time limited for the appeal,

(

c) an action to enforce the claim of lien has been discontinued, or

(

d) the claim of lien has been satisfied.

(2) An owner, contractor, subcontractor, lien claimant or agent of any of them may

at any time apply to the court and the court may cancel a claim of lien if satisfied

that

(

a) the claim of lien does not relate to the land against which it is filed, or

(

b) the claim of lien is vexatious, frivolous or an abuse of process.

(3) An application under subsection (1) or (2) may be made without notice to any

other person.

Enforcement of claim

26 A claim of lien may be enforced by an action according to the Rules of Court.

Local venue for proceedings under this Act

Section 21 of the Law and Equity Act applies to a proceeding in respect of a claim of

lien or other proceeding under this Act in the same way that

section applies to a

foreclosure proceeding on a mortgage.

Proof of filing of claim of lien

28 In a proceeding to enforce a claim of lien, the production of a copy of the claim of lien

disclosing the date of its filing and certified by the registrar or gold commissioner is

proof, in the absence of evidence to the contrary, of the filing of the claim of lien and

the date of its filing.

Evidence of delivery of material

29 If a person to whom material is supplied signs an acknowledgment of receipt of the

material stating that it is received for inclusion in an improvement at a named address,

the acknowledgment is proof, in the absence of evidence to the contrary, that the

material was delivered to the land described by the address.

Counterclaim and judgment for creditor

(1) Subject to the rights of lien claimants engaged by or under the plaintiff, a

defendant in an action to enforce a claim of lien may set up by way of counterclaim any right or claim arising out of the same transaction for any amount,

whether the counterclaim is for damages or not.

(2) On the trial of an action to enforce a claim of lien, the court may, so far as the

parties before it are debtor and creditor, give judgment for any indebtedness or

liability arising out of the claim of lien in the same manner as if the indebtedness

or liability had been the subject of an action in the court without reference to this

Act.

Court may order sale

(1) In an action to enforce a claim of lien, the court may declare that the lien claimant

is entitled to a lien for the amount found to be due.

(2) If the owner has not been discharged under

section 23 (2) of all liability for claims

of lien, the court may order the sale of the land or the improvement, or the

material supplied or the interest of the owner in any of them.

(3) If an estate or interest sold in proceedings under this Act is a leasehold interest,

the purchaser at the sale is conclusively deemed to be an assignee of the lease.

(4) For the purpose of effecting a sale of the land, the court may order that any or all

claims of lien filed in connection with the improvement be removed from the title

subject to conditions that it considers appropriate.

(5) The proceeds of the sale under this

section must be paid into court and must be

allocated in accordance with

section 36.

(6) No order for the sale of an interest in land owned by the Crown or a municipality

may be made, but the court may give judgment for an amount equal to the

maximum liability under this Act, as owner against either of them, and any

money realized on the judgment must be dealt with as if it were the proceeds of

a sale of the interest in land.

Priority of secured lender

(1) The balance owing on a registered mortgage has priority over a claim of lien to

the extent of the mortgage money secured in good faith and advanced in good

faith before the filing of that claim of lien, but in proceedings for the enforcement

of a claim of lien the court may order the sale of mortgaged lands at an upset price

of not less than the balance owing under all registered mortgages having priority

over the claim, court ordered costs and the costs of the sale, and the mortgages

must be satisfied out of the proceeds of the sale according to their respective

priorities and in priority to the claim of lien to the extent of the balance owing and

subject to subsection (2).

(2) Advances or payments made under a mortgage after a claim of lien has been filed

rank after that claim of lien.

(3) A mortgagee who has applied mortgage money in payment of a claim of lien that

has been filed is subrogated to the rights and priority of the lien claimant to the

extent of the money applied.

(4) Despite subsection (2) or any other enactment, if one or more claims of lien have

been registered in a land title office in relation to an improvement, a mortgagee

may apply to the court for an order that one or more further advances under the

mortgage are to have priority over the claims of lien, and the court must make the

order if it is satisfied that

(

a) the advances will be applied to complete the improvement, and

(

b) the advances will result in an increased value of the land and the

improvement at least equal to the amount of the proposed advances.

