Articles
<< back to all ArticlesWho is an “owner” under the Prompt Payment and Construction Lien Act?
There are many nuances in Prompt Payment and Construction Lien Act (the “PPCLA”) that must be followed in order to adequately preserve your lien rights.[1] One of these nuances relates to identifying the “owner” as defined by the PPCLA and the courts. As with all things in law, determining whether someone qualifies as an “owner” is more complicated than it may initially seem. Spoiler: appearing on the Certificate of Title does not necessarily mean that someone is an “owner” within the meaning of the PPCLA.
When registering a statement of lien, the lienholder will be required to identify whose interest they intend to lien. Therefore, it is important to correctly identify the owner at the outset to protect your time sensitive lien rights and avoid unnecessary complications in the future.
Legislation
Section 6 of the PPCLA states that a person who performs work on lands has a lien “on the estate or interest of the owner in the land in respect of which the improvement is being made.” Section 1(j) of the PPCLA defines an “owner” as:
a person having an estate or interest in land at whose request, express or implied, and
- on whose credit,
- on whose behalf,
- with whose privity and consent, or
- for whose direct benefit,
work is done on or material is furnished for an improvement to the land…
To summarize, to be an “owner” within the meaning of the PPCLA, an individual must (1) have an estate or interest in the land, (2) make an express or implied request for work, and (3) fall under one of the four listed factors.
It is relatively straightforward to determine whether someone has an interest in the lands or meets one of the four factors. But determining whether someone has made an express or implied “request” for the work is more uncertain and contextual. As such, the courts have stepped in to assist with interpreting what constitutes an express or implied “request.”
Case law
In a trilogy of cases, the Alberta Court of Appeal affirmed that a “request” requires some active participation by the owner. This is a fact dependent inquiry. Acquiescing or consenting to the work is not enough. Neither is simply being a party to a contract that contemplates work on the lands, or being named on title. Rather, the “owner” must have had a role in providing specifications or guidelines, supervising the work, furnishing approvals, and so on.
The first of these cases is Royal Trust Corp of Canada v Bengert Construction Ltd.[2]Here, the alleged owners entered into an agreement to purchase lands from a general contractor that planned to construct a home on the lands. After construction began, the general contractor became bankrupt. Subcontractors subsequently registered liens on the property and named the purchasers as “owners.” However, the Court of Appeal determined that the purchaser’s role did not rise to the level of active participation and they could not be considered owners under the legislation:[3]
the [purchasers’] participation in the construction activities was little more than to choose a house plan. They had such a minimal part in design that their contract does not even specify any extras to be added to it. The contract does not empower them to inspect during construction or to have any involvement with subtrades.
The fact that ‘active participation’ is required to meet the definition of an “owner” is endorsed in in more recent cases: see Synergy Projects (Destiny) Ltd v Destiny Bioscience Global Corp.[4]
The second case to consider is K & Fung Canada Ltd v NV Reykdal & Associates Ltd.[5] Here, the Court of Appeal assessed whether a landlord was an “owner” within the meaning of the legislation. The landlord held the fee simple interest in the lands and entered into a lease agreement with the lessee, who operated a restaurant on the premises. The lessee hired a contractor to perform improvements to the premises, but the contractor was not paid and registered a builders’ lien against the landlord’s fee simple interest.
The Court cited Bengert and emphasized that “whether or not active participation is established is a question of fact.”[6] In this case, the lease agreement did contemplate that tenant improvements may be installed. However, the fee simple owner only approved the concept plans and the paint colour for the exterior:[7]
The [fee simple owner] did not select the general contractor, did not prepare a set of plans nor approve a set of construction plans, did not control funding for the construction, did not provide any on-site supervision or inspection; did not receive any participation rent, in summary there is not sufficient evidence that the landlord actively participated to the extent that the court ought to find that the applicant made an implied request of the respondents to do work or provide materials.
As a result, the Court ordered the discharge of the lien against the fee simple owner’s estate.
The final case is Acera Developments Inc v Sterling Homes Ltd.[8] Here, a developer owned a parcel of land and hired a builder to construct homes on the lands. The developer failed to arrange for the appropriate subdivision plans, construction halted, and the builder registered liens.
In this case, the Court of Appeal determined that the developer was an “owner” under the legislation. There was enough factual evidence to show that the developer did have an active role in the work: it supervised the construction, specified standards and scope of work in the contract, and provided architectural and constriction guidelines. The developer also required that the builder provide them with the construction plans, elevations, finished grades, finishing materials and colours, final grade slops, setbacks, foundation designs, auxiliary buildings and fencing, and landscaping. This was the sort of active participation contemplated by the Court in Bengert and Reykdal.
Conclusion
Understanding who constitutes an “owner” under the PPCLA requires a careful consideration of both legislative provisions and case law. The PPCLA provides the basic definition, but the real challenge lies in interpreting what constitutes a valid “request,” a matter that has prompted intervention from the courts.
Case law, particularly Bengert, Reykdal, and Acera, emphasizes that active participation in requesting the work is crucial. Mere contractual involvement or presence on title is insufficient, as was the case with the prospective home-build purchasers in Bengert and the landlord in Reykdal. Rather, “owners” play a substantive role in specifying, approving, or supervising the work, as did the developer in Acera.
Failure to accurately identify the owner at the outset could jeopardize time sensitive lien rights and lead to legal complications. Consult with our Construction Team if you have questions about the PPCLA or your lien rights.
[1] These nuances are beyond the scope of this article. Please contact a member of our Construction Team for further information about builders’ liens.
[2] 1988 ABCA 58 [Bengert].
[3] Ibid at para 25.
[4] 2022 ABQB 384 at para 45.
[5] 1998 ABCA 178 [Reykdal].
[6] Ibid at para 8.
[7] Ibid.
[8] 2010 ABCA 198 [Acera].
This post is meant to provide information only and is not intended to provide legal advice. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this post to be outdated.
