Does Section 46(2) of the Prompt Payment and Construction Lien Act (“PPCLA”),[1] which requires trial within two years of registration of a Certificate of Lis Pendens (“CLP”), still apply when the lien has been discharged and replaced by security?
In 1951789 Alberta Ltd v Britannia Block General Partnership Inc, 2026 ABKB 283 [1951789 Alberta Ltd], the Court of King’s Bench held that it does not. The ruling is significant for most lien disputes in Alberta, given that security is posted in the vast majority of cases.
Background: A $1.4M lien, a bond, and six years of litigation
1951789 Alberta Ltd was an appeal of an Applications Judge’s decision. The parties were involved in a long and complicated construction dispute involving multiple actions, with both sides alleging delay by the other in bringing the matter to trial.[2]
1951789 Alberta Ltd, operating as Urban Interiors Group (“UIG”), supplied materials and labour to a residential housing project in Calgary.[3] Britannia Block General Partnership Inc. (“Britannia”), owned the lands on which the project occurred.[4]
Roughly six years prior, UIG registered a builder’s lien and a CLP against the land for over $1.4 million dollars.[5] When Britannia went to sell the land a year later, and as often happens during a lien dispute, the lien and CLP were discharged by consent, with Britannia posting a lien bond with the Court in place of the lien (the “Security”).[6]
The Applications Judge’s surprise: Security vacated under Section 46
Approximately four years after the Security was deposited, Britannia brought an application in Applications Judge chambers to vacate or reduce the Security on the basis of Section 48 of the PPCLA, rather than Section 46. The Applications Judge found there was no justification for reducing the Security under Section 48 of the PPCLA.[7]
However, in an exercise of discretion, and despite not being plead or relied on, the Applications Judge then considered whether the Security should be vacated under Section 46(2) of the PPCLA,[8] which reads:[9]
if no trial has been held within 2 years from the date of the registration of the certificate of lis pendens, any interested party may apply to the court to have the certificate of lis pendens vacated and the lien to which it relates discharged
Since two years had passed since registration of UIG’s CLP, and the matter did not appear close to resolution or trial-ready, the Court directed the release of the Security.[10]
UIG appealed the Applications Judge’s decision. As noted in our previous commentary, the decision was surprising, not only because the issue had not been raised by either party, but also because the action had advanced relatively reasonably, including the exchange of expert evidence.
Issues: Two questions on appeal
Justice Price considered three issues on appeal, with the following two being particularly relevant:
1. Did the Hearing Judge err in vacating the Security under Section 46 of the PPCLA?
The Court held that the Applications Judge should not have considered Section 46(2) because it was not plead or relied on; thus, neither party had an opportunity to prepare for it.[11] Moreover, the wording of Section 46 is specifically focused on the situation where a CLP has yet to be discharged – not where it has already been discharged.[12]
Justice Price held that even if Britannia had specifically relied upon Section 46(2), it would not have been successful.[13] Section 46(2) does not apply to situations where the parties have discharged the lien by consent and deposited Security with the Court in its place.
The Court also noted that relief under the delay provisions of the Alberta Rules of Court (Rules 4.31 or 4.33)[14] had not been sought, so their potential application could not be considered in the matrix at hand.[15]
2. If so, what is the appropriate disposition of the Security – should it be vacated or reinstated under Section 48 of the PPCLA?[16]
Despite finding that Section 46(2) did not apply, the Court then considered and determined that Section 48(1)(c) granted the Court discretion to release or reduce the security in response to a delay claim in appropriate circumstances. Section 48(1)(c) permits the Court to order the registration of a lien be removed from the title to the land concerned “on any ground … the court considers proper”.
The Court concluded that there was adequate explanation for the delay and ordered that the Security be reinstated. The procedural record provided sufficient explanation as to why that matter had to not yet advanced to trial and suggested that both parties were responsible for the complicated history, although the Court declined to make any decision on blameworthiness.[17] Rather, the Court held that the consistent, and often substantive steps taken by both parties throughout the litigation was sufficient to conclude that the litigation had not been abandoned by the parties in such a manner that it should be vacated via Section 48.[18]
The Court also directed that this was an appropriate case in which it should “exercise [its] discretion to set terms for the parties to proceed in the expeditious manner the PPCLA requires.”[19] Pursuant to Rule 4.10, the Court directed that the parties to schedule a case conference with respect to all three extant actions between them.
Takeaways: What this means for lien disputes in Alberta
This decision provides valuable insight into the application of several PPCLA procedural provisions, including:
- The form and basis for relief under the PPCLA should be expressly sought in application materials such that there is no question what the Court, and opposing counsel, face in argument.
- The two-year timeline to hold a trial under Section 46 of the PPCLA does not apply if the lien has been discharged and security placed with the Court. This is a particularly significant acknowledgement given the current procedural and administrative challenges in setting a matter for trial within 2 years of filing a CLP. It is also noteworthy as security is posted for most liens.
- There is still potential for a lien action to be dismissed under other procedural rules, including Rule 4.31 (inordinate and inexcusable delay) and Rule 4.33 (strict “drop-dead” rule for three years where there is no “significant advance” in an action). Just because Section 46 of the PPCLA does not apply to dismiss a lien claimants’ relief against an owner, does not mean there are no other time-based procedural grounds to do so. Parties should, however, be alert to the procedural requirements of the PPCLA, particularly the requirement for pre-trial conferences in accordance with Section 53.
- Courts may be prepared to consider novel applications for the dismissal of a lien and the associated security under Section 48(1)(c).
- In the absence of advancement to trial, the Court may impose its own procedural steps. In this regard, both the party attempting to dismiss an action on the basis of a delay, and the counterparty resisting that effort, should be prepared to undertake additional steps to expedite resolution on whatever terms the Court may determine necessary.
This decision changes the procedural calculus for both lien claimants and owners in Alberta. If you have posted or are holding security in place of a lien, the Section 46 two-year timeline may not be the constraint, or the leverage, you assumed. Whether you are pursuing or defending a lien claim, understanding how Sections 46, 48, and the Rules of Court interact is critical to your litigation strategy. Contact a lawyer from Miller Thomson’s Construction and Infrastructure group to assess your position.
[1] Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 [PPCLA].
[2] 1951789 Alberta Ltd v Britannia Block General Partnership Inc, 2026 ABKB 283 at para 51 [Britannia Block].
[3] Ibid at para 1.
[4] Ibid.
[5] Ibid at para 2.
[6] Ibid.
[7] Ibid at para 23.
[8] Ibid at para 24.
[9] PPCLA, supra note 1, s 46(2).
[10] Britannia Block, supra note 2 at para 24.
[11] Ibid at para 38.
[12] Ibid at para 40.
[13] Ibid at para 43.
[14] Alta Reg 124/2010.
[15] Britannia Block, supra note 2 at para 42.
[16] Ibid at para 26.
[17] Ibid at paras 49, 52.
[18] Ibid.
[19] Ibid at para 59.
