In the recent Alberta Court of Appeal decision Avli BRC Developments Inc v BMP Construction Management Ltd, <\/em>2023 ABCA 147 (\u201cAvli<\/em>\u201d), Alberta\u2019s appellate court validated the liens of subcontractors \u2013 the validity of which was in question because of various flaws in the way the liens were registered.<\/p>\n\n\n\n Avli BRC Developments Inc. (\u201cAvli<\/strong>\u201d) hired BMP Construction Management Ltd. (\u201cBMP<\/strong>\u201d) to construct a condominium complex on lands that it owned in Calgary (the \u201cProject<\/strong>\u201d). BMP in turn hired subcontractors, Desa Glass A Division of Desa Holdings Ltd. (\u201cDesa<\/strong>\u201d), Rimrock Landscaping and Property Management (\u201cRimrock<\/strong>\u201d), Grant Metal Products Ltd. (\u201cGrant<\/strong>\u201d), and Shanahan\u2019s GP Ltd. (\u201cShanahan\u2019s<\/strong>\u201d) (collectively, the \u201cSubcontractors<\/strong>\u201d).<\/p>\n\n\n\n On October 15, 2019, when construction on the Project was underway, Avli registered its condominium plan (the \u201cCondominium Plan<\/strong>\u201d), after which it became owner of all condominium units, in all of the common property rather than the single parcel as before. Once the Condominium Plan was registered Condominium Corporation No 1912037 was created (the \u201cCondominium Corporation<\/strong>\u201d), although there was no evidence that Avli had set up an interim board of directors as was required by s 101 of the Condominium Property Act<\/em>, RSA 2000, c C-22. <\/em><\/p>\n\n\n\n In October and November of 2019, before Avli had sold any units of the condominium, the Subcontractors registered respective liens. However, Desa and Grant filed their liens against the additional condominium sheet only and Shanahan\u2019s and Rimrock filed against one unit only, as opposed to each unit and the additional condominium sheet in accordance with the \u201cstandard approach\u2019 under Alberta\u2019s Builders\u2019 Lien Act <\/em>[BLA<\/em>]. Additionally, Grant\u2019s lien named the Condominium Corporation as the owner of the lands which was held to be an error.<\/p>\n\n\n\n Avli challenged the validity of the Subcontractors\u2019 liens, arguing that the following section was inapplicable to the liens of Desa and Grant because they were only registered against the additional condominium sheet, and the Condominium Corporation did not request the work:<\/p>\n\n\n 78. Builders’ Lien Act<\/strong><\/p>\n 78(1) For the purposes of the Builders’ Lien Act,<\/p>\n \u2026<\/p>\n (b) if on the request of a corporation<\/p>\n (i) work is done in or on or in respect of the common property or a unit, or both, or<\/p>\n (ii) material is furnished to be used in or on the common property or a unit, or both,<\/p>\n intended for the benefit of the common property generally, any lien that arises under that Act in consequence of it is on the estates of all the owners in all the units and the common property;<\/p>\n …<\/p>\n 78(2) Where<\/p>\n (a) a lien referred to in subsection (1)(b) arises, and<\/p>\n (b) a statement of lien is registered against the condominium plan, that statement of lien, on being registered against the condominium plan,<\/p>\n (c) is deemed to be also registered against the certificate of title for each unit, and<\/p>\n (d) may be enforced against the common property and each unit in the same manner as if the statement of lien were specifically registered against the estate of each owner and that owner’s share in the common property.<\/p>\n\n\n The argument presented by Avli was that because the Condominium Corporation did not request the work on the Project \u2013 rather, it was Avli that had made the request \u2013 the Desa and Grant liens were invalid. Avli also challenged Grant\u2019s lien on the basis that Grant had named the Condominium Corporation and not Avli as the owner of the lands.<\/p>\n\n\n\n Avli challenged the Rimrock and Shanahan\u2019s liens on the basis that they only named one unit each, so Avli argued these two Subcontractors should only be entitled to a fraction of the total amount claimed.<\/p>\n\n\n\n The Alberta Court of Appeal dismissed Avli\u2019s appeal, thereby upholding the decision of the Applications Judge and validating the Subcontractors\u2019 liens. The appellate court validated the liens under a saving provision, section 37 of the BLA<\/em>:<\/p>\n\n\n 37(1)\u00a0 A substantial compliance with section 34 is sufficient and a lien shall not be invalidated by failure to comply with any requirements of section 34 unless, in the opinion of the court, the owner, contractor, subcontractor, mortgagee or some other person is prejudiced by the failure.<\/p>\n (2)\u00a0 When, in the opinion of the court, a person is prejudiced by a failure to comply with section 34, the lien shall be invalidated only to the extent that the person is prejudiced by the default.<\/p>\n (3)\u00a0 Nothing in this section dispenses with the requirement of registration of a lien.<\/p>\n\n\n The Court of Appeal held there was no prejudice in validating the liens. Prejudice was framed in this context as whether \u201canyone was misled and did anything to their detriment in consequence.\u201d Since no units had been sold, the Condominium Corporation had no board of directors at the time the Subcontractors registered their liens, and Avli remained the owner of all units and was in control of the Project, the court affirmed that no person was prejudiced if the Subcontractors\u2019 liens were validated. The Subcontractors\u2019 liens were also held to be in substantial compliance with the technical requirements of a valid lien. As such, the Court of Appeal held that the Subcontractors\u2019 liens were valid and upheld that part of the Applications Judge\u2019s decision.<\/p>\n\n\n\nBackground facts <\/h2>\n\n\n\n
Avli\u2019s lien challenges<\/h2>\n\n\n\n
Decision on appeal<\/h2>\n\n\n\n