The Alberta Court of King's Bench recently decided in
1951789 Alberta Ltd v Britannia1 that
lienholders who fail to advance their claim within the two-year
period prescribed by the Prompt Payment and Construction Lien
Act
("PPCLA")2 risk having the
lien's security released. Their decision is unusual, as few
courts have ever enforced the PPCLA's timelines for holding a
trial of the lien.
Release of the lien security effectively extinguishes the lienholder's secured interest, reduces the claim to an unsecured debt, and impairs the claimant's ability to collect outstanding amounts or enforce a judgment, as they no longer benefit from the legal and financial protections afforded by a registered lien.
The case thus confirms that lien claimants must not delay enforcement of their liens because security for the lien cannot remain posted indefinitely. Courts will consider the potential unfairness of delays for the party posting security. The onus is on the lien claimant to provide some reason as to why no trial has occurred within two years of the date of registration of the certificate of lis pendens ("CLP").
(1) Sections 46 and 48 of the PPCLA
Section 46 of the PPCLA says that the Court may discharge a lien if no trial has been held within two years from the date of the registration of the CLP:
46(1) A lien that has continued to exist by reason of registration of the certificate of lis pendens relating to that lien continues to exist until
(a) the proceedings are concluded, or
(b) the certificate of lis pendens is discharged, whichever occurs later.
46(2) Notwithstanding subsection (1), if no trial has been held within 2 years from the date of the registration of the certificate of lis pendens, any interested party may apply to the court to have the certificate of lis pendens vacated and the lien to which it relates discharged.3
If no trial has been held within two years of the date of the CLP, an interested party may ask the Court to strike the lien. This provision reflects the Act's broader objective of promoting timely resolution of construction disputes and preventing indefinite encumbrances on property. It ensures that lien security does not remain in place unnecessarily, especially in cases where the lien claim has not been actively pursued. The provision is discretionary and balances the interests of the lien claimant with the potential prejudice to the party who provided the security.
Section 48 of the PPCLA provides that the security stands in pace of the land and is subject to the lien claim:
48(2) Money paid into court of any security given under subsection (1)
- stands in place of the land;
- is subject to the claims of the person whose lien has been removed; and
- shall not affect the amount required to be retained under section 18(1).4
(2) Background
In this case, the Lien Claimant, 1951789 Alberta Ltd. (the "Lien Claimant"), registered a lien against the respondent, Britannia Block General Partnership Inc. (the "Owner"), in February 2020 and filed a Statement of Claim and CLP in June 2020. The Owner posted security for the lien in April 2021. Over the following years, the Lien Claimant took few steps to progress its lien claim. While some procedural steps were taken—such as filing summary judgment applications—none were resolved, and the action did not move toward trial.
(3) The decision
The Court determined that an application for the release or reduction of a security engages sections 46 and 48 of the PPCLA. The Court found that the Lien Claimant did not explain its delay in moving the action toward trial and granted the Owner's application to release the security.
The Court noted two bases when it may release or reduce the security:
- when the facts justify a reduction in the amount that is necessary as security for any lienable claims; and
- when the security can be conceivably removed or reduced on the basis of section 46 of the PPCLA.5
On these facts, the Lien Claimant had not taken any significant steps to enforce its lien in the four years since registration of its CLP or the three years since posting of the security.
The Court noted that the two-year period in by section 46 is a guideline, not a strict deadline. Unlike Rule 4.33 of the Alberta Rules of Court,6 which requires dismissal of an action if no significant steps occur, section 46 is discretionary.
The Court noted that section 46(2) does not specify how the Court should respond to an application to remove or reduce a lien. As a result, the Court determined from the caselaw that the onus lies on the lien claimant to explain why there has been a delay.7While a detailed explanation for the delay is not required, there must be "some explanation".8 Examples of accepted explanations for delay included a party's waiting for guidance from a bankruptcy trustee about potential payment, and delays caused by a party's insolvency or financial instability.
In light of the unexplained delay in enforcing the lien, the Court released the lien security:
[22] In the circumstances here, the parties are well past the two-year goal and the matter does not seem particularly close to resolution or trial. It would appear to me to be an appropriate case in which to apply section 46 of the Act to release the security for the lien. Accordingly, I release the security. I direct that the proceedings shall proceed as unsecured claims.9
(4) Takeaway
The Court's decision is an important reminder that lien claimants risk losing the secured status of their lien if they do not enforce their lien rights. Losing lien rights is a significant legal and tactical disadvantage; while a lien remains registered on title, it not only restricts the owner's ability to sell or refinance the property but also grants the lienholder the status of a secured creditor. This means they have priority over unsecured creditors in recovering funds—typically from the proceeds of a property sale. Additionally, when funds are posted as security for the lien, the financial pressure on the responding party can be significant, often encouraging earlier resolution of the dispute.
One question is: why now? For decades, the Court has very seldom enforced the two-year deadline. Though not stated in the decision, the introduction of the prompt payment regime in the PPCLA may have heralded the change: if owners have obligations to promptly pay their contractors, contractors have obligations to promptly enforce their lien claims.
Footnotes
1 1951789 Alberta Ltd. v. Britannia Block General Partnership Inc., 2025 ABKB 324.
2 Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4
3 Ibid.
4 Ibid.
5 Supra note 1 at paras 3 – 5.
6 Alberta Rules of Court, Alta Reg 124/2010
7 Supra note 1 at para 21 citing 1361556 Alberta Ltd v Ristorante Cosa Nostra Inc., 2021 ABQB 157 at para 36
8 Ibid.
9 Supra note 1 at para 22.
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