Interest charges

Section 1(1) of the Court Order Interest Act, R.S.B.C. 1996, c. 79, which provides for pre-judgment interest, provides, in part, as follows:
 
[A] court must add to a pecuniary judgment an amount of interest calculated on the amount ordered to be paid at a rate the court considers appropriate in the circumstances from the date on which the cause of action arose to the date of the order.
(Court Order Interest Act, R.S.B.C. 1996, c. 79, s. 1(1), emphasis added).
 
Similarly, s. 7 of the Court Order Interest Act, R.S.B.C. 1996, c. 79 which provides for post-judgment interest provides, in part, as follows:
 
A pecuniary judgment bears simple interest from the later of the date the judgment is pronounced or the date money is payable under the judgment.
(Court Order Interest Act, R.S.B.C. 1996, c. 79, s. 1(1), emphasis added).
 
However, because a claim of lien leads to a declaratory judgement rather than a pecuniary judgment, court ordered interest is not claimable when seeking a declaration of lien
 
When a materialman establishes a claim of lien he obtains a declaration to that effect. In that declaration the court finds the amount due, but there is no judgment, in personam, for that amount. What the lien claimant obtains is a declaration that he is entitled to a builders’ lien for a sum specified in the judgment. Where, as here, the security of the land has been replaced by moneys paid into court, if that security is sufficient to pay all the liens established at trial the court can then direct payment out to the lien claimant of an amount sufficient to satisfy the amount found to be due pursuant to the declaration of the court. But the lien claimant has not obtained a judgment in personam against the owner, a contractor or a subcontractor.
 
Therefore I conclude that the judgment obtained in a builders’ lien action is not a pecuniary judgment. As a result the Court Order Interest Act has no application and the lien claimant is not entitled, pursuant to the provisions of that Act, to claim court order interest.
 
(Westburne Industrial Ent. Ltd. v. Lougheed Towers Ltd., 1985 CanLII 390 at paras. 28 - 29 (B.C.C.A.))
 
Contractual interest not claimable as part of lien. In Fast Trac Bobcat & Excavating Service v. Riverfront Corporate Centre Ltd., 2009 BCSC 840 the lien claimant claimed contractual interest (see para. 24), but that claim was rejected:
 
The case law supports the conclusion that interest should not form part of the lien, but a plaintiff may still be entitled to interest on the personal judgment against the defendant.
(Fast Trac Bobcat & Excavating Service v. Riverfront Corporate Centre Ltd., 2009 BCSC 840 at para. 32).
 
Also, s. 2 of the Builders Lien Act allows a lien for “the price of work and material”, and interest is not part of the price, but a penalty for late payment of the price. Keep in mind that the lien is statutorily created and so the lien is limited to that permitted by the statute.
 
Although it is improper to claim interest and so there is no benefit to doing so, including a claim for interest does not invalidate the entire lien:
 
The defendant argues the claimant misstated the amount claimed.  The lien claim incorrectly includes an interest claim not provided for in the contract.  The plaintiff acknowledges the amount of the lien claim is incorrect because it includes non contractual interest.
 
The inclusion of interest in the value of the lien claim does not affect the validity of the lien claim:  Westburne Industrial Enterprises Ltd. v. Lougheed Towers Ltd., 1985 CanLII 390 (BC CA); Henderson Land Holdings (Canada) Ltd. v. Micron Construction Ltd., 1999 CarswellBC 292, 49 C.L.R. (2d) 311 (B.C.S.C.).  Rather, the amount on the lien claim will be reduced by the amounts improperly claimed.
 
As in Westburne, the value of the lien claim should be reduced by the amount of interest included.
 
(Arch Windoor Ltd. v. Aragon (Quayside) Properties Ltd., 2012 BCSC 179 at para. 51-53).

 

 

 

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