(5) A registered right to purchase land, and any money secured in good faith or

payable in good faith under it, has the same priority over a claim of lien as is

provided for a mortgage and mortgage money in subsections (1) and (2), and for

the purposes of this Act the vendor is deemed to be a mortgagee, and money

secured in good faith and payable in good faith under the agreement is deemed to

be mortgage money secured in good faith or advanced in good faith.

Limitation and notice to commence an action

(1) If a claim of lien has been filed, an action to enforce the claim of lien must be

commenced and, unless the claim of lien has been removed or cancelled under

section 23 or 24, a certificate of pending litigation in respect of the action must

be registered, not later than one year from the date of its filing, in the land title

office or gold commissioner's office in which the claim has been filed.

(2) Despite subsection (1),

(

a) an owner, or

(

b) a lien claimant who has commenced an action

may serve on a lien claimant, or other lien claimants, as the case may be, a notice

to commence an action to enforce the claim of lien and to register in the land title

office or in the gold commissioner's office, as the case may be, a certificate of

pending litigation within 21 days after service of the notice.

(3) The notice served under subsection (2) must be in the prescribed form, and

service is validly effected if the notice is

(

a) served personally on the lien claimant, or

(

b) mailed or delivered to the address for service given in the claim of lien.

(4) If service is by mail the notice is conclusively deemed to have been served on the

eighth day after deposit of the notice in the Canada Post Office at any place in

Canada.

(5) Unless an action to enforce a claim of lien is commenced and a certificate of

pending litigation is registered within the time provided in this section, the lien is

extinguished.

Limit of claims

(1) The maximum aggregate amount that may be recovered under this Act by all lien

holders who claim under the same contractor or subcontractor is equal to the

greater of

(

a) the amount owing to the contractor or subcontractor by the person who

engaged the contractor or subcontractor, and

(

b) the amount of the required holdback in relation to the contract between the

contractor or subcontractor and the person who engaged the contractor or

subcontractor.

(2) For the purposes of subsection (1) (a),

(

a) an amount claimed by way of counterclaim against a contractor or subcontractor by the person who engaged the contractor or subcontractor does not

reduce the amount owing to the contractor or subcontractor by that person,

(

b) a payment that is made in bad faith to a contractor or subcontractor by the

person who engaged the contractor or subcontractor does not reduce the

amount owing to the contractor or subcontractor by that person, and

(

c) a payment to a contractor or subcontractor by the person who engaged the

contractor or subcontractor that is made

(

i) after a claim of lien has been filed by a lien holder claiming under the

contractor or subcontractor,

(ii) if the person has actual notice of the claim of lien, and

(iii) if the claim of lien has not been removed or cancelled from the title

to the land, under

section 23 or 24 or otherwise, at the time the

payment was made,

does not, to the extent of the lien, reduce the amount owing to the contractor

or subcontractor by that person.

(3) Despite subsection (2), a person may, on the default of another person that the

first person engaged, apply money held by the first person in excess of the

required holdback in order to remedy that default or compensate for damage

caused by the default.

Maximum claim against purchaser's interest

35 The amount that may be claimed under this Act against the interest of a purchaser in

good faith of an improvement in respect of claims of lien filed after the latest of

(

a) acceptance for registration of the purchaser's interest at a land title office or

gold commissioner's office,

(

b) completion, abandonment or termination of the head contract for

construction of the improvement, and

(

c) completion or abandonment of the improvement if the owner did not engage

a head contractor

must not exceed 10% of the purchase price of the improvement.

Allocation of proceeds from sale

(1) In this section, "owner's discharge sum" means an amount that, if paid into

court by the owner under

section 23, would be sufficient to discharge the owner

from liability with respect to all claims of lien filed by persons other than

contractors or workers engaged by the owner.

