A recent B.C. Court of Appeal decision has affirmed that there are two liens created by the BC Builders Lien Act. While this has been the law for over twenty years, it likely comes as news to many of you that the Act creates two distinct types of liens.
The first lien is the one that you are likely familiar with, the claim against the land that gets filed in the land title office.
The second is a lien against the holdback. This requires some explaining. A “holdback” is the percentage of a contract price retained by the owner until the project or contract is completed and all bills for that project are paid. A “lien” is a claim on the property of another to satisfy an unpaid debt that can prevent the property from being conveyed unless the lien is paid off. Case law in B.C. has established that valid claimants, who remain unpaid, can also assert a lien against the holdback. When done, this has the effect of preventing distribution of the holdback until their claims are addressed. The lien against the holdback is claimed by commencing an action in court to enforce the right before the holdback is paid out.
The case establishing the lien against the holdback (Shimco Metal Erectors Ltd. v. Design Steel Constructors Ltd.) has been broadly criticized. Many construction participants have felt that it creates unnecessary confusion in a statutory lien framework that was previously clear. However, in the over 20 years since Shimco was decided, the construction industry has grudgingly learned to adjust to what was once a novel two-lien structure.
Recently, however, this two-lien structure was challenged. In the case of Kingdom Langley Project Limited Partnership v. WQC Mechanical Ltd., 2025 BCCA [Kingdom] the appellants argued that the Court’s decision in Shimco was wrongly decided. The appellants argued that the underlying language of the Builders Lien Act, when properly interpreted, creates only one lien (a lien against the land), not two.
At issue in this case was whether WQC could claim against the holdback or only against the lien bond posted by the general contractor, Metro-Can. The owner of the project, Kingdom, argued that, properly interpreted, the Builders Lien Act created only one type of lien, and that meant both the holdback and land lien were cancelled under s. 24 of the Builders Lien Act upon posting security. Kingdom argued that WQC had given up its claim to the holdback by accepting the lien bond as security, and should only be paid from the bond, not the holdback.
The BC Court of Appeal rejected this argument and affirmed that Shimco remains good law in British Columbia. The Court held that WQC’s security order for the land lien did not cancel their lien against the holdback or otherwise relinquish any rights they held under the Builders Lien Act in relation to the holdback.
The decision in Kingdom confirms the existing two-lien structure in B.C. and affirms the multiple statutory remedies created by the BC Builders Lien Act. Both owners and contractors will need to accept the reality of the lien against the holdback and continue to consider its benefits and risks on their projects.
This article was prepared with the assistance of Brendan Semchuk, student at Harper Grey LLP.
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Norm Streu is Associate Counsel at Harper Grey LLP and a former Chair of the Vancouver Regional Construction Association. This article was prepared with the assistance of Brendan Semchuk, student at Harper Grey LLP.