



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Wah Fai Plumbing & Heating Inc. v. Ma,











2011 BCCA 26




Date: 20110127

Docket: CA037596

Between:

Wah Fai Plumbing
& Heating Inc.

Appellant/Cross-Respondent

(Plaintiff)

And

Harton Kwok Hing
Ma, Yolanda Heung Ying Yuen and

True Art
Construction and Renovation and

Nghia Moc Vuong

Respondents/Cross-Appellants

(Defendants)




Before:



The Honourable Madam Justice Newbury





The Honourable Madam Justice Levine





The Honourable Mr. Justice Chiasson




On
appeal from the Supreme Court of British Columbia, September 28, 2009

(
Wah Fai Plumbing
& Heating Inc. v. Ma, Harton,
2009 BCSC 1914,

Vancouver
Registry, Docket 024839)




Counsel for the Appellant/Cross-Respondent:



J.R. White

V. Reakes





Counsel for the Respondents/Cross-Appellants:



E.G. Wong





Place and Date of Hearing:



Vancouver, British
  Columbia

October 28, 2010





Place and Date of Judgment:



Vancouver, British
  Columbia

January 27, 2011













Written Reasons by:





The Honourable Madam Justice Levine





Concurred in by:





The Honourable Madam Justice Newbury





Concurring Reasons by:





The Honourable Mr. Justice Chiasson (Page 17, para. 66)








Reasons for
Judgment of the Honourable Madam Justice Levine:

Introduction

[1]

The primary issue raised on this appeal is the claim by a subcontractor
to a lien against the holdback under the
Builders Lien Act
, S.B.C. 1997,
c. 45, as described in
Shimco Metal Erectors Ltd. v. Design Steel
Constructors Ltd.
, 2002 BCSC 238, 99 B.C.L.R. (3d) 59, affd
Shimco
Metal Erectors Ltd. v. North Vancouver (District)
, 2003 BCCA 193, 11
B.C.L.R. (4th) 199.  On this appeal, the subcontractor seeks to extend the
application of
Shimco
to circumstances where no holdback was retained by
owners as required by the
Act
.  As will be seen, it is my opinion that
the reasoning and result in
Shimco
do not apply, and should not be
extended to this case.

[2]

The appellant, Wah Fai Plumbing & Heating Inc., provided plumbing
services as a subcontractor for renovations of the home of the respondents,
Harton Kwok Hing Ma and Yolanda Heung Ying Yuen (the Owners).  The appellant claims
it is owed the amount of $47,882.98 for the work, which was completed in
November 2001.  On September 28, 2009, it sought judgment in a summary trial in
Supreme Court on the grounds that it was entitled to a declaration that it has
a lien against the amount that the Owners were required to holdback pursuant to
s. 4(1) of the
Act
, and to a constructive trust over the Owners land on
the basis of unjust enrichment.

[3]

The trial judge dismissed the appellants action.  He found that the
claim for the holdback lien was out of time, and the appellant had not proved
that the Owners were enriched.  The appellant appeals on both grounds.

[4]

In my opinion, the appellant is not entitled to a declaration of a
holdback lien in accordance with the
Act
or its interpretation in
Shimco
,
and has not shown that the chambers judge made any error in dismissing its claim
for unjust enrichment.  It follows that I would dismiss the appeal.

Background Facts

[5]

On May 18, 2000, the Owners contracted with the respondent, Nghia Moc
Vuong doing business as True Art Construction and Renovation (the Contractor),
to undertake major renovations at their Vancouver home.  The Owners had paid
the Contractor the total amount of $389,630 under the contract by the time the
Contractor abandoned the contract on January 2, 2002.  The Owners did not
retain any holdback funds as required by s. 4 of the
Act
.

[6]

On September 20, 2000, the appellant contracted with the Contractor to
perform plumbing and heating work for the renovations for the total amount of
$82,882.98.  The Contractor paid the appellant $35,000.  The appellant
completed the work on November 1, 2001, and invoiced the Contractor for the
balance owing of $47,882.98.  Two weeks later, on November 14, 2001, the appellant
filed a lien against the Owners land for the same amount.

