Canada: B.C. Court Of Appeal Refuses To Expand Shimco Builders Lien Liability

Copyright 2011, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Construction, March 2011

On January 27, 2011, the British Columbia Court of Appeal (the Court) released its decision in Wah Fai Plumbing & Heating Inc. v. Ma. In its decision, the Court refused to expand the reasoning in the Shimco case, resolving some of the uncertainty that many legal commentators have objected to and reinforcing the importance of making timely lien claims.


The dispute in this case related to a home renovation project. The owners of the home (the Owners) contracted with True Art Construction and Renovation (the Contractor), and the Contractor in turn hired Wah Fai Plumbing and Heating (the Subcontractor) to provide plumbing services to the project.

The Owners had paid the Contractor the total amount owing to it by the time the Contractor abandoned the contract. The Owners did not retain a holdback as required by the B.C. Builders Lien Act (the Act).

The Subcontractor was not paid the full amount owing under its contract with the Contractor and the Subcontractor filed a lien against the land. It is a requirement under the Act that lien claimants perfect their liens against the land by commencing a proceeding to enforce the claim of lien and by filing a certificate of pending litigation within one year of substantial completion.

While the Subcontractor did commence an action within one year, it did not seek to enforce its claim of lien in that proceeding, nor did it file a certificate of pending litigation. As a result, the Subcontractor's lien against the land was extinguished at law by the passage of the one-year period. After its lien claim against the land was extinguished, the Subcontractor amended its statement of claim to assert a lien against holdback, among other relief.


The Court of Appeal reviewed its decision in Shimco Metal Erectors Ltd. v. North Vancouver (District). It was in that case that the Court first interpreted the Act as providing for a lien against the holdback, separate from the lien against the land. A lien against the holdback is not extinguished at the same time as a lien against the land. Under the Act, holdbacks must be retained until 55 days after the completion, abandonment or termination of the relevant contract. If a proceeding is commenced to enforce a lien against the holdback before that period expires, the holdback may not be paid out. Liens against the holdback are sometimes referred to as "Shimco liens", given their genesis.

Following its review of Shimco, the Court summarized some of the critical commentary that the legal profession has made of the dual-lien theory. In general, the concerns raised by practitioners have centred on the fact that the holdback lien appears to be governed by different rules than the lien against the land, and those rules are uncertain. The British Columbia Law Institute has recommended legislative amendments to abolish the holdback lien. The Court held that this response from the profession suggests "a cautious approach" to any extension of the reasoning and result in Shimco to other cases.

In Shimco, the owner retained a holdback and the plaintiff commenced proceedings to claim a lien against the holdback retained by the owner prior to the extinguishment of its lien against the land and prior to the holdback funds being released. Conversely, in this case, the Owners did not retain a holdback from their payments to the Contractor, and the Subcontractor did not commence proceedings to enforce a lien against the holdback prior to extinguishment of its lien against the land. Further, the holdback period had expired, and had the Owners retained a holdback, they could have lawfully paid it out prior to the filing of the amended claim, extinguishing the appellant's lien against the holdback.

The Court held that Shimco does not deal with these circumstances. Further, in the Court's view, the Act cannot be interpreted to provide that where a holdback has not been retained, or has wrongfully been paid out, a person whose lien against the land has been extinguished can later commence proceedings to enforce a lien against a non-existent holdback. The Court held that the Subcontractor did not have any right under the Act to enforce its lien and there was no reason to extend the reasoning in Shimco to these circumstances.

The Court stated that the fact that there was no holdback was the principal difference between this case and Shimco. Where there is no holdback fund to claim against, no lien claim against the holdback can be made.

The Court did recognize that the non-existence of the holdback was due to the Owners' failure to comply with the Act, but noted that is the result of the wording of the legislation, which the legislature has the power to remedy.


Ultimately, this case may be more significant for its commentary on the uncertainties created by the duallien system; however, the Court did provide some clarification on how Shimco liens operate.

The Court made clear that a Shimco lien is extinguished upon distribution of the holdback. The Court further clarified that the lien claim against the holdback is not an in personam right that follows the person responsible for retaining the holdback. The lien attaches to the holdback fund only. Owners and contractors required to retain a holdback must still be diligent in following the provisions of the Act in order to avoid losing the holdback defence or encountering a breach of trust claim.

For contractors and subcontractors that have not been paid and who seek to secure their claims under the Act, they must remain attentive to the timelines in the Act. In order to preserve their right to a lien against the holdback, contractors should seek to commence a proceeding to enforce that lien prior to expiration of the holdback period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
16 Oct 2018, Seminar, Toronto, Canada

Join Blakes lawyers for our 10th annual overview of recent legal and regulatory developments and practical strategies to navigate the changing regulation of Canada’s payments industry.

26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Bennett Jones LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Bennett Jones LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions