Report on the Builders Lien Act

Abstract

British Columbia's Builders Lien Act may be somewhat more familiar to a wide cross-section of the working world than many other commercial statutes, but the complexities that arise in its application are proverbial. The purpose of the Act has been judicially characterized as being “to protect the claims of those who supply work and materials [to an improvement to land] so long as the owner is not prejudiced.” There is a fundamental tension between the two poles of this dual legislative purpose, and it gives rise to contradictory effects.

For example, the Act provides contractors, subcontractors, and workers with highly valued extracontractual rights and remedies, but their use can result in the flow of payments down the chain of contracts and subcontracts being interrupted. This potentially leads to domino insolvencies, something that the Act was always intended to prevent. The Act lets owners limit their exposure to claims of unpaid subcontractors by means of a mandatory holdback, but the interest expense of maintaining an unnecessarily large holdback that accumulates in a project with a long construction schedule can become a problem in itself.

The Report on the Builders Lien Act offers concrete, practical recommendations for reforms to address a host of problems surrounding the Act, including the ways in which it tends to operate counter-productively and the ways in which it is sometimes misused. Many of the 86 recommendations would also simplify the Act and clarify the meaning of the more problematic provisions. The report results from the first comprehensive, independent review of the present Builders Lien Act since its enactment in 1997. The recommendations are the product of lengthy deliberations by a highly experienced and knowledgeable Project Committee, and have been informed by broad stakeholder consultation.