Builders’ Liens
A lien is a vital tool that many in the construction industry rely on to help them get paid. Yet not all entities involved in the construction process have a clear path to a lien without relying on the help of a business lawyer who has experience with these sorts of issues.
Shaun Flannigan has been practising corporate and commercial law since 2007, and has scored many victories for our clients who might otherwise have gone unpaid such as this one for an engineer and architect after property owners failed to live up to their obligations. The line between work that can be subject to a lien and work that is not subject to a lien is not always clear, but Shaun Flannigan and Merchant Law look for every opportunity to help you turn this and other legal tools to your advantage when you need to protect your interests.
Case Study: J.K. Engineering LTD. v. Red Quest Developments Ltd.
In 2017, Shaun helped J.K. Engineering secure a builders’ lien on an RV Park development. Red Quest Developments, the property owner, alleged the work provided by J.K. Engineering could not be subject to a builder’s lien, and applied to have said lien removed from its certificate of title.
Shaun successfully resisted the landowner’s application before a Master in Chambers.
The circumstances of this case were somewhat unique. Construction work had begun before all necessary regulatory approvals were obtained. The work done by J.K. Engineering in the 45-day lien period related to regulatory approvals.
The issue before the Court was whether the work related to obtaining approvals was sufficiently related to the process of construction to allow J.K. Engineering to register a lien. In order to obtain a valid builder’s lien under the Alberta Builders Lien Act the work must be related to the process of construction.
In many cases, work that is done by architects or engineers for the purposes of obtaining approval will be deemed insufficiently related to the process of construction, and will be unable to support a lien.
Mr. Flannigan was able to argue that, under the unique circumstances of this project, the work related to obtaining regulatory approval was directly related to the construction work which was well under way. Red Quest’s application to remove the lien was dismissed.
The landowners appealed to the Court of Queen’s Bench and lost the appeal. They filed a further appeal with the Alberta Court of Appeal which in reasons reported at 2019 ABCA 263 concluded the Courts below did not err and concluding the landowner had not demonstrated that the lien was invalid. The issue was then closed and J.K. Engineering kept its lien, protecting its ability to receive payment for the work they’d already put into the project.
Do you have protection if your construction and development partnerships fall apart?
While not all work done by architects and engineers on a construction project can be protected by builders’ liens, we can still work with your firm to provide advice and representation on any disputes that may arise from any construction process.
If you don’t yet have a business lawyer who is experienced in the specific legal issues with construction helping you protect your interest on your projects, reach out to Shaun today. He can be reached by phone at (403) 225-7777 or via email at sflannigan@merchantlaw.com.