Under the British Columbia Builders Lien Act, a contractor may be liable to an owner for the wrongful filing of a claim of lien, but there have been very few cases where this remedy has been awarded. In a recent case, the BC Supreme Court ordered a contractor to pay an owner’s costs and damages suffered as a result of a lien that was filed after the 45-day time limit set out in the Act.

Section 19 of the Act states:

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.

(emphasis added)

In Century Group GP Co. Ltd. v KRS Excavating Ltd.¹ , the BC Supreme Court provided some explanations as to the types of costs and damages recoverable under this provision, including by distinguishing two categories of “costs”, (1) lien investigation/removal costs, and (2) lien litigation legal costs:

Lien investigation/removal costs: Reasonable legal fees related to the investigation of the lien claim and advising the client contemplating the discharge of the lien, including obtaining a letter of credit.

Lien litigation legal costs: Costs incurred to challenge the lien, for example, the cost of a successful application. An owner may be entitled to special costs if the contractor’s behaviour is egregious.

Damages: May include out-of-pocket costs and other consequences resulting from the lien, such as, lost profits or premiums paid on security.

In the case, the contractor, KRS Excavating, filed a lien claim against lands owned by Century Group . Century posted alternative security – a letter of credit for the face value of the claim of lien – and the lien was discharged from the title to the land. Century then commenced litigation against KRS claiming, among other things, damages for the wrongful filing of the lien claim on the basis it was not filed within the 45-day time limit in the Act. Century sought recovery of the premiums and fees it paid in respect of the letter of credit and its legal expenses to the date of its court application pursuant to Section 19.

The Court considered the policy behind the Act, noting that the rights afforded to lien claimants are strictly construed and that the lien claimant’s rights are balanced against the rights of an owner. The Act “provides an important deterrent to contractors if they do not comply with the [Act’s] requirements…if the contractor does not satisfy those clear preconditions so as to be entitled to file a lien, consequences follow to compensate the landowner for any ‘costs and damages’.”²

Based on this policy, the Court ordered KRS to pay the costs and damages suffered by Century, consisting of the premiums it paid on the letter of credit ($28,844.25), plus court ordered interest, Century’s lien investigation/removal costs, and the costs of the application.

For more information on this topic, please reach out to the authors Edward Hulshof and Karen Martin.

1. 2022 BCSC 357 [Century Group].
2. Century Group at para 35.