(2) Subject to any order of the court in relation to the discharge of any prior encumbrances or an order under

section 32 (1), the proceeds from a sale under

section 31 must be distributed as follows:

(

a) the lesser of

(

i) the difference between the owner's discharge sum and any amount

previously paid into court by or on behalf of the owner under

section 23, and

(ii) the proceeds from the sale under

section 31

must be applied to the payments of the claims of persons other than persons

engaged by the owner and be distributed under

section 37;

(

b) proceeds in excess of the amount allocated under paragraph (

a) must be

applied to pay the claims of lien of persons engaged by the owner and to pay

the owner, and be distributed under

section 38.

Distribution among claimants not engaged by owner

(1) In this section:

"available holdback fund" or "holdback funds available" means

(

a) the amount paid into court under

section 23, and

(

b) the amount available for distribution under this

section as calculated under

section 36 (2) (a);

"priority computation base" of a class of lien claimants means the lesser of

(

a) the amount owing to the person who engaged the class of lien claimants, and

(

b) the total amount of the claims of the class members.

(2) The available holdback funds must be applied to pay and be distributed to

subcontractors and workers other than workers engaged by the owner according

to the following priority:

(

a) the costs of the lien claimants of and incidental to the proceedings of filing

and enforcing their claims of lien;

(

b) up to 6 weeks' wages, if that much is owed, to workers;

(

c) the amount of money owed

(

i) to the workers in excess of 6 weeks' wages, and

(ii) to the subcontractors.

(3) The holdback funds available to a category of lien claimants constituted under

subsection (2) (

a) or (

b) must be distributed proportionally among the members

of the category so that a single member of the category is entitled to that

proportion of the amount recovered that the amount of the member's lien bears to

the aggregate amount of the liens of all members of the category.

(4) Before the holdback funds available to lien claimants in the category constituted

under subsection (2) (

c) are distributed, the holdback funds must be allocated

proportionally among the classes of lien claimants so that each class is allocated

that proportion of the available holdback funds that the priority computation base

of the class bears to the aggregate amount of the priority computation bases of all

classes, including that of the class whose allocation is being assessed.

(5) The portion of the available holdback funds allocated to a class under subsection

(4) must be distributed proportionally among the members of the class so that a

single member of the class is entitled to that proportion of the allocated funds that

the amount of the member's lien bears to the aggregate amount of the liens of all

members of the class.

(6) In a distribution under this

section a lien claimant is not entitled to recover more

than the amount of the claimant's lien claim and entitlement to costs under

subsection (2) (a).

(7) Money distributed under this

section is subject to sections 10, 11 and 14.

Distribution among claimants engaged by owner

(1) The portion of the proceeds of sale allocated under

section 36 (2) (

b) must be

applied to pay the claims of lien of contractors and workers engaged by the

owner, and to pay the owner, and distributed according to the following priority:

(

a) the costs of lien claimants of and incidental to the proceedings of filing and

enforcing their claims of lien;

(

b) up to 6 weeks' wages, if that much is owed, to workers;

(

c) the amount of money owed

(

i) to the workers in excess of 6 weeks' wages, and

(ii) to the contractors;

(

d) the owner.

(2) The funds available to the members of a category of lien claimants constituted

under each of subsection (1) (a), (

b) or (

c) must be distributed proportionally

among the members of that category so that a single member of the category is

entitled to that proportion of the amount recovered that the amount of the

member's lien bears to the aggregate amount of the liens of all members of the

category, but a lien claimant is not entitled to recover more than the amount of the

claimant's lien and entitlement to costs under subsection (1) (a).

(3) Money distributed under this

section is subject to sections 10, 11 and 14.

During continuance of lien, property not to be removed

(1) During the continuance of a lien, material must not be removed from the land or

the improvement to the prejudice of a lien holder.

(2) An attempt at removal may be restrained on application to the court.

Subcontractor's lien enforceable despite noncompletion by another

40 A subcontractor may enforce the subcontractor's lien despite the noncompletion or

abandonment of the contract or subcontract by the contractor or other subcontractor

under whom the first subcontractor claims.

