Section 46 of the of Prompt Payment and Construction Lien Act (the “PPCLA”) allows a party to apply for discharge of a lien and associated certificate of lis pendens (“CLP”) if no trial has been held within two years of when the CLP was registered. However, how strictly do Alberta courts hold parties to the two-year standard, given how long it takes for matters to reach trial? Is this timeline realistic? What types of delay will courts accept if the two-year standard is exceeded?

Background

Urban Interiors registered a lien against Britannia’s lands. The lien included a delay claim of just over $800,000 supported by expert evidence. Britannia obtained an order allowing it to post security in place of the lands to vacate the lien.

After several years, Britannia filed an application to release or reduce the security it posted for Urban Interiors’ lien. Britannia did not rely on section 46 of the PPCLA directly, but argued its applicability “by analogy” (as the CLP was vacated upon posting of security, and as such on a technical reading, section 46 was not engaged). In addition, Urban Interiors raised a delay claim of just over $800,000 supported by expert evidence.

What the Court Said

The Court outlined two ways a party can release or reduce security tied to a lien.

First, a court can do so if new facts justify a reduction. Second, a court can release or reduce security under section 46 of the PPCLA.

The Court decided not to vacate security based solely on the merits of Urban Interiors’ delay claim. The Court noted that delay claims are more likely to be allowed as lien claims where the delay charges relate to work that improved the land. If the delay claim is not related to an improvement in the land (eg general office overhead), the delay claim is less likely to be allowed as a lien claim.

Next, the Court discussed the second option for vacating security: section 46 of the PPCLA. Section 46 states that a lien and CLP stay in effect until the later of the conclusion of the proceedings or the removal of the CLP. Enforcement proceedings can also continue after the CLP is removed. Most important, section 46(2) states that a party can apply to vacate security and discharge the lien if no trial has been held within two years of the CLP’s registration date.

The Court noted that the two-year guideline in section 46(2) is just that – a guideline, not a strict rule. However, this section does imply that there can be consequences at the Court's discretion, as the main goal of the PPCLA is to resolve lien claims quickly. The onus is on the lien claimant to explain the delay. Examples include non-litigation delay, such as a lien claimant’s waiting on advice and/or funds from defendant’s bankruptcy trustee (see West Fab Homes Ltd v Duncan, 1996 ABCA 382) and a lien claimant’s insolvency (see Heron Building Co v Sunset Diesel Service Ltd, 2006 ABQB 137). In A.R. Baziuk Architect Ltd v Isaak Properties Ltd, 1984 CanLII 1152, no explanation was needed at all.

The Court noted that the matter had continued considerably past the two-year mark noted in section 46(2) of the PPCLA. For instance, the current application was filed approximately four years after Urban Interiors submitted the CLP. Further, the matter was “nowhere near trial.” The Court did not go into any reasons for the delay, but noted that there were at least two filed (but unheard) summary judgment applications and an affidavit proving lien on file.

Ultimately, the Court released the security posted by Britannia because the parties were “well past the two-year goal” noted in section 46(2) and the matter was not close to resolution or trial.

The Court went on to state that even if section 46 did not apply, substituting security for land is discretionary. The Court found that it would still have released the security because of the matter’s minimal progress (which also involved a delay claim for a lien which may or may not be allowed as to quantum and security), and because Britannia maintained the security for a reasonable amount of time.

The Court pointed out that a lien is a robust remedy that protects claims that might otherwise be unsecured. However, the party who posts security should not need to maintain it indefinitely. Liens also limit the party’s ability to transfer and utilize their land. Further, the party who posts security loses access to the secured funds and may have to pay bond premiums continuously. In this case, Britannia had been spending approximately $30,000 annually to maintain security. These items strongly encourage parties to pursue lien claims quickly.

Takeaways

Lien claimants in Alberta should bring their matters to trial as quickly as possible. Although the two-year guideline in section 46(2) is not applied strictly, lien claimants should be prepared to explain the delay in prosecuting the action when faced with an application to vacate security or the underlying lien, if no security has been posted. Typically, this explanation need not be extensive.

Parties applying to remove a lien under section 46(2) should highlight prejudice (and particularly non-litigation prejudice) incurred by the lien claimant’s delay in bringing the matter to trial. Such parties should prepare counterarguments against the lien claimant’s reasoning for their delay.   

To learn more about the two year rule from an Ontario perspective, consider reading the prior Constructive Thoughts article interpreting Ontario’s version of section 46 of the PPCLA: Lien Claimants: Hurry Up + Set Your Matter Down for Trial.

Lien disputes can become complex very quickly. Contact Anthony Burden in Calgary, Ryan Krushelnitzky in Edmonton, or any member of Field Law's Construction Group for advice on preserving your lien rights, meeting critical deadlines, and navigating the legal complexities of construction law in Alberta.

Link to Decision: 1951789 Alberta Ltd. v. Britannia Block General Partnership Inc., 2025 ABKB 324