Chapter 20

Public Bodies and the Builders Lien Act

 

20.1 How does the Act apply to governmental bodies?

Registered and unregistered land

Commentary: governmental bodies seldom act as contractors or subcontractors so the real question here is the impact of builders lien legislation on such bodies in their capacity as the owners of land on which improvements may be made. From this analysis, two main questions emerge. Are governmental bodies obliged to retain holdbacks under the Act? Is the land on which the improvement is situated liable to be sold to satisfy a lien?

There are three main kinds of governmental bodies that should be considered in connection with the Act – Local Governments, Provincial Government and the Federal Government.

20.2 What about local governments?

Local governments

Commentary: with one exception, there is nothing in either the Builders Lien Act nor the various statutes under which local governments are constituted that would in any way limit the application of the Builders Lien Act. The Act applies to cities and municipalities in their capacity as owners and developers in the same way that it applies to an owner/developer in the private sector. The exception referred to is a limitation placed on the ability of lien claimants to force a sale of land belonging to a municipality. Section 31(6) provides:

(6)  No order for the sale of an interest in land owned by the Crown or a municipality may be made, but the court may give judgment for an amount equal to the maximum liability under this Act, as owner against either of them, and any money realized on the judgment must be dealt with as if it were the proceeds of a sale of the interest in land.

This provision also applies to land owned by “the Crown.” As to the meaning of that term, see paragraph 20.4.

20.3 What about the Provincial Government?

 Provincial government

Commentary: it was once a legal rule that a statute did not bind the Crown unless the statute expressly said it was binding. That rule was changed in British Columbia in 1974 by a provision of the Interpretation Act which now reads:

14(1)  Unless it specifically provides otherwise, an enactment is binding on the government.

That provision, standing by itself, would suggest that the Builders Lien Act applies fully to the provincial government and its capacity as owner/developer. The provision, however, must be read subject to subsection (2).

14(2)  Despite subsection (1), an enactment that would bind or affect the government in the use or development of land, or in the planning, construction, alteration, servicing, maintenance or use of improvements, as defined in the Assessment Act, does not bind or affect the government.

The impact of this provision is uncertain. It is capable of being interpreted in a way that would exclude the applicability of the Builders Lien Act.

On the other hand, there are a few cases that have considered the applicability of the Builders Lien Act to provincial government projects and in none of those cases has subsection 14(2) been raised.

[See Coulson, paragraph 2.41]

Moreover, there is internal evidence in the Builders Lien Act which suggests that it was the intention of the legislature that provincial government be bound. These are the reference to “government”* in section 5(8) and the reference to “the Crown” in section 31(6).

The analysis is further complicated by the fact that much of the construction in the public sector is not done for the government itself but for the many emanations of the Provincial Government such as Crown corporations and quasi-independent boards and commissions. Where such a body can be said to be an “agent of the Crown,” it will share whatever immunity from the legislation the provincial government itself might have. But determining whether or not this body is such an agent can be a difficult legal question involving very close analysis of its enabling legislation.

The strict legal position of the provincial government in relation to the Builders Lien Act awaits judicial clarification. In the meantime, caution suggests that the provincial government should regard itself as bound by the Act and conduct its affairs accordingly.

The two provisions of the Act that expressly apply to the provincial government are section 31(6) (discussed in paragraph 20.2) and section 5(8) which relieves the provincial government from the necessity of establishing a holdback account where it is the owner.

20.4 What does the Act mean when it refers to the “Crown?”

“Crown”

Commentary: the Interpretation Act contains the following definition:

“Her Majesty”, “His Majesty”, “the Queen”, “the King”, “the Crown” or “the Sovereign” means the Sovereign of the United Kingdom, Canada, and her other realms and territories, and head of the Commonwealth;

A reference in a statute to the “Crown” can embrace the government of any Canadian province, the government of Canada, the government of the United Kingdom, the government of Australia and of most other commonwealth countries.

Thus, if the government of Australia were building a consulate in Vancouver, it would have the benefit of section 31(6).

[See paragraph 20.2]

The application of the Builders Lien Act to the federal government is problematic. As a general rule, legislation enacted by a province cannot bind the federal government.

[As to the application of the former Builders Lien Act to the federal government, see generally Coulson at paragraph 2.36 and 2.37]

Go back to Chapter 19, ahead to Chapter 21, or return to the Table of Contents.


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