Right to information

(1) A lien holder or a beneficiary of a trust under this Act may, at any time, by

delivering a written request, require

(

a) from the owner

(

i) the terms of the head contract or contract under which the lien holder

of beneficiary claims, including the names of the parties to the

contract, the contract price and the state of accounts between the

owner and the head contractor,

(ii) the name and address of the savings institution in which a holdback

account has been opened, and the account number,

(iii) particulars of credits to and payments from the holdback account,

including the dates of credits and payments, and the balance at the

time the information is given, and

(iv) particulars of any labour and material payment bond posted by the

contractor with the owner in respect of the head contract or contract

under which the lien holder or beneficiary claims, and

(

b) from a mortgagee or an unpaid vendor

(

i) the terms of the mortgage or agreement for sale,

(ii) in the case of a mortgage, particulars of the amount advanced under

the mortgage, including the dates of advances, and of any arrears in

payment, and

(iii) in the case of an agreement for sale, particulars of the amount secured

under the agreement for sale and any arrears in payment.

(2) The owner may request in writing from

(

a) a subcontractor when a claim of lien has been filed or a written notice of a

claim of lien has been received by the owner, and

(

b) the contractor, at any time,

the following information:

(

c) the terms of any subcontract, including the names of the parties to the

subcontract, the subcontract price and the state of accounts between the

contractor and a subcontractor or between a subcontractor and another

subcontractor, or any other person providing work or material;

(

d) particulars of any labour and material payment bond posted by a subcontractor with the contractor or by a subcontractor with another subcontractor.

(3) The person to whom a request is made under subsection (1) or (2) must comply

within 10 days after the day the request is delivered.

(4) A person who fails to comply in writing with a request within the time provided

in subsection (3), or who knowingly or negligently misstates the information

requested, is liable to the person requesting the information for any resulting loss

or damage.

(5) On the failure of a person to comply with a request made under subsection

(2) within the time provided, the owner may also, if the request is made of

(

a) a contractor, withhold further payments to the contractor, or

(

b) a subcontractor, instruct the contractor or another subcontractor to withhold

further payments to the subcontractor

until the contractor or subcontractor, as the case may be, has complied with the

request.

(6) The court may, on application by an interested person at any time before or after

an action is commenced for the enforcement of a claim of lien,

(

a) order that the owner, mortgagee, vendor, contractor or subcontractor

produce for inspection all contracts, subcontracts, documents, books or

records relating to the contract or subcontract or to the payment of the

contract or subcontract price,

(

b) order that any person referred to in paragraph (

a) deliver to the applicant

copies of any documents referred to in that paragraph, and

(

c) make an order as to the costs of the application.

Certain acts, agreements, assignments void

(1) A conveyance, mortgage or charge of or on land given for the purpose of granting

a lien holder a preference or priority is void for that purpose.

(2) An agreement that this Act is not to apply, or that the remedies provided by it are

not to be available for a person's benefit, is void.

(3) A device by an owner, contractor or subcontractor adopted to defeat the priority

given by this Act to a worker for the worker's wages is void as against the worker.

(4) No assignment by the contractor or subcontractor of any money due in respect of

the contract or subcontract is valid as against any lien or trust created by this Act.

Lien may be assigned

lien rights may pass by operation of law.

Insurance money

44 If all or part of property subject to a lien under this Act is destroyed by fire, insurance

money receivable by the owner, mortgagee or other encumbrancer as a result of the

fire stands in place of the property so destroyed, and is, after satisfying any mortgage,

charge or encumbrance, in the manner and to the extent set out in

section 36, subject

to the claims of all persons for liens to the same extent as if the insurance money were

realized by the sale of the property in an action to enforce a claim of lien.

Offence

(1) A person who knowingly files or causes an agent to file a claim of lien containing

a false statement commits an offence.

(2) A person who commits an offence under subsection (1) is liable to a fine not

exceeding the greater of $2 000 and the amount by which the stated claim

exceeds the actual claim.

Application of Offence Act

Section 5 of the Offence Act does not apply to this Act or to the regulations.

Power to make regulations

(1) The Lieutenant Governor in Council may make

regulations referred to in

section 41 of the

Interpretation Act .

