BCCA Rules Builders Lien Act Inapplicable to Airport

On February 25, 2011, the British Columbia Court of Appeal dismissed the Attorney General of British Columbia's appeal from a Supreme Court judgment finding that the sections of Builders Lien Act (the “Act”), which allow for the registration and ultimate sale of property subject to builders liens, were inapplicable to the leasehold interest of the Vancouver International Airport Authority (the “Airport Authority”) by operation of the doctrine of interjurisdictional immunity.

The Airport Authority challenged the provisions of the Act that allow for the registration of a lien against the Airport Authority's leasehold interest.

The Airport Authority has a lease with Canada for the sole purpose of operating and maintaining the Vancouver International Airport.

As part of that obligation, the Airport Authority undertook renovations on part of a terminal and expanded its runways. This work resulted in liens being registered against the leasehold interest of the Airport Authority.

The Court of Appeal found that the ability to create a registrable lien against the Airport Authority's leasehold interest impaired a vital and essential part of its operations, finding that the in rem nature of a lien creates a risk of impairment by limiting the Airport Authority's ability to obtain financing for the construction of improvements and operational requirements necessary for it to fulfill its mandate.

A sale of the Airport Authority's leasehold interest to enforce a registered lien would also clearly impair its ability to operate the Vancouver International Airport.

In sum, the Court of Appeal found that the construction of airport facilities is an integral, vital and essential part of the Airport Authority's undertaking and the impugned provisions of the Builders Lien Act would impair that core competence of the federal jurisdiction over aeronautics.

Charles Willms and Katey Grist of Fasken Martineau DuMoulin LLP represented the Vancouver International Airport Authority at both the Supreme Court and Court of Appeal.

Veronica Jackson represented the Attorney General of British Columbia at both levels of court.