Difference between revisions of "Creditors' Remedies against Debtors (10:III)"

Under the current ''Builder’s Lien Act'', a worker, material supplier, contractor, or sub-contractor who does or causes to be done any work  upon, or supplies material, or both, for an improvement, has a lien for the price of the work and material, upon the interest of the owner in the improvement, upon the improvement itself, upon the material delivered to the land, and upon the land itself (s 2). “Price” does not include interest on outstanding accounts: see ''Horseman Bros. Holdings Ltd v Lee'' (1985), 12 CLR 145 (BCCA).  

After a claim of lien is filed against land, the lien-holder may enforce their claim by obtaining a court order for the land to be sold (s  31). When a writ is issued, the lien holder must register a certificate of pending litigation against the land (s 33(1)), which prevents any dealings with the title to the land until after the court determines the validity of the claim. No claim of lien can be filed if the claim is for less than $200 (s 17).  

A claim of lien on land is filed in the Land Title Office (s 33(1)). A claim of lien must be in the prescribed form or it is extinguished (s 22). It takes effect from the time when work began, or when the first material was supplied for which the lien is claimed. A claim of lien has  priority over all judgments, executions, attachments, and receiving orders recovered, issued, or made after that date (s 22).  

If a person agrees to have repairs done, they must withhold 10 percent of the value of the work or material as they are actually provided under the contract or subcontract, or the amount of any payment made on account of the contract or subcontract price, whichever is greater, from the contractor for a period of 55 days after the certificate of completion is issued. This covers the possibility of having to pay workers, subcontractors, and suppliers who were not paid for their services by the contractor. This holdback must not be retained from a worker, material supplier, architect, or engineer (s 4(6)). These funds are to be paid into a separate trust account at the time of payment.  

In addition, all improvements done with the knowledge, but not at the request, of the owner will be held to be done at the request of the owner (s 3(1)). This rule does not apply to improvements made after the owner files a notice of interest in the Land Title Office. A notice of interest is a prescribed form warning other persons that the owner’s interest in the land is not bound by a lien claimed under the Act for an improvement on the land unless that improvement is undertaken at the express request of the owner (s 1).

Under the ''Repairer’s Lien Act'' [''RLA''] every mechanic or other person who has bestowed money, skill or materials upon any chattel for its improvement, has a common law possessory lien on the chattel while it remains in their possession. These people are called garage keepers in the ''RLA''. The lien holder may keep the chattel until paid. Where the person holds the chattel for 90 days, they may sell it upon compliance with statutory provisions (s 2). If the lien holder gives up possession prior to filing a lien, they lose the lien (except with liens on automobiles and aircraft, etc.) and are restricted to ordinary remedies in court.  

==== b) Liens on Automobiles, Aircrafts, Boats and Outboard Motors ====

If a mechanic relinquishes possession of an automobile, aircraft, boat or outboard motor, they do not lose the lien, provided that the debtor,  before giving up possession, signed an acknowledgement of indebtedness (e.g. invoice, statement of account, etc.).

==== c) Procedure ====

Where a garage keeper gives up possession of an automobile, etc., and afterwards files an affidavit with the registrar, the garage keeper may enforce the lien by issuing a warrant for seizure to a licensed bailiff or the sheriff (s 11). The automobile or aircraft may then be sold by following the procedures for the sale of chattels set out in s 2 (s 12). A warrant may only be issued within 180 days of filing the lien (s 11).  

==== d) Limitation Period ====

'''When an affidavit of lien is filed, the lien will expire after 180 days, unless the automobile, etc., has been seized within that period (s 4).'''

 

 

When a buyer has made a partial or full payment to a seller - and the goods are unascertained or future consumer goods, the buyer can place a lien against all goods that are in, or will come into, the possession of the seller that correspond with the description or sample of goods agreed upon (See Part 9 of the ''Sale of Goods Act''). This holds as long as the goods were not sold to someone else. The buyer also has a lien against any bank account where the seller normally deposits  the  proceeds  of  sales.  This  lien  has  priority  over  all  other  security  interests, but generally is not valid in bankruptcy. However, if the seller has maintained records or documents that clearly identify the goods  for which a deposit was paid, the buyer may be entitled to the lien. Where the seller maintains a separate trust account, the buyer can file a property claim for the trust funds which is in priority to other security interests. See ''In the Bankruptcy of Ian Gregory Thow'', 2006 BCSC, 1414 and ''In the Matter of the Bankruptcy of Anderson's Engineering Ltd.'' 2001 BCSC 1476.   

The ''Warehouse Lien Act'' provides that every warehouse owner or operator has a lien on goods deposited with him or her for storage, whether  deposited by the owner of goods or by their authority, or by any person entrusted with possession of the goods by the owner, or by their authority (s 2(1)). This right does not apply to unpaid charges for goods previously stored: see ''Re Dutton Pacific Forest Products Ltd.'' (1980), 117 DLR (3d) 507 (SC), sub nom ''Squamish Terminals Ltd. v Price-Waterhouse Limited''. After the warehouser gives the appropriate  notices, the goods may be sold to collect the charges (ss 3 and 4).  

If the lien is valid and the debtor wishes to discharge the lien, but disputes the amount of the claim, the debtor may wish to make the payment to the court by application under s  23(1) of the ''Builder’s Lien Act''. This discharges the liability in respect to the Lien under s 23(2) The court will then assess the proper amount to be paid by receiving evidence, or directing a trial.

{{REVIEWED LSLAP | date= July 15, 2019}}