(2) Without limiting subsection (1), the Lieutenant Governor in Council may make

regulations as follows:

(

a) prescribing forms for the purposes of this Act;

(

b) prescribing a fee to be paid for filing a claim of lien, and providing for the

fee to be calculated on

(

i) the number of parcels of land to which the claim of lien purports to

attach, or

(ii) the amount of the claim of lien;

(

c) respecting the administration of holdback accounts;

(

d) governing rights in relation to holdback accounts on a sale of an

improvement by an owner.

(3) The Lieutenant Governor in Council may make regulations the Lieutenant

Governor in Council considers necessary or advisable for meeting or removing

any difficulty arising out of the transition to this Act from the Act repealed by this

Act and for preserving and giving effect to the rights of persons arising under the

repealed Act except as those rights are expressly varied by this Act, and the

regulations may be made to apply generally or to a particular case or class of

cases.

Transition

(1) In this section, "transition project" means an improvement for which the time

for filing liens has not yet expired under the Act repealed by this Act.

(2) This Act applies to a transition project unless all parties agree that the Act

repealed by this Act continues to apply.

(3) Despite this Act there is no obligation to create or maintain a holdback account

under

section 5 on a transition project.

(4) If this Act requires a person not previously required to retain a holdback under

the Act repealed by this Act to retain a holdback, it is sufficient compliance with

this Act if, in relation to a transition project, the person retains a holdback only

with respect to advances or payments made after this Act comes into force.

(5) Despite subsection (4), for the purposes of sections 23 and 34, in relation to a

transition project, "required holdback" means the amount that would have been

retained if this Act had applied to the transition project from the time the

improvement was started.

(6) In respect of a transition project, nothing done in compliance with the law in force

immediately before this Act comes into force is invalidated by subsection (2).

(7) A purchaser of an improvement that is a transition project is entitled to retain a

holdback under

section 4 (7) only if a binding agreement of purchase and sale was

entered into after this Act comes into force.

(8) In respect of a transition project, on the coming into force of this Act money paid

into court under

section 20 (4) of the Act repealed by this Act or under an order

of the court under

section 33 (2) of the Act repealed by this Act is deemed to be

money paid into court under

section 23 of this Act.

(9) Parties to a dispute respecting a transition project may apply to the court for

directions as to the application of this

section and the regulations to the circumstances of the dispute.

Consequential Amendments

Condominium Act

Section 75 of the Condominium Act, R.S.B.C. 1996, c. 64, is amended

(

a) in subsection (1) by striking out "builders lien" and substituting "claim of lien under

the Builders Lien Act " and by striking out "31 days" and substituting "45 days" ,

(

b) in subsection (2) by striking out "40 days" and substituting "55 days" ,

(

c) in subsection (3) by striking out "employed" and substituting "engaged" ,

(

d) in subsection (4) by striking out "40 days" and substituting "55 days" , and

(

e) in subsection (5) by striking out "employed" and substituting "engaged" .

Expropriation Act

Section 1 of the Expropriation Act, R.S.B.C. 1996, c. 125, is amended in the definition of

"security interest" by striking out "lien" and substituting "claim of lien" .

Land Title Act

51 The Land Title Act, R.S.B.C. 1996, c. 250, is amended

(

a) by repealing

section 207 (2),

(

b) in

section 216 (2) (

f) by striking out "claim of builders lien," and substituting "claim

of lien under the Builders Lien Act, " , and

(

c) in

section 370 (7) (

b) by striking out "builders lien," and substituting "claim of lien

under the Builders Lien Act, " .

Property Transfer Tax Act

Section 1 (1) of the Property Transfer Tax Act, R.S.B.C. 1996, c. 378, is amended in

paragraph (a) (iv) of the definition of "fair market value" by striking out "a lien" and

substituting "the rights of a lien holder" .

Repairers Lien Act

Section 13 of the Repairers Lien Act, R.S.B.C. 1996, c. 404, is repealed.

Repeal

54 The Builders Lien Act, R.S.B.C. 1996, c. 41, is repealed.

Commencement

55 This Act comes into force by regulation of the Lieutenant Governor in Council.

Copyright © 1997: Queen's Printer, Victoria, British Columbia, Canada