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Shimco Metal Erectors Ltd v. Design Steel Contractors Ltd

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Shimco Metal Erectors Ltd v. Design Steel Contractors Ltd
Salient facts
This case involved a contract between the District of North Vancouver – as owner of land – and Design Steel Contractors Ltd as the general contractor. The contract involved the construction of a tennis court. In its bid to finish the work in time…………

Issues before the court
The District of North Vancouver wished to use the remainder of the holdback to correct some deficiencies in the tennis court construction. It therefore applied to the Supreme Court for a declaration of the maximum liability………..

Arguments of each of the parties
The District of North Vancouver (which was the defendant) stated that the lien rights of the four unperfected claimants………….

Summary of the court decision

In its decision, the court ruled that according to the “Builders Lien Act” – which can also simply be referred to as the Act – a separate lien exists with respect to the holdback fund. The court concluded that this independent holdback must be maintained at the expense of the contractors or subcontractors. The court went further, observing that this separate lien against the holdback survived the extinction of the lien against the land and its improvements at any given time. Besides, the lien against holdback was not in any way affected by the registration that was required to perfect a lien against other assets that relate to such improvements. This meant that the claimants needed not register and obtain a certificate of pending litigation perfect the lien against the holdback. The defendant filed an appeal, but the Supreme Court maintained this decision, placing special emphasis upon the fact that the “separate and distinct” survived the extinction of the claimants’ lien against District of North Vancouver’s land and its improvement.

While giving the judgment in court, Justice Tysoe J noted that “the law is very clear that subcontractors have at least two separate and distinct remedies under the Act. They can pursue their lien against the land and they may pursue any monies with a trust by s. 10 of the Act.” However, the judge also agreed with the plaintiff’s argument, that there existed a third “separate and distinct remedy,” which involved pursuing “a lien against the holdback funds,” regardless of whether the claimants’ lien against the land had been extinguished (British Columbia Law Institute 2). The judge disagreed with the defendant, declaring that “the owner takes the position that here is only one lien under the Act and that it is entitled to utilize the remainder of the holdback monies towards the deficiencies after it has paid the amount of the liens which have not been extinguished.”