Justice Feasby in Lesenko v Wild Rose Ready Mix Ltd, 2004 ABKB 333, has held that a lien claimant whose lien is discharged via security has no deadline under the PPCLA to commence an action to enforce the lien. Any deadline set by the lien template Consent Order is void.
The template Order's origins
Before 2017, Consent Orders to discharge liens via security under section 48 of the then-Builders' Lien Act were bespoke and differed from lawyer to lawyer. Seeking uniformity, in 2017 the Alberta Court of King's Bench introduced a template form of Consent Order for section 48 applications and instructed lawyers to use only that template. Variations to the template were to be bolded.
That template included a 180-day deadline for the lien claimant to commence an action to enforce the lien or the lien would cease to exist, which reflected the same deadline under section 43 of the PCCLA given to lien claimants whose liens were not discharged by security.
The Prompt Payment Provisions may now eliminate the 180-day Deadline
In its recent decision in Lesenko, the Court of King's Bench held that this deadline in the template Consent Order is invalid. In so doing, the Court called into question its own template Order and held that lien claimants whose liens are discharged via security have no deadline under the Prompt Payment and Construction Lien Act (PPCLA) to commence an action to enforce their lien. (The lien claimant may still have to commence an action within two years of discovering the claim in order to comply with the Limitations Act).
In Lesenko, the lien claimant registered a lien for the value of concrete it installed at a home. Using the template Consent Order, the homeowners paid cash security under section 48 of the PPCLA to discharge the lien from the title of their home. The Order required the lien claimant to commence proceedings to enforce the lien within 180 days of its date of registration or the lien would cease to exist. As the lien claimant failed to do so, the homeowners applied to Court to dismiss the lien and return the security; the lien claimant cross applied for an extension to its 180-day deadline to commence an action.
At the initial hearing, the Applications Judge held that he could not extend the 180-day deadline in the template Order because that was the time limit fixed by the PPCLA. In so doing, the Applications Judge overlooked section 44 of the PPCLA, which says that if a lien is removed with security under section 48, the lien claimant no longer must commence an action within 180 days of registration of the lien. Unusually, the Applications Judge issued a corrigendum to his decision deleting the holding about the missed 180-day deadline and replacing it with a holding that there was no compelling reason to grant the requested extension.
On appeal, the Justice held that the corrigendum did not apply and that the 180-day deadline in the template Order was not enforceable. Section 44 of the PPCLA says that the 180-day deadline no longer applies to liens removed with security. Section 5 of the PCCLA says that any agreements that the Act or remedies do not apply are void. Interpreting the template Order as one such "agreement," the Justice held that the 180-day deadline in the template Order was void under section 5 because its 180-day deadline was not a statutory requirement in light of section 44. In other words, a lien claimant whose lien is discharged via security has no deadline under the PPCLA to commence an action to enforce the lien. Any deadline set by Consent Order is void.
The 180-day deadline in the template section 48 Order arises from a hole in the legislation: the PPCLA neither defines a process nor sets deadlines to assess a lien claim that is discharged under section 48 via security. As far back as its 1974 decision Driden Industries Ltd. v. Sieber, 1974 ALTASCAD 14 ("Driden"), the Alberta Court of Appeal lamented that "It would have been better if the Legislature had spelled out the procedure to be followed when moneys were paid into court." As the legislation did not, the Court of Appeal directed:
"...there should be a direction by the court as to procedure when the application to pay the moneys into court is made. Section 39 [now 53] which provides for a pre-trial application would apply after there has been a direction as to the issue and who is to be plaintiff and who is the defendant. It might even if that all these matters could be settled in the same application."
Since Driden, section 48 Orders have thus set the procedure to assess the lien claim. As part of that procedure, since 2017 the template section 48 Order has set the 180-day deadline for the lien claimant to commence an action to enforce the lien. According to Lesenko, that deadline is no longer enforceable.
What is the new deadline then?
Practically speaking, what deadline does a lien claimant have to commence an action to enforce the lien? One may expect the two year deadline in the Limitations Act to apply. But see the decision in Edmonton Gold's Gym Corp. v. Complete Concrete Cutting Ltd., 2012 ABQB 638, which held that the passage of two years from the registration date of the lien did not automatically extinguish the lien because the burden remained upon the Applicant paying security to set the procedure for assessing the lien:
"[T]he mere existence of the [Limitations] Act does not have the effect of shifting the onus to a lienholder to have the claim determined. Both sides want the money. Both sides have an equal interest in having the matter determined."
Presently, then, the only way to set a deadline for the lien claimant to commence an action is a Notice to commence action under section 45 of the PPCLA. That section sets a 30-day deadline from the date of service of the notice. Expect many such notices to now shortly follow section 48 applications until either Courts or the Legislature address the Lesenko decision and the hole in the legislation identified since at least 1974's Driden decision.
Key takeaways
- The 180-day deadline to commence an action still applies to situations where security has not been posted under s.48.
- A party paying security under s.48 can no longer enforce a 180-day deadline in the template Order.
- A party paying security under s.48 may consider issuing a Notice to commence action, or commencing its own action, in order to force proceedings along.
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