On March 1, 2022, the BC Court of Appeal released its decision in the highly anticipated case of JVD Installations Inc. v Skookum Creek Power Partnership, 2022 BCCA 81.

JVD Installations Inc. has been providing craft labour across Western Canada to clients in the mining, forest, oil & gas and petrochemical industries since 1996. Recently it filed liens for work performed in connection with the construction of a hydroelectric facility. Almost all of the facility was situated on Crown land, which cannot be liened under the BC Builders’ Lien Act. However, the owner of the facility had obtained rights of way over privately owned lands with transmission lines which would carry power from the hydroelectric facility.

JVD Installations performed work on the Crown land on which the hydroelectric facilities themselves were situated, but ultimately filed liens against the private land over which the transmission lines ran. The owner sought to have the liens declared invalid on the basis that JVD Installations did not perform work in relation to an improvement located on the lands described in the liens.

At the 2020 trial, the BC Supreme Court found that the lien claims were valid because the transmission lines and other hydroelectric facilities constituted a “single improvement” which spanned more than one parcel of land. The Court of Appeal reversed the trial court’s decision on the facts of the case, and confirmed the scope of a lien claimant’s right to lien land on which it had not performed work: it is not permissible unless it can be shown that the work is part of a “single improvement,” and that the improvement’s sole purpose is to benefit the land liened. 

The BC Builders’ Lien Act

The dispute centered on the application of s. 2 of the Builders Lien Act, which grants a limited scope of lien rights:

2 (1) Subject to this Act, a contractor, subcontractor or worker who, in relation to an improvement,

1. performs or provides work,
2. supplies material, or
3. does any combination of those things referred to in paragraphs (a) and (b)

has a lien for the price of the work and material, to the extent that the price remains unpaid, on all of the following:

4. the interest of the owner in the improvement;
5. the improvement itself;
6. the land in, on or under which the improvement is located;
7. the material delivered to or placed on the land.

An “improvement” is a defined term under the Act, referring to the product or end result of work completed to benefit the land on which it forms a part.

Trial Level Decision: 2020 BCSC 374

The BC Supreme Court found that JVD Installations was entitled to lien the privately owned lands because the project was a “single integrated improvement” and that “its various components, including the intake penstock power house substation, and transmission lines, are mutually interdependent and are integral and necessary to each other,” pointing out that without the transmission lines, the power generated by the other components of the Project on which JVD Installations performed work was useless.

The Court’s decision followed Pedre Contractors Ltd. v. 2725312 Canada Inc., 2004 BCSC 1112. In that case, a subcontractor had installed 3 kilometers of fibre optic conduits under city streets in order to provide a fibre optic network for a communications centre. The subcontractor ultimately filed liens for the unpaid value of their work against the parcel of land on which the data centre was situated, notwithstanding that much of the fibre optic conduits installed extended outside the boundaries of that parcel.

The Court concluded by summarizing the law:

…a lien claimant need not demonstrate that the work it performed directly benefits the land over which it seeks a lien. If it has performed or provided work on any part of a single integrated improvement, it is entitled to a lien over any lienable lands that the improvement touches. The finding that the improvement is single and integrated in nature necessitates that conclusion.¹

The Court of Appeal Decision: 2022 BCCA 81

The Court of Appeal disagreed with the trial court’s application of the “single integrated improvement” test to the facts of the case: 

“while the power plant and the transmission lines in this case are connected and there is a high degree of interdependence between them, they cannot reasonably be classed as a ‘single improvement’. They are functionally distinct, physically remote from one another, and were constructed by different subcontractors at different times.”²

Because JVD Installations did no work on the parcel of land on which the transmission lines were located, it had no right to a lien against that land.

In coming to its conclusion, the Court of Appeal laid out the following principles:

• An improvement situated outside the boundary of a parcel of property cannot give rise to a lien against that property;
• It is possible that where an improvement extends across more than one parcel of land, the entire improvement may be the subject of a lien against any one of the parcels of land on which the improvement is located if the improvement’s only function is to enhance the value of the liened parcel;
• On the other hand, where a single improvement extends across more than one parcel of land, a lien for the entire cost of the improvement is not available against any of the parcels of land on which the improvement is situated if the owner of the land receives little or no benefit from the improvement;
• The validity of such liens should be interpreted in accordance with the objective of the Act, that the parcel of land which receives the benefit of the work bears the burden of the lien.

Conclusion

Where a project is being developed on Crown or other land that is not lienable, there may still be opportunities for contractors to seek to recover unpaid amounts through the filing of a lien on other land, provided the ‘single integrated improvement’ test is met. The Court of Appeal in JVD Installations makes clear how fact-specific this test is.

Lien claims are complex and are frequently the subject of cases before the courts. The courts attempt to resolve those cases in accordance with the purposes of the Builders Lien Act, resulting in new clarifications, considerations, and nuance with each case. Due to the number of cases, the law applicable to builders liens is constantly changing. A party considering filing a lien or one defending the filing of a lien against their land would be prudent to pay close attention to the developing case law and seek professional legal advice.

¹ Para 61
² Para 54