The British Columbia Court of Appeal overturned orders striking construction payment claims and staying a separate builders-lien holdback claim because of overlapping court proceedings. The Court found that pursuing related claims in Provincial Court and Supreme Court did not automatically constitute an abuse of process.
In 1866noentry.com Systems Ltd. v. Surrey (City), 2026 BCCA 430, the Court also ordered the reinstatement of security that had been released despite an unresolved claim against the statutory construction holdback.
The decision addresses how contractors can pursue unpaid construction accounts while preserving distinct remedies under British Columbia’s Builders Lien Act.
Two Court Proceedings Over the Same Construction Debt
1866noentry.com Systems Ltd., formerly known as Intercon Security Ltd., alleged that Graham Construction and Engineering Limited Partnership failed to pay for services and equipment supplied to a construction project on land owned by the City of Surrey.
The company registered a builders lien against the land for $139,646. That lien was subsequently cancelled under a consent order after equivalent security was deposited with Graham’s counsel. The order expressly provided that the security would also secure any claim against the statutory holdback.
The company commenced a Small Claims action against Graham, limiting its monetary recovery to the Provincial Court’s $35,000 jurisdictional ceiling. It later commenced a Supreme Court action seeking $65,257.25 through contractual and restitutionary claims, together with a declaration of entitlement to a holdback lien.
The chambers judge struck the monetary claims as an abuse of process, stayed the holdback-lien claim pending the Small Claims proceeding and ordered the security released.
Why the Parallel Proceedings Were Not Automatically Abusive
The Court of Appeal found that the chambers judge had erred by treating the duplication between proceedings as effectively decisive.
An abuse-of-process analysis requires consideration of the surrounding circumstances, including the effect of overlapping proceedings on judicial economy, consistency, finality and the administration of justice.
The claimant had offered to abandon its Small Claims action, which would eliminate the duplication, and subsequently withdrew that proceeding. Graham also had a related counterclaim remaining in Supreme Court.
The Court found that these circumstances had not been properly considered. It set aside the orders striking the monetary claims and staying the holdback-lien claim.
A Holdback Lien Is Distinct from a Lien Against Land
The decision also addresses two separate remedies under the Builders Lien Act.
A conventional lien under section 2 secures a claim against land and improvements. Section 33 generally requires enforcement proceedings to be commenced within one year after the lien is filed, together with registration of a certificate of pending litigation where required. A shorter deadline can apply if a notice to commence an action is served.
A separate lien against the statutory holdback arises under section 4(9). This is commonly called a Shimco lien, following Shimco Metal Erectors Ltd. v. North Vancouver (District), 2003 BCCA 193.
The Court of Appeal found that the section 33 enforcement deadline for the conventional land lien did not determine the claimant’s monetary claims or its separate Shimco lien claim.
The holdback-lien claim also could not be adjudicated or enforced in Provincial Court, giving the Supreme Court proceeding a distinct purpose.
Why the Security Had to Be Reinstated
The original consent order expressly provided that the posted security would cover both the registered land lien and any claim against the statutory holdback.
Although the conventional land lien was no longer enforceable, the Shimco lien claim remained unresolved. Releasing the security was therefore inconsistent with the consent order.
The Court directed Graham to reinstate equivalent security within 30 days, subject to any lower amount agreed upon by the parties.
The outcome depended on the express terms of the consent order. It does not mean that security posted to cancel every conventional builders lien necessarily secures a separate holdback-lien claim.
Implications for Construction Payment Disputes
The decision demonstrates why contractual payment claims, liens against land and statutory holdback liens must be assessed separately. These remedies involve different procedural requirements and may require proceedings in different courts.
For contractors and subcontractors, preserving each available remedy requires attention to jurisdiction and statutory deadlines. This case is also a reminder of the pitfalls of commencing proceedings in Provincial Small Claims Court where a matter involves a builders lien whose enforcement is the exclusive jurisdiction of the Supreme Court.
We have been involved in numerous disputes where builders liens claims are lost and unenforceable because the claimant pursued the claim in Provincial Court.
ATAC LAW represents owners, contractors and subcontractors in British Columbia construction litigation, including builders-lien enforcement, holdback disputes and unpaid construction claims.
