Yongfeng Holdings Inc. v. Zheng: The Need for Strict Compliance when Registering a Claim of Builder’s Lien

BACKGROUND

The British Columbia Supreme Court recently stressed and re-iterated the importance of strict compliance with the many requirements set out in the British Columbia Builders Lien Act (the “BLA“).

In Yongfeng Holdings Inc. v. Zheng, 2019 BCSC 1534, the Court considered whether a lien claimant properly completed its claim of lien form. On January 11, 2017, the lien claimant registered against title to the project lands its claim of lien in the amount of $174,308 (the “Claim of Lien“). In particular, the court considered whether the lien claimant completed its Claim of Lien form in the manner, form, and time limits prescribed by the BLA.

The owner of the project lands argued the Claim of Lien form contained three errors, each of which would make the Claim of Lien non-compliant under the BLA and of no force or effect. First, the Claim of Lien form listed “Y Holdings” as the party making the claim instead of a “natural person acting as the agent” of the lien claimant. The owner relied on the British Columbia Builders Liens Practice Manual, which states “a corporate claimant can only claim by an agent”. The owner argued Y Holdings is not an agent of the lien claimant.

The owner also argued the signature on the Claim of Lien form was illegible.

Finally, the owner argued the lien claimant erroneously listed in the space entitled “lien claimant’s address for service” the address of the project owner instead of the lien claimant’s address. As a result of these errors, and each of them individually, the owner argued the Claim of Lien must be extinguished pursuant to section 22 of the BLA.

In coming to its decision to extinguish the Claim of Lien, the court relied on two prior judgments, both of which emphasized the importance of strict compliance with the BLA.

In 581582 B.C. Ltd. v. Habib, 2013 BCSC 378, at paragraph 8, Justice Rogers said:

It is settled law in this province that a builders lien claimant must strictly comply with the requirements of the Builders Lien Act: see Nita Lake Lodge Corp. v. Conpact Systems (2004) Ltd., 2006 BCSC 885, and Framing Aces Inc. v. 0733961 B.C. Ltd., 2009 BCSC 389. It is equally well settled law that a non‑legal entity has no capacity to file a builder’s lien: see Framing Aces Inc., and Canbar West Projects Ltd. v. Sure Shot Sandblasting & Painting Ltd., 2010 ABQB 372. Put another way – entities that do not have legal personhood cannot obtain builder’s liens, and only a legally recognized person, such as, for example, a human being, a corporation, or a society, may apply for a builder’s lien…

The Court concluded the “objective behind strict compliance with the manner and form prescribed by the BLA and its regulations is to provide certainty in relation to rights and obligations arising in the construction industry and security in relation to the performance of a contract”.

THE COURT’S ANALYSIS

“Y Holdings” as Party Making the Claim

In its analysis with respect to whether listing “Y Holdings” instead of a natural person as the party making the Claim of Lien, the Court was informed by section 28(1) of the British Columbia Interpretation Act, which states:

If a form is prescribed under an enactment, deviations from it not affecting the substance or calculated to mislead, do not invalidate the form used.

In holding that listing the wrong party as lien claimant did not invalidate the Claim of Lien, the Court considered comments made in the 581582 B.C. Ltd. decision, in which judgment the Court explained that a “deviation from the lien form would involve something like inadvertently putting the date money comes due in the space allotted for the sum claimed and putting the sum claimed in where the date ought to be. It is not a deviation from the prescribed form to describe the lien claimant as something other than the actual claimant”.

In 581582 B.C. Ltd., the incorrect lien claimant was also listed on the claim of lien form, which error the Court found not to rise to a “deviation” affecting the substance of the form or calculated to mislead, as contemplated by section 28 of the Interpretation Act.

Illegible Signature

Paralleling the reasoning above, the Court concluded the lien claimant’s illegible signature did not constitute a “deviation” pursuant to the Interpretation Act, and therefore not grounds to invalidate the Claim of Lien.

Wrong Address

Even though the Court concluded two of the three errors on the Claim of Lien form were not significant enough to invalidate the Claim of Lien, listing the wrong address on the Claim of Lien form was too significant of an error to overlook:

It is settled law that strict compliance with the BLA is required. This is evident in light of the amendments to the legislation and is consistent with its stated purposes. Due to this failure to comply with the BLA requirements, I order the lien extinguished pursuant to s. 22 of the BLA.

CONCLUSION

This judgment again stresses the importance of strict compliance with the claim of lien forms as well as the many other BLA requirements. Contractors, subcontractors, or workers who wish to register a claim of lien and preserve their lien rights pursuant to the BLA are encouraged to seek out timely legal advice from a qualified construction lawyer.

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