The Supreme Court of British Columbia approved the $37.5 million receivership sale of a West Vancouver development and rejected attempts by a project manager and an unpaid contractor to claim priority over a $2.61 million municipal construction deposit. The developer’s contractual rights to any refund were covered by its lender’s perfected security interest.
The ruling distinguishes money securing municipal works from payments owed under a construction contract. A contractor cannot treat a development deposit as available trust funds merely because its work relates to the same project.
The Competing Claims to the Deposit
In Pacifica Mortgage Investment Corporation v. 2490 Marine Drive Ltd., 2026 BCSC 1928, the Pierwell development entered receivership after the developer encountered financial difficulties. Pacifica was owed more than $42.5 million, and the receiver obtained a $37.5 million purchase offer.
The District of West Vancouver held approximately $2.61 million under an Engineering Services Agreement. The funds secured the developer’s obligation to complete public infrastructure works. The District could use the money if the developer failed to perform, with any remaining balance governed by the agreement’s refund terms.
The deposit was financed through a US$2.2 million loan from Create World to project manager C&WHB Construction Ltd. Funds passed directly to the developer’s limited partnership and then to the District. Meanwhile, site-servicing contractor RTR Terra Contracting Ltd., which contracted with the project manager, claimed $1,042,590.42 in unpaid work.
RTR and the project manager asserted rights to the deposit ahead of Pacifica.
Why the Lender Had Priority
Pacifica held security registered under the Personal Property Security Act covering the developer’s existing and future contractual rights. The Court found that this perfected security included the developer’s interest in any refundable balance of the municipal deposit, subject to the District’s rights to apply the funds to required work.
The project manager argued that the original advance created a Quistclose trust because it was earmarked for the deposit. The Court did not need to decide whether a trust initially arose: even if it had, the funds had been used for their intended purpose when paid to the District. The asserted trust therefore could not defeat Pacifica’s security.
Shortly before Pacifica commenced foreclosure proceedings, the developer also signed a form directing the District to record the project manager as depositor. The Court held that this administrative change redirected a possible refund but did not transfer the underlying contractual rights. Any purported transfer remained subject to Pacifica’s earlier security and, on the Court’s findings, would also be void under the Fraudulent Conveyance Act.
RTR separately invoked section 10 of the Builders Lien Act. That provision concerns money received by a contractor or subcontractor on account of a contract price. Here, the money remained with the District as security for municipal obligations. It was not a payment received under RTR’s subcontract, so the statutory trust claim failed.
The Court did not decide whether RTR was actually owed its claimed amount; that dispute remained in separate lien proceedings. It approved the sale through a reverse vesting order, preserving the District’s contractual rights.
What Project Participants Should Take From the Decision
Developers and project managers should document who funds municipal deposits, who holds any refund rights and how those rights are affected by loan security. Contractors should distinguish a claim for unpaid work from an interest in money held by a municipality. Lenders should ensure registered security covers contractual rights and deposits.
Here, Pacifica’s priority attached to the developer’s refund rights, not an unrestricted right to take money the District still held to secure public works.