[7]

The Contractor did not pay the appellant in full allegedly because the Owners
did not pay the Contractor the full amount claimed by it.  The Contractor went
into bankruptcy in 2006, and did not participate in these proceedings.  The Owners
claim deficiencies against the Contractor, and deny that any money is owing to
the Contractor.  The trial judge was unable to determine on the evidence
whether the Owners owe any amount to the Contractor, and appellants counsel
conceded that amount cannot be determined from the record.

[8]

On August 29, 2002, the appellant commenced an action against the Owners
and the Contractor, claiming breach of contract.  The pleadings did not refer
to any claim of lien.  On November 14, 2002, the lien the appellant had filed
against the Owners land was extinguished because it had not been perfected within
one year after it was filed by commencing an action to enforce the claim of
lien and filing a certificate of pending litigation (ss. 22, 33(1) and (5) of
the
Act
).  On May 15, 2006, the appellants claim of lien against the
land was cancelled and removed from the title to the land when a mortgage was
registered on the property.

[9]

On August 17, 2006, the appellant filed an amended statement of claim in
which it claimed a lien against the land, a lien against the holdback and
unjust enrichment against the Owners.  The appellant also filed a certificate
of pending litigation.

[10]

The trial judge ordered that the certificate of pending litigation be
removed.  The claims for a lien against the land and a certificate of pending
litigation are not in issue in this appeal.

[11]

The trial judge rejected the appellants claims for a holdback lien and
a constructive trust as a remedy for unjust enrichment, and dismissed the
appellants action.

[12]

He found that the appellant had waited too long to bring its claim for a
lien against the holdback (at para. 11):

In these
circumstances, it seems to me that the plaintiff is trying to get around the
scheme set out by the
Builders Lien Act
which requires particular steps
to be taken at certain times in order to enforce certain rights.  That
Act
sets
out a scheme designed to enable contractors, subcontractors, and owners to
secure and determine their rights within an appropriate timeframe.  The time
within which an owner would normally be able to pay out the holdback funds had
long passed by the time this claim for a lien on those funds was first raised,
even though, of course, the owners never did pay out any funds because they had
never set any aside.

[13]

The trial judge also dismissed the claim for unjust enrichment on the
grounds that the appellant had not proved the Owners were enriched, and the contract
between the Owners and the Contractor gave a juristic reason for the appellants
deprivation.  The trial judge denied the Owners costs ... in view of their own
failure to abide by the provisions of the
Act
in terms of a holdback
account (at para. 14).

[14]

The appellant appeals the dismissal of its action, and the Owners
cross-appeal the order denying them costs of the trial.

Lien Against the Holdback

[15]

The appellants claim for a lien against the holdback is based on the
decision in
Shimco
, which established that the
Act
provides for a
lien against the holdback that is distinct from and independent of the lien
against the land.

Statutory Provisions

[16]

The relevant provisions of the
Act
are ss. 2(1), 4(1), 4(9), and 
8(4):

2
(1)     Subject to this Act, a
contractor, subcontractor or worker who, in relation to an improvement,

(a)        performs or provides work,

(b)        supplies material, or

(c)        does
any combination of those things referred to in paragraphs (a) and (b)

has a lien for the price of the work and material, to the
extent that the price remains unpaid, on all of the following:

(d)        the interest of the owner in the
improvement;

(e)        the improvement itself;

(f)         the land in, on or under which the
improvement is located;

(g)        the material delivered to or placed on
the land.

4
(1)      The person primarily liable
on each contract, and the person primarily liable on each subcontract, under
which a lien may arise under this Act must retain a holdback equal to 10% of
the greater of

(a)        the
value of the work or material as they are actually provided under the contract
or subcontract, and

(b)        the
amount of any payment made on account of the contract or subcontract price.


4
(9)      Subject
to section 34, a holdback required to be retained under this section is subject
to a lien under this Act, and each holdback is charged with payment of all
persons engaged, in connection with the improvement, by or under the person
from whom the holdback is retained.


