On February 25, 2011, the British Columbia Court of Appeal released its judgment in Vancouver International Airport Authority v. British Columbia (Attorney General), 2011 BCCA 89. The Court of Appeal held that sections 2, 15, 16, 21 and 31 of the Builder’s Lien Act [Act] are not applicable to the Vancouver Airport Authority’s (the “Authority”) leasehold interest in the Federal Crown lands upon which the Vancouver International Airport was built.

The impugned provisions of the Act allow those who perform work and/or supply materials to “an improvement” to file a lien, for the value of the unpaid price of the work, against each parcel of land where work was done. Section 31 of the Act provides that the lien can be enforced by the sale of the lands against which the lien is registered.

The Federal Crown owns the land upon which the Airport is situated (the “Lands”). In 1992, the Federal Crown entered into a lease with the Authority for the Lands, as well as the structures on the Lands (the “Lease”). The purpose of the Lease was for the management, operation and maintenance of an international airport, a federal undertaking.

The Authority entered into two contracts for improvements to the taxiways for the aircrafts and the expansion of the holding area for passengers (the “Improvements”). Under the terms of the Lease, these Improvements are owned by the Federal Crown. A number of companies that supplied materials and labour for the Improvements filed builders liens against the Authority’s leasehold interest.

The Authority sought to have the liens cancelled and sought a declaration that the Authority’s leasehold interest was immune from the application of the impugned provisions of the Act, because they would impair the operation of a federal matter.

The Court of Appeal held that provincial legislation cannot intrude upon federal property rights, particularly those that involve the operation and management of an airport, over which the Federal Crown has exclusive jurisdiction.

The Authority is a federal undertaking that manages and operates an international airport. The construction of airport facilities, including the taxiways and holding areas for travellers, are clearly a vital part of the Authority’s development, management and maintenance of the airport. The ability to file a lien against the Authority’s leasehold interest would impair a vital part of its operations by limiting the ability of the Authority to obtain financing for its construction, and an order for sale of the interest to enforce the lien would end the Authority’s mandate to operate the airport. Therefore, the Court of Appeal concluded that the impugned provisions of the Act were inapplicable, in order to shield the Authority from the adverse consequences of their application.

The case suggests that, while a lien may be registered against a leasehold interest of Federal Crown land where the purpose of the leasehold interest is a matter within provincial jurisdiction, if the purpose of the leasehold interest is to carry out a federal undertaking, the provisions of the Act will not apply.

It is important to note that the Court did not deal with a lien against the holdback funds, if any, that might be asserted under section 4 of the Act and it remains to be seen whether this particular lien remains an option to those working on federal undertakings.

To view the full judgment: http://www.courts.gov.bc.ca/jdb-txt/CA/11/00/2011BCCA0089.htm