This post was written prior to our January 2017 merger, under our previous firm name, Aikins, MacAulay & Thorvaldson LLP.
Suppliers of construction materials that have not been paid for are often disappointed to discover that once materials are delivered to a construction site or staging area, their right to remove those materials from the site is restricted. Generally speaking, materials which have been delivered to a construction site must stay on site until they are incorporated into a building or other improvement to the land.
There are a number of reasons why this is the case. The first is practical: the materials, having been delivered to the construction site or staging area, are now located on property which belongs to someone other than the supplier. Attendance on the site without the permission of the owner is trespassing and may attract unwanted consequences for the unpaid materials supplier looking to reclaim materials for his or her inventory.
Even if an unpaid material supplier was to return to the site without trespassing, both The Executions Act and The Builders’ Liens Act contain provisions that effectively restrict the removal of unpaid materials from a construction site or staging area. For example, The Builders’ Liens Act provides that during the existence of a lien, the materials giving rise to the lien are not to be removed to the prejudice of the lienholder. Any party apprehending removal of such materials can apply to the court under section 35 of The Builders’ Liens Act to obtain an order preventing materials from being removed. Removal of materials in breach of such an order would be the basis of a contempt of court order. In a recent Manitoba case, the removal of materials in breach of such an order resulted in penalties of $10,000 being assessed against each of the offending parties.
Although The Builders’ Liens Act prohibition on the removal of materials may appear to be at odds with the objective of providing statutory protections and remedies to contractors, subcontractors and suppliers, it is consistent with the Act’s limitation of owner liability provisions. The Act’s prohibition on the removal of materials ensures that all disputes relating to the ownership, payment for and beneficial use of the materials will be determined in an orderly manner by the courts. Thus, owners are assured that even if the general contractor or sub-contractors have defaulted by failing to pay their supplier(s) for materials, the materials will remain available for use in completion of the construction project.
By imposing limitations on the use of debt enforcement processes against construction materials, The Executions Act also regulates the removal of materials from a construction site. Suppliers may be surprised to learn that under The Execution Act, materials which are used in the construction, alteration or repair of a building remain subject to debt enforcement process, such as seizure, but only in favor of the person who supplied the materials and only once that person has obtained a judgment with respect to the unpaid materials. Although the requirement that the supplier take the necessary steps to become a judgment creditor first can be inconvenient, the right to recover materials under The Execution Act extends even to those materials which have been worked into, and therefore become part of, the building itself.
The existence of statutory protections preventing, or restricting, others from removing construction materials from construction sites supports the scheme in the Builders’ Liens Act. But if a material supplier remains unpaid, by obtaining a court judgment it may find a different opportunity under The Executions Act to enforce against and specifically reclaim its materials from the site, even after they have been incorporated into the building and become affixed to the land.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
Daryl A. Chicoine is an associate in the Construction Law Practice Group at the Winnipeg law firm of Aikins, MacAulay & Thorvaldson LLP. Reach him at email@example.com.