Commercial Landlords: Qualifications As An "Owner" For The Purposes Of A Builders' Lien

• Published date: 25 April 2023
• Subject Matter: Real Estate and Construction, Construction & Planning, Landlord & Tenant - Leases
• Law Firm: Borden Ladner Gervais LLP
• Author: Ms Erin Cutts, Grace Jiyeon Shory and Laura Robson

A decision by what was then the Alberta Court of Queen's Bench finds that a commercial landlord does not always qualify as an "owner" under the former Builders' Lien Act (BLA)¹, now the Prompt Payment and Construction Lien Act (PPCLA).

Issue and decision

In Synergy Projects (Destiny) Ltd. v Destiny Bioscience Global Corp., 2022 ABQB 384 (Synergy), the Court found that the landlord, 718721 Alberta Ltd. (718), was not an "owner" as that term is defined in the BLA, and therefore, was not subject to a lien that was registered against the fee simple interest.

Smart Grow Pros, LLC (Smart Grow) was hired as a design consultant by the tenant, Destiny BioScience Global Corp. (Destiny). Destiny failed to pay its invoices to Smart Grow. Consequently, Smart Grow registered a lien against 718's fee-simple interest. The questions for the Court were whether 718 was an "owner" per the BLA; and if 718 was found not to be an "owner," whether the lien could be treated, via the BLA's curative provision (s. 37)², as a lien against Destiny's leasehold interest instead.

Justice Lema concluded that 718 was not an "owner" as that term is defined in the BLA and that the BLA does not authorize "a conversion of a lien aimed at one party and one interest into one aimed at another party and another interest".³ Smart Grow's lien named both the wrong interest and the wrong interest holder, and this was not a forgivable shortcoming that could be remedied using the BLA's curative provision. Accordingly, Smart Grow's lien against the fee-simple interest was deemed invalid by the Court.

Analysis

Is the landlord an "owner" per the BLA?

The BLA defines "owner" as a person having an estate or interest in land at whose request, express or implied, and (i) on whose credit, (ii) on whose behalf, (iii) with whose privity and consent, or (iv) for whose direct benefit work is done for an improvement in the land.⁴

No express or implied request

All of the parties agreed that 718 had an estate or interest in the land, so the first issue to be decided was whether 718 requested, expressly or implicitly, that work be done for an improvement in the land. Smart Grow argued that because the lease between 718 and Destiny obliged Destiny to construct one or more buildings on the leased lands, 718 had expressly or impliedly requested Smart Grow's services to be performed.

In determining whether or not 718 had expressly or impliedly "requested" the work be performed by Smart Grow, the Court considered the facts...