A Refinement Of The Shimco Lien

In 2002 the court’s decision in Shimco Metal Erectors Ltd., 2002 BCSC 238 and 2003 BCCA 193 caught both the construction industry and the legal community by surprise.  Prior to Shimco it was commonly held that the only way to maintain a claim of lien was through the normal process of filing in the appropriate Land Title Office the standardized claim of lien form prescribed by the Builders Lien Act against title to the property where the work had been done or the material supplied.  In Shimco however the court recognized that in addition to in rem (against the land) lien rights unpaid subtrades may have there existed an additional lien subtrades could assert against an unreleased holdback.  That lien is asserted simply by commencing legal proceedings and pleading the same in the action.  The advantage of the Shimco lien is that it is not governed by the same time restrictions set out in the Builders Lien Act that apply to the filing of a regular builders lien claim.

In a fairly recent decision the B.C. Court of Appeal has refined its interpretation of the Shimco lien.  In Wah Fai Plumbing & Heating Inc., 2011 BCCA 26 the court has restricted the application of the Shimco lien to apply to only those instances where the holdback actually exists and remains in the hands of the person charged under the Act to hold it.  The court has clarified that no Shimco lien can be claimed where no holdback has been retained or where the holdback has been wrongfully paid out prior to an action being commenced to enforce a Shimco lien.  Furthermore, the Court’s decision in Wah Fai also addresses the situation where a builders lien cannot be asserted in the first instance such as lands held in the name of the Federal Crown or highways.  In those situations the court has made it clear that if the unpaid subtrade could not have maintained a claim of lien in the Land Title Office in the first instance it cannot maintain a claim to a Shimco lien.  No doubt some subtrades will be disappointed with this development; however the court’s decision in Wah Fai has now answered some perplexing questions that the legal community was asking after the release of the Shimco decision.

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