Limitation Periods And Liens: Saskatchewan Court Of Appeal Provides Clarifications

A common misunderstanding with regard to builders' liens is the belief that they require no further action once filed and remain on title until a debt is paid. This is not the case. A lien is not self-enforcing and does not guarantee payment. It is but a registered interest on the title of a property that prevents it from being sold (or encumbered to some extent) until that unpaid debt is paid or becomes unenforceable. Its purpose is to preserve the asset on which the work was performed or for which the materials were provided so that a judgment from a lien enforcement action can be enforced against it. Because of the two-year limitation period in the limitations acts of most provinces,1 a lien will typically become unenforceable if nothing is done to enforce it through the courts within a period of two years from when the unpaid debt is discovered.

There is often little to be done to save and enforce a lien that has outlived its limitation period for enforcement. For example, recently in Nayeem Uddin v Tubello Stoneworks Ltd., 2018 SKQB 301 [Nayeem], the Chambers Judge2 agreed with the conclusions reached earlier in P.J.D. Holdings (1989) Ltd v Kasa Construction Ltd, 2016 SKQB 103 and found that the procedure in subsection 56(4) of the Saskatchewan Builders Lien Act, SS 1984-85-86, c B-7.1 (the "BLA") is not available to circumvent an expired limitation period. Whatever the Legislature meant when it said that the court may, upon application, order that monies previously paid into court be paid out to the "person entitled", the Saskatchewan Court of Queen's Bench found that it did not have in mind a substantive determination of construction disputes beyond the two-year limitation period.

The Nayeem appears to have definitely closed the door which had been opened by the Saskatchewan Court of Appeal in Axcess Capital Partners Inc. v Allsteel Builders (2) Ltd., 2015 SKCA 33 at paras 29-33. The Court of Appeal had there suggested that subsection 56(4) may provide an alternative procedure to a court action for the summary determination of a lien claim on the merits. This likely also closes the door to the availability of subsection 57(5) for obtaining, after the limitation period runs out, a determination on the merits of a lien dispute over the paying out of a holdback amount paid into court.

Absent overruling by the Saskatchewan Court of Appeal, the two-year limitation period is now firmly entrenched in the Saskatchewan BLA, and there are no...