8
(4)      Payment
of a holdback required to be retained under section 4 may be made after expiry
of the holdback period, and all liens of the person to whom the holdback is
paid, and of any person engaged by or under the person to whom the holdback is
paid, are then discharged unless in the meantime a claim of lien is filed by
one of those persons or proceedings are commenced to enforce a lien against the
holdback.

[17]

Section 2(1) creates a lien against the land in, on, or under which the
improvement on which the contractor or subcontractor performs work is located. 
In this case, the appellant filed a claim of lien against the land, which was extinguished
in law on November 14, 2002, and discharged in May 2006.

[18]

The lien against the land is not in issue in this appeal.

[19]

Sections 4(1), 4(9) and 8(4) are relevant to the holdback lien.

How a Holdback Lien Operates

[20]

Section 4(1) of the
Act
requires a person who is primarily liable
on a contract to holdback 10% of the greater of the value of the work or
materials under the contract, and the amount of any payment made on account of
the contract. Section 4(9) provides that the holdback required to be retained is
subject to a lien.

[21]

Shimco
established, interpreting s. 4(9), that a lien against a
holdback is independent of the lien on the land established under s. 2(1) (BCSC
at paras. 17-18), and, under s. 8(4), the holdback lien is not extinguished
when a lien against the land is extinguished (BCSC at para. 20).

[22]

The holdback period expires 55 days after the completion, abandonment or
termination of the project (s. 8(2)). Once that period has expired, the
holdback may be paid out. If the money is paid out to compensate a person with
a lien on the land, that persons lien and the liens of any person engaged by
or under that person are discharged.  If in the meantime (before payment of
the holdback) a claim of lien is filed against the land, or proceedings are
commenced to enforce a lien against the holdback, the holdback may not be paid
out (s. 8(4),
Shimco
, BCSC at paras. 20, 22(j)).

Shimco

[23]

Shimco
involved a
contract between the District of North Vancouver (as owner) and Design Steel
Constructors Ltd. (as general contractor) for the construction of a tennis
court.  Design Steel hired several subcontractors to assist it with the project
but failed to pay them completely.  Seven subcontractors filed builders lien
claims against the Districts lands.  Only three claimants perfected their
liens by commencing an action and filing a certificate of pending litigation
within the stipulated time.  Shimco Metal Erectors Ltd., one of the claimants
who had failed to perfect its lien against the land, conceded that its claim
against the land was extinguished, but argued that it was still entitled to
pursue a claim of lien against the holdback moneys retained by the District as
required by s. 4 of the
Act
(BCSC at paras. 2, 3, 5).

[24]

In Supreme Court, Tysoe J. (as he then was) determined, based on prior
Supreme Court authorities and a close reading of the
Act
, that despite
the fact that the lien against the land had been extinguished, the lien against
the holdback continued to exist because the action was commenced prior to the
holdback being paid out.  Thus, the holdback continued to exist and a lien
could be filed against it  (BCSC at para. 20):

In my opinion, the wording of s.
8(4) reinforces the existence of a separate lien. It provides that a holdback
may be released upon expiry of the holdback period unless (i) a claim of lien
is filed or (ii) proceedings are commenced to enforce a lien against the
holdback. The first of these events corresponds to the s. 2 lien and the second
corresponds to the s. 4(9) lien. Even if a claimant has not filed a lien in the
land title office by the time of the expiry of the holdback period, the
holdback may not be released if proceedings have been commenced to enforce a
lien against the holdback. The lien against the land will have been
extinguished by operation of s. 22 but the holdback may not be released and
there may be continuing proceedings to enforce the lien against the holdback.
This acknowledges that there is a separate lien against the holdback which has
not been affected by the extinguishment of the lien against the land.

[25]

A unanimous division of this Court affirmed Tysoe J.s judgment.

