Security Measures: 
The Alberta Court of King's Bench Clarifies the Law of Lien Security

The Court of King's Bench of Alberta has provided important new guidance regarding construction lien timelines. The registration of a construction lien and certificate of lis pendens (CLP) is an effective way of securing payment for labour, materials or services provided on a construction project. To ensure that lien claims are determined in a timely manner, section 46(2) of the Prompt Payment and Construction Lien Act, RSA 2000, c P-26.4 (the PPCLA) provides that, if a trial has not been held within 2 years from the date of registration of a CLP, an interested party may apply to the Court to have the lien and CLP discharged.

However, a party may elect to deposit security with the Court to stand in place of the lands and clear the lien and CLP from the applicable land title. In these circumstances, does the 2-year limit in the PPCLA still apply? In 1951789 Alberta Ltd v Britannia Block General Partnership Inc, 2026 ABKB 283 (Britannia Block), the Court confirmed that it does not.

Background

Britannia Block involved a residential housing project in Calgary, Alberta (the Project) owned by Britannia Block General Partnership Inc. (Britannia). The Plaintiff, 1951789 Alberta Ltd., operating as Urban Interiors Group (UIG), supplied labour and materials to the Project.

In early 2020, UIG registered a construction lien against the Project lands (the Lands) in the amount of approximately C$1.47 million. A Statement of Claim and CLP followed six months later.

In mid-2021, Britannia wanted to sell the Lands and, to do so, it sought to discharge the lien and CLP from the Lands by depositing a lien bond with the Court in the amount of the lien plus security for costs (the Security). On July 21, 2021, Applications Judge Mason granted an Order to this effect and the Lands were sold.

Over the next several years, the litigation proceeded across three actions: an Originating Application filed by Britannia to discharge the lien, UIG's debt action for unpaid materials and labour, and a separate action by Britannia against UIG for amounts allegedly owed to subtrades.

The Application Judge's Decision

In 2025, Britannia applied to have the Security discharged or reduced. Although the Applications Judge found that the lien claim was "certainly not specious," and despite Britannia not relying on section 46(2) in its submissions, he ordered that the Security be discharged because it had been more than 2-years since the CLP had been registered. UIG appealed this decision.

The Appeal

Section 46(2) Should Not Have Been Considered

The Appeal was heard by Justice Price, who held that the Applications Judge erred in his decision on three grounds:

1. The Relief Ordered Was Not Sought By Britannia: Justice Price held that the Applications Judge applied a provision (section 46 of the PPCLA) that was not argued by either party. Justice Price held that, absent consent, courts should avoid granting remedies not pleaded. Further, Justice Price held that adjudicating an issue that was not raised by either party deprives them of the opportunity to present evidence and submissions on that issue.
2. UIG Was Denied Procedural Fairness: Justice Price held that, even if section 46(2) applied, the Applications Judge failed to give UIG the opportunity to provide submissions on why there had been delay in prosecuting the action. As such, UIG was denied the opportunity to adduce evidence or make submissions explaining the delay. Justice Price also confirmed that the litigation was complex, and that the history of the case showed ongoing activity rather than inaction or abandonment. He also held that both parties contributed to the protracted litigation.
3. Section 46(2) Did Not Apply: Finally, Justice Price held that section 46 of the PPCLA applies only where a CLP has not yet been discharged. As there was no lien or CLP to vacate in this case, section 46 did not apply. In making this determination, Justice Price endorsed the approach in Whitson Contracting Ltd v Pacific West Systems Supply Ltd, 2023 ABKB 309, where Applications Judge Schlosser suggested that, once there is no longer a CLP to vacate, the more appropriate avenue is a dismissal-for-delay application under the Alberta Rules of Court.

Key Takeaways

Justice Price's decision in Britannia Block provides several important reminders for parties involved in construction lien disputes under the PPCLA:

1. Lien rights are a creature of statute and Courts will adopt a strict interpretation in determining whether a claimant is entitled to a lien and a liberal approach with respect to whom the PPCLA applies.
2. The 2-year deadline to hold a trial from the date of the registration of a CLP in section 46(2) of the PPCLA will not apply if the lien has been cleared from title through the posting of security with the Court or otherwise. Conversely, if a lien and CLP remain on title to the subject lands, lien claimants should ensure they advance the action in a timely manner and keep an eye on the 2-year clock to mitigate the risk of losing the security provided by a lien.
3. Where a lien and CLP have been discharged and there has been an inordinate and inexcusable delay by a lien claimant, the aggrieved party should consider an application for dismissal for delay under Division 6 of the Alberta Rules of Court.
4. Courts should avoid granting remedies not pleaded because it deprives parties of an opportunity to present responsive evidence or make informed legal submissions.

If you have any detailed questions or require tailored advice on how prompt payment and lien matters can affect your project, please contact one of the members of our Construction Law practice group.