An Owner’s rush to clear subcontractors’ liens from a project’s title can frustrate the Court’s ability to determine an appropriate amount of security. In Savory 2588 Developments Ltd. v. HQM Contracting Ltd. (2024 BCSC 1733), Savory 2588 Developments Ltd. (the Owner) and its general contractor petitioned under s. 23 of the Builders Lien Act to remove builders’ liens from a construction project. They argued that they had paid sufficient security into court ($182,229.39) to cover the statutory 10% holdback required under the Act. In response, the Respondent subcontractor filed lien claims totalling $276,086.10, asserting they remained unpaid for work performed before their head contractor terminated its subcontract with the general contractor for non-payment.
When assessing the liens’ 10% holdback amount under s. 4 of the Builders Lien Act, the Owner discounted the total contract price by the value of incomplete work and the cost of remediating deficiencies ($489,766.75). The Respondents argued that this was inappropriate, as it failed to account for amendments to the head contract’s scope of work, which substantially increased its value and, consequently, the 10% holdback.
Justice A. Saunders rejected the Owner’s attempt to discharge the subcontractors’ liens, citing insufficient evidence to properly determine the value of the work and the resulting holdback. Saunders J. noted that the Owner did not consider evidence that the head contract had been amended after it became clear the contractor had underbid the project. Meanwhile, the Respondents’ evidence did not adequately substantiate the alleged change orders, a gap they attributed to the Owner’s short-notice petition. Additionally, Saunders J. found no legal basis for discounting the work’s valuation by the cost of remediating deficiencies under section 23 of the Builders Lien Act; that issue is for trial. The petition was dismissed, but the Owner was granted leave to convert it into a Notice of Civil Claim and proceed by summary trial.
This case highlights the importance of balancing the need to clear title and prevent delays with the Court’s expectation that parties will provide sufficient time to gather evidence on a project’s holdback value. To avoid further procedural delays, parties should consider entering into informal lien security agreements.