[26]

The dual lien theory endorsed in
Shimco
was not warmly received
by the profession, and was the subject of critical commentary:  see David A.
Garner, Builders Lien Law Update  2003:  The Aftermath of
Shimco Metal
Erectors Ltd.
, prepared for the Continuing Legal Education Society of
B.C.s Construction Law  2003 Update (November 2003) at
§
1.1.3;
David Coulson,
Guide to Builders Liens in British Columbia
, loose-leaf
(Scarborough:  Carswell, 1992-) at
§
5.33; Jason S.
Twa, The Shimco Lien  A Refresher, prepared for the Continuing Legal
Education Society of B.C.s Construction Law  2009 Update (April 2009) at
11.3.3; Norm Streu & Christopher Hirst, Shimco Lien Lives On
Journal
of Commerce Online
(7 April 2003); Brindle, Jenkins & MacEwing, eds,
British
Columbia Builders Liens Practice Manual
, loose-leaf (Vancouver:  The
Continuing Legal Education Society, 1999) at
§
3.42.
[BC Practice Manual];  British Columbia Law Institute, Consultation Paper on
Builders Liens After the
Shimco
Case (Vancouver, September 2003); 
British Columbia Law Institute, Report on Builders Liens After the
Shimco
Case (Vancouver, February 2004) [BCLI Report].

[27]

In the BCLI Report, the BC Law Institute summarized the concerns of
practitioners, owners, and others involved in the construction industry.  In
general, it was suggested that the existence of a holdback lien created
uncertainty, which conflicted with one of the broad policy goals of the
Act

to create certainty around the maintenance and release of holdbacks  and would
create more complex contractual negotiations, and more disputes and litigation
in the construction industry.  The primary concern was that the provisions of
the
Act
that establish procedures for claiming, enforcing and
extinguishing a lien against land do not apply to a holdback lien, creating
uncertainty concerning the scope and implementation of a holdback lien in
comparison with a land lien.  Other concerns were expressed about the owners
role in maintaining and paying out a holdback required under the
Act
.  It
was suggested by one commentator, for example, that the holdback lien as interpreted
in
Shimco
may create a personal (as opposed to an
in rem
claim)
against an owner who has failed to maintain a holdback account (or to retain a
holdback):  see B.C. Practice Manual at 3.42:

There is a
significant difference between a right
in rem
against a holdback and a
right
in personam
against an owner for the holdback obligation.  The
distinction will be important where no holdback account has been established,
and where non-contracting owners are sued.  If there is no holdback account,
then perhaps this lien is a charge against the contractors right to be paid
the holdback.  This would be the equivalent to a money judgment against the
contracting owner who failed to maintain a holdback account.

[28]

After consultation with interested parties, the BC Law Institute
recommended legislative amendments to abolish the holdback lien.  No such
amendments have been made.

The Appeal

[29]

The discussion of the implications of the holdback lien and the
recommendations of the BC Law Institute suggest a cautious approach to any
extension to other cases of the application of the reasoning and result in
Shimco
. 
An analysis of
Shimco
, to determine what it decides, and of the
Act
,
to determine how it applies to the facts of this case, is necessary.

[30]

The facts in
Shimco
were that the owner retained a holdback, and the
plaintiff commenced proceedings to claim a holdback lien before its land lien
was extinguished and before the holdback had been paid out.

[31]

On those facts, Tysoe J. determined that the plaintiff was entitled to a
lien against the existing holdback, separate from its extinguished land lien,
and the plaintiffs holdback lien was not extinguished on the extinguishment of
its land lien.

[32]

In this case, the Owners did not retain a holdback from its payments to
the Contractor (or alternatively, they effectively paid the holdback to the
Contractor by wrongfully failing to holdback 10% from those payments), and the
appellant did not commence proceedings to enforce a lien against the holdback
before its land lien was extinguished (on November 14, 2002, under ss. 22 and
33(5) of the
Act
, for failure to comply with the filing requirements of
the
Act
).

[33]

On these facts, there was no holdback in existence that remained to be
paid, and the appellant had not commenced proceedings to enforce a lien against
the holdback when its land lien was extinguished.

[34]

Shimco
does not deal with these facts.  It is the
Act
which determines whether the appellant has a valid claim to a holdback lien in
these circumstances.

[35]

The relevant provision of the
Act
is s. 8(4), which I reproduce
here for convenience:


8
(4)      Payment
of a holdback required to be retained under section 4 may be made after expiry
of the holdback period, and all liens of the person to whom the holdback is
paid, and of any person engaged by or under the person to whom the holdback is
paid, are then discharged unless in the meantime a claim of lien is filed by
one of those persons or proceedings are commenced to enforce a lien against the
holdback.

