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August 5, 2025

A recent case from the Alberta Court of King’s Bench serves as a warning to parties engaged in construction lien disputes where money has been posted as security and the lien discharged from title. If the dispute is not resolved quickly enough, the Court may discharge the security. Below, we summarize the Court’s decision and then outline techniques you can use to avoid losing security or delaying proceedings.

Background and Legal Context

In 1951789 Alberta Ltd. v. Britannia Block General Partnership Inc., a lien was registered against Britannia’s property. In July 2021, the lien and certificate of lis pendens (the “CLP”) were discharged in exchange for the posting of a $1,595,842.50 bond. The bond served as security for payment, should the lien be proven. Three years later, the dispute was still ongoing and not close to trial. Britannia convinced the Court to vacate the security. It no longer needed to maintain the bond. The lienholder is still entitled to pursue its claim for payment but has lost the security over Britannia’s property.

Section 46 of the Prompt Payment and Construction Lien Act (the “Act”) says that any party can apply to vacate a construction lien or CLP if a hearing to decide the merits of the dispute is not held within two years. This is not a strict rule, but rather a guideline. The Court can permit security to remain even after this two-year period expires.

The law recognizes that construction liens grant lienholders significant rights. The Act allows lienholders to encumber an owner’s property and interfere with sale or financing. In exchange for that right, s. 46 suggests they have the obligation to pursue their claim quickly.

Ways to Maintain Security

This case is a cautionary tale of how security can be lost if an action is not advanced within the two-year period. However, there are a number of ways to advance a file and maintain security.

Pursue Partial Summary Judgment

Complex construction disputes can easily get bogged down by complexity. Our practice includes identifying any discreet issues which could be resolved summarily and pursue those. Even if it does not completely resolve the case, it could result in partial judgments or significantly change the party’s bargaining position and improve chances of successful settlement. Further, it can meet the two-year deadline imposed by the Act.

Obtain a Litigation Plan

The Court of King’s Bench recently announced that starting September 1, 2025, all civil disputes which are non-family and not complex under rule 4.5(1) will have to file a Litigation Plan within four months from the service of the Statement of Defence. A Litigation Plan can ensure the dispute advances meaningfully within, or close to, the two-year period. The existence of a Litigation Plan may also convince the Court that discharging security is not appropriate, given that there are deadlines for upcoming steps.

Schedule A Trial Before All Pre-Trial Steps Are Completed

A third option is to set a trial date before all pre-trial steps are completed. Last year, the Court announced a pilot project whereby any party to a litigation can apply to set a trial after pleadings close and 90 days after the deadline for all affidavits of records. Before bringing the application, the moving party should serve a proposed Litigation Plan and draft order to all the other parties.

Section 53 Applications

Section 53 of the Act also allows a party to schedule a pre-trial application to establish the steps necessary to advance the claim and establish deadlines for such steps. Similar to a Litigation Plan, this can push the matter along quickly and serve as a defence or excuse should disputes linger past the two-year window.

Need Help with Construction Matters? We’re Here.

Ultimately, large or complex construction disputes will often take more than two years to resolve. Our goal is to identify and minimize the risks to our clients which can arise over the life of a dispute. If you are facing any lien or posted security issues and need expert assistance, our construction litigation group is ready to provide the support you need.

Carbert Waite’s lawyers bring extensive experience in construction litigation, including construction disputes involving developers, condominiums, and large renovations. We offer practical, strategic advice to help you confidently navigate the complicated legal and regulatory landscape around your development project.