Yukon Court Of Appeal Clarifies Lien Rights Under The Miners Lien Act

In the recent decision of Brad Paddison Contracting Ltd. v. Sumitomo Canada Limited,¹ the Yukon Court of Appeal clarified the scope and enforceability of lien claims under the Miners Lien Act  (MLA),² offering guidance on registration requirements and the impact of sales of concentrate on lien rights.

Background

Brad Paddison Contracting (BP Contracting), a general contractor in the mining sector, registered a lien claim under s. 4 of the MLA  for unpaid work for the Minto Mine.³ BP Contracting used the standardized claim of lien form under the Miners Lien Forms Regulation,⁴ and described the property to be charged by referring to an attached schedule.⁵ The schedule listed the Mine's mineral claims and leases. BP Contracting subsequently filed a petition and obtained a certificate of pending litigation, which it filed in the mining recorder's office and served on Minto Minerals, the mine operator.⁶

Sumitomo Canada Limited (Sumitomo), a mining investment and export company and buyer of the Minto Mine's copper concentrate, failed to conduct a search of the mineral claims and leases owned by Minto Minerals and was unaware of the lien. ⁷After Sumitomo applied to appoint a receiver over Minto Minerals, BP Contracting sought to enforce its lien against the purchased concentrate.⁸ The chambers judge dismissed the claim, but the Court of Appeal overturned the chambers judge's ruling, finding that BP Contracting had a valid and enforceable lien over the concentrate.⁹

Issues on appeal

1. Is a lien under the MLA over mineral concentrate extinguished once ownership changes hands?
2. Must a lien claim description specifically identify all the property to be charged in order to provide effective notice?

Discussion

(a) The lien over mineral concentrate will remain when ownership changes hands post-registration

Applying the purposive approach to statutory interpretation, the Court of Appeal reviewed s. 2(1) of the MLA  which provides:

(1) A contractor or subcontractor who provides services or materials to a mine...

...is given a lien by this subsection and, notwithstanding that a person holding a particular estate or interest in the mine or mineral concerned has not requested the services or materials, the lien given by this subsection is a lien on

(d) all the estates or interests in the mine or mineral concerned;

(e) the mineral when severed and recovered from the land while it is in the hands of the owner;

(f) the interest of the owner in the fixtures, machinery, tools, appliances and other property in or on the mines or mining claim and the appurtenances thereto.

Thus, the Court of Appeal held that a lien materializes when a contractor or subcontractor "provides services or materials to a mine", and extends over "severed and recovered" minerals when "in the hands of the [mine] owner".¹⁰

Sumitomo argued a strict interpretation of s. 2(1); that is, the lien only exists while the concentrate is still owned by the mine owner.¹¹ The Court of Appeal rejected this interpretation, holding that the such an interpretation would abrogate the common law principle that a lien can follow the property to which it attaches as long as it remains identifiable.¹²

The Court emphasized that extinguishing lien rights upon sale would create significant commercial and practical difficulties, including:

(i) registering a lien claim against mineral concentrate would serve no purpose and mine owners would be encouraged to defeat lien claims by arranging for title to pass to a purchaser;

(ii) lien claimants may not have a practical way of knowing when the concentrate was sold;

(iii) lien claimants would be forced into costly, unnecessary litigation that would be far more burdensome than requiring purchasers to make reasonable inquiries and hold back funds; and

(iv) small Yukon businesses and other potential lien claimants would require sophisticated legal assistance to understand and enforce their rights.¹³

As a result, the Court of Appeal held that a lien will attach to mineral concentrate as long as works or services are provided while the concentrate is in the hands of the mine owner.¹⁴ The lien will arise and attach when the work is done by the contractor or subcontractor.¹⁵ Potential claimants must register their lien under s. 4 of the MLA  to provide notice and pursue enforcement.¹⁶ If a sale occurs prior to registration, the lien will remain but it will not be enforceable against a bona fide  purchaser for value without notice.¹⁷ However, if the sale occurs after the lien is registered, the lien will be enforceable against the purchaser, on the basis that notice has been provided.¹⁸

The Court of Appeal rejected the lower court judge's finding that BP Contracting's reference to the schedule was an insufficient description that failed to provide potential purchasers with notice of the lien. The Court of Appeal held that such an interpretation would place an unreasonable burden on claimants to be aware of all potential property covered by their lien.¹⁹ Instead, the Court of Appeal emphasized the relationship between ss. 2 and 4 of the MLA:  s. 2 broadly defines the property a lien attaches to, including all interests in the mine and any severed minerals, while s. 4 governs registration requirements.²⁰ The Court of Appeal found that BP Contracting's reference to the relevant claim and lease numbers aligned with the MLA's definition of "mine" and therefore provided sufficient notice of which mine the lien attached to.²¹ A potential purchaser could consult the MLA  to determine which assets or interests related to the mine were subject to the lien.

The Court of Appeal emphasized that it would be commercially unreasonable for a claimant to register an under-inclusive lien that did not contain all property covered by s. 2(1) of the MLA, and that requiring a claimant to recite the full language found in s. 2(1) would elevate form over substance.²² Accordingly, a lien will attach to all the property described in s. 2(1), and under s. 4(1)(e), it is sufficient for a claimant to list the relevant mining lease, claim or grant numbers.²³

Key takeaways

In this decision, the Court of Appeal provided valuable guidance for both contractors and subcontractors with potential lien claims, and potential purchasers.

Importantly, when registering a lien claim with the mining recorder's office, claimants can describe the property by referring to the relevant mining lease, claim or grant numbers. They are not required to list specific machinery or concentrate covered by the lien. Additionally, if their lien is registered prior to a sale, the lien can be enforced against the purchaser. Lastly, potential purchasers of severed minerals should be aware of their responsibility to make reasonable inquiries to confirm whether they need to hold back funds to cover any existing lien claims.

Footnotes

1. 2025 YKCA 9 ("Brad Paddison Contracting Ltd.").↩

2. Miners Lien Act, R.S.Y. 2002, c. 151 [MLA]. ↩

3. Brad Paddison Contracting Ltd., supra  note 1 at para. 2. ↩

4. Miners Lien Forms Regulation, Y.O.I.C. 2016/084. ↩

5. Brad Paddison Contracting Ltd., supra  note 1 at para. 3.↩

6. Ibid  at para. 4. ↩

7. Ibid at paras. 5-6. ↩

8. Ibid at para. 8.↩

9. Ibid  at paras. 82-83.↩

10. Ibid  at para. 37. ↩

11. Ibid  at para. 39. ↩

12. Ibid  at para. 44. ↩

13. Ibid  at paras. 47-49. ↩

14. Ibid  at para. 51. ↩

15. Ibid.↩

16. Ibid.↩

17. Ibid  at para. 53. ↩

18. Ibid. ↩

19. Ibid  at para. 60. ↩

20. Ibid  at para. 61. ↩

21. Ibid  at paras. 62-63. ↩

22. Ibid  at paras. 65-66. ↩

23. Ibid  at para. 69. ↩