BC Supreme Court tackles builders lien claim against a strata corporation’s common property
November 16, 2016
BY Kevin Zakreski
In a decision released yesterday, the Supreme Court of British Columbia addressed some of the difficult issues that can arise when a strata corporation engages a builder to carry out construction on common property. Primex Industries Inc v The Owners, Strata Plan LMS 1751, 2016 BCSC 2092, contained a sustained discussion on whether strata-lot owners must be named in a court proceeding to enforce the lien or whether just the strata corporation can be named as the owners’ agent.
Facts and issues
Primex involved a strata property with over 100 strata lots located in Vancouver. The strata corporation entered into a contract with a construction company (Primex) to carry out exterior panelling work on the strata’s common property. A dispute arose, Primex wasn’t paid for the work it performed, and Primex launched this proceeding seeking recovery of over $688 000.
Primex identified in its Lien Claim document the property identification numbers (“PID”) for each of the units whose title is held by their respective owners. The Lien Claim was filed against 108 PIDs. Even though the work provided by Primex is said to be in respect of common property, it had no other option other than to file the Lien Claim against the PIDs because the common property is not separately identified.
Primex did not file lien claims against the interests of each of the owners. Instead, Primex claimed that [the strata corporation] was the Owner.
Following the requirements of section 33 of the Builders Lien Act, Primex commenced an action in supreme court to enforce its lien claim. The action wasn’t commenced against the individual strata-lot owners, who by virtue of section 66 of the Strata Property Act own the strata’s common property collectively as tenants in common. Instead, Primex named the strata corporation as defendant, as agent for the owners under section 163 of the Strata Property Act.
A final procedural twist cropped up in the judgment and proved to be significant:
Primex advised that it intends to seek to amend the notice of civil claim to show that [the strata corporation] acts as the representative or agent of the Owners who own registered legal title to the Lands. If Primex were to succeed on that application, then it may also be entitled to add the 100 remaining owners as parties to the litigation despite the expiry of the 12-month limitation as a consequence.
The judgment focussed on two issues in the strata corporation’s “application to cancel the Lien Claim and the CPL per s. 25(1)(a) of the BLA”:
- “Is Primex able to name only [the strata corporation] as a defendant without naming the Owners in the notice of civil claim, in its capacity as agent of, and thus instead of, the Owners?”
- “In the alternative, [the strata corporation] grounds its application on what it claims to be an erroneous claim for declaratory relief in Primex’[s] notice of civil claim. Specifically, [the strata corporation] says that the notice of civil claim is premised on the material and inaccurate statement that [the strata corporation] is the owner of the Lands. As a consequence, [the strata corporation] asserts that the claim for declaratory relief as well as the CPL must be struck since [the strata corporation] has no interest in the Lands.”
Must the owners be named in the action?
The court noted that this issue appeared to be one of first instance, raising some difficult policy considerations:
The hearing of [the strata corporation’s] application was adjourned part way during submissions to allow the parties to search for other cases or guidance from legislative debates that may bear on this issue since counsel advised this was a case of first instance. They were unable to find any and, consequently, advise that the issues raised by Primex on this application concerning the purported effect of s. 163 of the SPA, which designates the strata corporation as agent of the owners of strata property for various purposes, is one of first instance.
Primex’s arguments highlighted its substantial compliance with the Builders Lien Act and the importance of giving that act a liberal interpretation “as to achieve its aim to protect persons who supply work or materials.” The court allowed that “Primex makes a good point when it says that it is cumbersome to name close to 100 individual owners as parties to the litigation, particularly where the SPA defines [the strata corporation] as their agent.” A further point highlighted by the court was that Primex’s actions had not misled the owners.
On the other hand, the framing of the Strata Property Act (most notably the lack of any express authorization in that act for proceeding as Primex did) seemed to favour the strata corporation’s position:
I do not find any language in the SPA that obviates the requirement each of the Owners be separately named in respect of the in rem claim advanced by Primex.
I agree with [the strata corporation] that the obligation to name each Owner as a party, to permit it to defend its own interest, including its proportionate interest in common property, against an in rem claim is not tempered by the provisions of s. 163 of the SPA. The language of that section is general and stands in contrast to s. 90 of the SPA, which specifically addresses builders lien claims in the context of a payment made into court in respect of a lien claim.
I also agree with [the strata corporation] that there is nothing in s. 171 of the SPA, which confers on a strata corporation the right to bring an action for injury to common property, that advances Primex’s position.
Nor, in my opinion, does s. 166 of the SPA support Primex’[s] position. That section states that a judgment against the strata corporation is a judgment against all of the strata owners. The language is general, however, and does not specifically refer to liens and in rem claims.
I also agree with [the strata corporation] that if Primex’s position is accepted, then an owner may be unduly burdened in defending its property interest where the owner is dissatisfied with the course of action taken (or not, as the case may be) by the strata corporation to defend against an in rem lien claim. In that instance, an owner would have to sue the strata corporation per s. 164 of the SPA, and to succeed, the owner would have to meet a threshold test, as set out in s. 164 of the SPA, that the act or omission of the strata corporation was or would be “significantly unfair.”
These considerations would seem to point to the necessity of Primex naming the individual strata-lot owners in order to sustain its lien. But the court ultimately didn’t give the strata corporation its order cancelling the claim of lien, as it wanted to give Primex an opportunity to proceed with its planned application to amend its notice of civil claim: “In my respectful opinion, Primex should be put to the task of bringing its amendment application to ensure the prosecution of this action proceeds without further delay.”
Inaccurate description of the strata corporation as owner
While the court characterized Primex’s description of the strata corporation as the owner of the common property as not being “fatal” to its application, it also subordinated the resolution of this issue to the determination of “whether an application by Primex to add the Owners as defendants, if brought, succeeds.”