[36]

If the Owners had retained a holdback as required by s. 4(1) of the
Act
,
under s. 8(2) the holdback period would have expired 55 days after January 2,
2002, the date the Contractor abandoned the contract.  Section 8(4) provides
that the holdback could then be paid out unless a claim of lien was filed
against the land or proceedings were commenced to enforce a lien against the
holdback.

[37]

At the expiry of the holdback period (February 22, 2002), the
appellants lien had been filed against the land.  The holdback could not have
been paid out until the resolution of the claim.

[38]

The appellants land lien was extinguished one year after it was filed,
on November 14, 2002.

[39]

As of November 14, 2002, the appellant had not commenced proceedings to enforce
a lien against the holdback.  Under s. 8(4), the Owners could then have
lawfully paid out the holdback, extinguishing the appellants lien against the holdback.

[40]

Shimco
does not deal with these circumstances.  Nor can the
Act
be interpreted to provide that where there is no holdback, or a holdback has
been wrongfully paid out, a person whose land lien has been extinguished may later
commence proceedings to enforce a lien against a nonexistent holdback.

[41]

The appellant argues there is no limitation in the
Act
for
enforcing a lien against the holdback.  It claims that proceedings to enforce a
lien against a holdback may be commenced any time before the holdback is paid
out, subject only to the six-year limitation period provided in s. 3(5) of the
Limitation
Act
, R.S.B.C. 1996, c. 266.  It argues further, citing s. 4(4) of the
Limitation
Act
, that the amendment to the statement of claim in August 2006 to claim
the holdback lien did not have the effect of commencing a new action, and its
claim against the holdback should be considered to have arisen when it
originally filed the writ and statement of claim in August 2002.

[42]

The appellant cites no authority for its suggestion that s. 4(4) of the
Limitation
Act
should be given retroactive effect, and I see no basis in principle to
so find in this case.  In any event, it would not change the result:  the
appellant is not entitled to claim a lien against a nonexistent holdback.

[43]

The fact there was no holdback is the principal difference between this
case and
Shimco
.  Even if the appellant commenced proceedings to claim a
holdback lien before its land lien expired, there was nothing against which the
lien could be claimed.  The
Act
does not provide for enforcement of a
holdback lien where there has been no holdback, nor is there any reason to
extend
Shimco
to that factual circumstance.

[44]

It is true that the Owners failure to comply with s. 4 of the
Act
is the primary cause of the loss of the appellants holdback lien.  That is the
result of the wording of the legislation, which the Legislature has the power
to remedy.  It is also true that the appellant did not take steps to claim a
lien against the holdback until long after the time that the Owners could have
paid out the holdback, had they retained it.

[45]

It follows that I would not accede to this ground of appeal.

Unjust Enrichment

[46]

The appellants claim for unjust enrichment is brought in the alternative
to its claim for a lien against the holdback.

[47]

At trial, the appellant claimed that the Owners were unjustly enriched
because of the work that it completed on their home. The Owners were enriched
by the improvements, while the appellant was deprived because he was not paid
for that work.  The appellant asserts that because the Owners have not paid all
that is owed on the contract between them and the Contractor, there is no
juristic reason for their enrichment.

[48]

The trial judge found that the appellant had been deprived.  He did not
find that the Owners were correspondently enriched because the appellant did
not prove that the Owners did not pay the full amount owed under the contract
to the Contractor. If the full amount was paid for the renovation, it could not
be said that the Owners were enriched.  The onus was on the appellant to prove
that the Owners did not pay the full cost of the renovations.  The trial judge found
that the appellant failed to discharge that burden.

[49]

The trial judge decided that, in any event, the contract between the Owners
and the Contractor was a juristic reason for the benefits [the Owners}
obtained from the appellants work (at para. 6).  He found further that the
... deprived [appellant], who was not a party to that contract, does not have
a sufficient relationship to the owners to demonstrate the absence of a
juristic reason (at para. 6).

