Shane Coblin and Milaad Hashmi successfully argued before the Court of Appeal that the act of filing a lien that the lien claimant knew or ought to have know was inflated, constitutes an abuse of process entitling an owner to damages.
In 601 Main Partnership v. Centura Building Systems (2013) Ltd., 2024 BCCA 76, the British Columbia Court of Appeal addressed the role of the tort of abuse of process in combatting inflated construction liens. The common law has restricted the application of the tort of abuse of process to circumstances where the abusive act complained of is separate from the litigation process itself. The logic being, that abusive litigation conduct is dealt with by an award of costs within the proceeding and ought not to give rise to a separate cause of action—so as to avoid one failed action begetting another action, which may beget another action, and on and on.
To address this, the common law developed a requirement that the conduct giving rise to the claim of abuse of process be an “overt act” that is outside the normal incidents of litigation.
The Respondent argued that a Builders Lien is part of the litigation process associated with the enforcement of the lien, and therefore cannot be the type of “overt act” required to succeed on a claim for abuse of process. After reviewing the common law relating to abuse of process and the need for an “overt act”, the Court of Appeal rejected this argument. The panel held that the filing and maintaining of a Builders Lien is an act which is outside the underlying debt or enforcement action. In this respect, the court likened Builders Liens to Certificates of Pending Litigation, the wrongful filing of which have long been held to constitute an abuse of process.
The court also held an improper motive on the part of the lien claimant can be inferred by the court notwithstanding that the only evidence to support the claim is the deficiency in the lien claim itself.
Justice Wilcock concluded his analysis with the following words about Builders Liens and their potential misuse:
… liens are “powerful pre‑judgment weapons”. Their use should be carefully scrutinized. As noted in Guilford at 405–406: “mechanics’ liens, lis pendens and garnishing orders are sometimes, though not often, used by unscrupulous persons to achieve results which could not otherwise be obtained”.
In the end, this case provides useful guidance to all members of the construction industry that contractors that knowingly inflate their lien claims are exposed to a claim of abuse of process and may be required to pay damages to the Owner.
