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Another Surprising Lien Decision

20-Apr-10

The Alberta Court of Queen's Bench has issued another decision that reminds contractors they may not always be able to count on their builders' lien rights.

In E. Gruben’s Transport Ltd. v. Alberta Surplus Sales Ltd., the landowner entered into an agreement for sale of its lands. The purchaser/developer applied for subdivision and contracted to start building the roads. When the purchaser ran into trouble, the roadbuilder was not paid and registered a lien against the lands. However, the lands were still owned by the vendor. In fact, the agreement for sale was later cancelled due to the purchaser’s default, although the vendor carried through with the subdivision. The vendor applied to dismiss the roadbuilder's lien. The Court held the vendor was merely a “passive” participant in the roadwork and therefore had not requested the work and did not fall within the statutory definition of an "owner" under the Builders' Lien Act. The lien was dismissed.

This case is troubling for the implication that a landowner’s interest cannot be liened if the landowner is merely a “passive” participant in the construction process, but perhaps this case may be limited to its unique circumstances where there was a failed agreement for sale. In any event, contractors would be prudent to inquire if the party developing a project actually has some legal interest in the lands, or face the risk of proceeding without lien rights.

This update is a general overview of the subject matter and cannot be regarded as legal advice. Please contact Corbin Devlin in Edmonton, Jim Lebo in Calgary, or any member of our Construction Law Practice Group for advice on this or any other construction law topic.

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