[50]

The parties focused much of their argument on whether a contract is a
juristic reason for the appellants deprivation.  They say that the law in
Canada is not settled on this point. The respondent argues that the existence
of a contract, in itself, precludes a claim for unjust enrichment, citing
Garland
v. Consumers Gas Co.
, 2004 SCC 25 at paras. 40, 44-46; [2004] 1 S.C.R.
629;
Pacific National Investments v. Victoria (City)
, 2004 SCC 75 at
paras. 23-25, [2004] 3 S.C.R. 575.  The appellant argues that the state of
accounts between the parties to the contract (in this case, the Owners and the
Contractor) is relevant to whether an owner retaining a benefit is supported by
a juristic reason, citing, among other cases,
Ken Lawter Holdings Ltd. v.
Steen Panduro Holdings Ltd.
(1991), 55 B.C.L.R. (2d) 317 (C.A.).  It
suggests that the statement in
Garland
, referred to in
Pacific
National Investments
, that the existence of a contract is an established
category of juristic reason resulting in the denial of a claim for unjust
enrichment, was not applied in those cases.

[51]

Where the parties differ is on the question of whether proof of the
state of accounts between the Owners and the Contractor is necessary to the
claim for unjust enrichment.  The appellant says that is determinative:  if the
Contractor was not paid in full, the Owners were unjustly enriched.  The Owners
argue that the existence of the contract, whether or not they paid the
Contractor in full, is a juristic reason for any enrichment they may have
received.

[52]

It is trite law that the three elements of a claim for unjust enrichment
are an enrichment of the defendant; a corresponding deprivation of the
plaintiff; and an absence of juristic reason for the enrichment:  see
Garland
at para. 30.

[53]

Thus, for the appellant to succeed on its claim for unjust enrichment,
it must prove enrichment of the Owners.

[54]

The appellant concedes that that the state of accounts between the Owner
and the Contractor must be resolved before it can be determined whether the
Owners were enriched, and there is insufficient evidence on the record to
determine that question.  Without proving that the Owners were enriched by
failing to pay the Contractor in full, an unjust enrichment claim cannot
succeed.

[55]

On appeal, the appellant argues that on the summary trial, the trial
judge could have concluded that he could not decide the issue and referred it
to trial instead of dismissing the action.

[56]

In my opinion, the appellant failed to prove its case on this issue. 
The appellant did not provide any information to this Court to explain why it
could not produce the evidence necessary to prove its claim for unjust
enrichment at the summary trial, and why it would have been unjust for the
trial judge to dismiss the claim for unjust enrichment.

[57]

Since the appellant has not proved that the Owners were enriched, the
issue of whether there is a juristic reason for any enrichment does not arise.

[58]

I would not accede to this ground of appeal.

Costs

[59]

The Owners cross-appeal the order denying them the costs of the trial.

[60]

The Owners cross-appealed from the order for costs without applying for
leave under s. 7(2)(b) of the
Court of Appeal Act
, R.S.B.C. 1996, c. 77,
which provides that leave is required to bring an appeal from an order
respecting costs only.  This matter was raised by the division at the hearing,
and the parties provided written submissions on whether leave to cross-appeal
was required.

[61]

Previous cases of this Court have made it clear that where an order for
costs is integral to a judgment from which an appeal is brought, leave is not
required to appeal or cross-appeal the order for costs:  see
Rieta v. North
American Air Travel Insurance Agents Ltd.
(1998), 52 B.C.L.R. (3d) 114
(C.A.);
Heppner v. Schmand
(1997), 29 B.C.L.R. (3d) 128 (Esson J.A. in
chambers);
Cao (Guardian ad litem of) v. Natt
, 2004 BCCA 446 (Esson
J.A. in chambers).

