Possible Impacts on the Construction Industry and Proceedings under the British Columbia Builders Lien Act
On March 27, 2020, the Government of British Columbia issued an order that suspends all limitation periods as a result of the COVID-19 pandemic (the “Order“). The Order was issued by the Minister of Public Safety and Solicitor General via Ministerial Order No. M086. The authority pursuant to which the Order was issued arises out of Section 10 of the British Columbia Emergency Program Act.
The Order may have broad and systemic implications for all areas of the law. This note focuses on the British Columbia construction industry with respect to claims of lien, holdbacks, and the many other issues that may arise under the British Columbia Builders Lien Act (“BLA“).
Section 2 of the Order states:
Limitation periods in court proceedings
- Every mandatory limitation period and any other mandatory time period that is established in an enactment or law of British Columbia within which a civil or family action, proceeding, claim or appeal must be commenced in the Provincial Court, Supreme Court or Court of Appeal is suspended.
Section 2 does not expressly mention mandatory timelines with respect to matters arising under the BLA, but its broad wording appears to be intended to apply to at least some of the limitation periods and filing deadlines as set out in the BLA, including limitation periods and filing deadlines with respect to the following matters:
- the 1-year limitation period to commence a lien-enforcement action in the Supreme Court of British Columbia (section 33 of the BLA);
- the 1-year limitation period with respect to BLA trust claims (section 14 of the BLA); and
- the 2-year limitation period with respect to Shimco actions by which plaintiffs may advance a common-law claim against the holdback fund, in the event money was in fact held back and has not yet been paid out.
Section 2 may or may not apply to certain other time periods set out in the BLA which are not clearly periods within which a civil action, proceeding or appeal must be commenced:
- the 45-day claim of lien filing period (section 20 of the BLA);
- the 1-year limitation period to register a certificate of pending litigation with respect to a lien-enforcement action (section 33 of the BLA);
- the 21-day limitation period with respect to a notice to commence an action (section 33 of the BLA); and
- the 55-day holdback period (section 8 of the BLA).
The heading of Section 2 is narrow and refers to only limitation periods in court proceedings. Whether or not the Order suspends the 45-day lien filing and 55-day holdback periods is not clear, since the time periods associated with those particular issues are not intrinsically tied to court proceedings. On the other hand, the 1-year limitation period requiring the commencement of a lien-enforcement action and registration of a certificate of pending litigation is tied to a court proceeding.
Section 11 of the British Columbia Interpretation Act states that a statutory heading is “not part of the enactment” and “must be considered to have been added editorially for convenience of refence only”. However, our Courts have concluded that headings may be used as guiding principles in the event a corresponding section under a heading is unclear or ambiguous.
At time of writing, we are not able to comment on whether the language of Section 2 of the Order rises to a level of ambiguity that may invite Courts to narrow its application to only those limitation periods with respect to court proceedings, and not those deadlines with respect to the registration of claims of lien and/or the payout of holdbacks.
It is important to note that lien holders, at this time, may still register claims of lien and certificates of pending litigation because the Land Title and Survey Authority of British Columbia continues to operate and the Supreme Court of British Columbia still permits the commencement of proceedings by the electronic filing of a Notice of Civil Claim. The Order does not prohibit or restrict the registration of claims of lien or certificates of pending litigation.
In the event money becomes due and owing, persons with potential lien claims or persons with already filed claims of lien should in no way interpret this legal update and/or the Order to mean that they should forego the registration of claims of lien within the regular 45-day lien-filing deadline or certificates of pending litigation. In fact, given the uncertainty, the prudent course would be to take steps to ensure that the claim of lien is filed within the 45-day period.
As well, the payout of holdback money is discretionary. Section 8(4) of the BLA uses discretionary language with respect to the payment of holdback money: “[p]ayment of a holdback required to be retained under section 4 may be made after expiry of the holdback period…” The drafters of the BLA were not concerned with what happens to holdback money after the expiry of the holdback period in the absence of lien claims. The BLA only concerns itself with the retention of holdback money. Once the 55-day holdback period has expired, the holdback money reverts to being contract funds and is subject to the contractual equities affecting payment. Parties to a construction agreement are therefore well advised to review whether express provisions in their respective agreements deal with the payout of holdback money following the expiry of the holdback period.