[62]

The trial judge refused costs to the successful Owners because their
failure to comply with the holdback provisions of the
Act
affected the
manner in which the action proceeded.  In doing so, the trial judge erred in
principle in exercising his discretion as to costs by relying on pre-litigation
conduct of the Owners:  see
Rossmo v. Vancouver Police Board et al.,
2003 BCCA 677 at paras. 59 and 62, 21 B.C.L.R. (4
th
) 68, followed in
Brito (Guardian ad litem of) v. Woolley
, 2007 BCCA 1 at paras. 27 and
28, 63 B.C.L.R. (4
th
) 139.  This Court said in
Rossmo
at
para. 62:

I conclude that the trial judge
erred in principle by basing her decision on pre-litigation conduct.  The very
purpose of the litigation was to determine whether the impugned conduct
supported a cause of action leading to a judgment in damages.  The trial judge
found no liability against DCC Unger.  Costs should follow that determination. 
The order denying him costs amounts to a finding of quasi-liability and cannot
be sustained.

[63]

Similarly, in this case, the very purpose of the litigation was to
determine whether the failure of the Owners to retain a holdback supported a
cause of action by the appellant to enforce a claim against the holdback.  The
trial judge found that it did not.  The order denying the Owners costs amounts
to a finding of quasi-liability.  While the nonexistence of the holdback is the
primary reason for denying the appellants claim, it is the application of the
law that gives rise to that result.

[64]

I would allow the Owners cross-appeal, set aside the order of the trial
judge denying them the costs of the summary trial, and order that they are
entitled to those costs.

Conclusion

[65]

I would dismiss the appeal, allow the cross-appeal, and order that the
Owners are entitled to the costs of the summary trial and the appeal.

The Honourable
Madam Justice Levine

I Agree:

The Honourable
Madam Justice Newbury

Reasons for Judgment of the Honourable Mr. Justice Chiasson:

[66]

I have had the privilege of reading a draft of the reasons for judgment
of Madam Justice Levine.  I agree with her conclusion, but wish to add a few
comments.

[67]

A lien is a right
in rem
.  It must attach to property.  Newbury
J.A. made this very clear in
Columbia (Workers' Compensation Board) v.
Canadian Imperial Bank of Commerce
(1998), 157 D.L.R. (4th) 193.  Section 4
requires a person liable on a contract, in this case the owners, to retain
money payable to contractors.  Retain means continue to have; keep
possession of:
Concise Oxford English Dictionary
,
11
th
ed.
The money retained is the property to which the lien attaches.

[68]

In
Voth Bros. Const. (1974) Ltd. v. National Bank of Canada
(1988), 54 D.L.R. (4th) 534 (B.C.C.A)
,
this Court observed that the
holdback did not have to be in a specific fund. Section 5 was a new feature of
the
Builders Lien Act
, S.B.C. 1997, c. 45 (which came into force on
February 1, 1998).  It provides for the creation of a specific fund: the
holdback account.

[69]

In its factum, the appellant stated, without reference to authority,
that the legislation provides for three liens: land, holdback and holdback
account.  In my view, that is not correct.  There are two liens only: the land
lien and the holdback lien.  The holdback account is merely the holdback held
in a designated fund, from which liens are paid.  It is the same money that is
required to be retained by s. 4.

[70]

This is clear from a consideration of ss. 4 and 5.  Section 4(1)
requires the retention of money.  Section 5(1)(b) requires that money to be put
into a depository, unless the money is retained by a lending institution (ss.
5(4), 4(4) and (5)).  The failure of an owner to put the money into a
depository or to have it retained by a lender does not relieve the owner of the
responsibility to retain the money pursuant to s. 4.

[71]

In
Shimco
there was a holdback; there was property to which the
holdback lien could attach.  In this case, as Madam Justice Levine observes,
there was no holdback.  The owners did not retain the money required to be
retained by s. 4.  There was no property to which the lien could attach.  That
is why the appellant cannot obtain a declaration of lien. If an owner has not
retained money, whether in or not in a specific fund, no lien can arise.

[72]

The appellants difficulty derives from the legislation.  Section 4
provides for a lien.  The legislation is silent on any remedy that may be
available to a claimant arising out of an owners failure to meet the statutory
obligation to retain funds to which that lien could attach.  There may be such
a remedy, about which I give no opinion, but a declaration of lien is not one of
them.

[73]

I also would dismiss this appeal.

The Honourable
Mr. Justice Chiasson


