By Carter Moe and Hunter Lang

Construction professionals will be familiar with Shimco Metal Erectors Ltd. v. North Vancouver (District), 2003 BCCA 193 [Shimco], a decision which recognized what is now known as the Shimco lien – a lien that is distinct from the lien against land and improvements created under section 2 of the BLA and instead applies against the statutory holdback that must be retained by owners, contractors, and subcontractors under the Builders Lien Act, S.B.C. 1997, c. 45 [BLA].

Shimco was decided by our BC Court of Appeal over twenty years ago but has since been subject to complex legal issues, criticism, and debate in the construction industry, including prompting calls for reform and abolishment of the Shimco lien. However, in the recent decision of Kingdom Langley Project Limited Partnership v. WQC Mechanical Ltd., 2025 BCCA 169 [Kingdom Langley], the BC Court of Appeal declined to overturn the Shimco decision and instead made clear that doing so will require legislative intervention.

Dawn of the Shimco Lien – Revelation or Fallacy?

The Shimco lien was arrived at through a strict interpretation of the BLA. As stated above, it provides for a lien on holdback funds that is entirely separate from the firmly established lien on land and improvements. Notably, it allows a subcontractor to pursue a separate lien against the holdback even where other lien rights had been extinguished.

The Shimco decision has since been the topic of debate. As noted in the Kingdom Langley decision, neither the Shimco decision or the BLA provides further guidance regarding how notice of a Shimco lien is provided, how the lien is to be enforced, or how the lien is cancelled. Shimco acknowledges that sections 23 and 24 of the BLA (relating to the clearing or cancellation of liens) can only apply to a lien against land and improvements. In comparison, the BLA lacks any corresponding provisions that apply to discharge a Shimco lien.

The Shimco lien also creates some uncertainty regarding the administration of holdback funds. For example, if even one Shimco lien is asserted before the end of the holdback period specified in sections 8(1) and (2) of the BLA, section 8(4) might be assumed to prohibit any of the holdback from being paid out. However, there is no explicit restriction on when other Shimco liens may be claimed once the holdback fund has been immobilized.

The Shimco Lien Revisited – A Missed Opportunity?

In ultimately refusing to overturn the Shimco decision, the BC Court of Appeal considered the Shimco lien in the context of construction practice, emphasizing the importance of understanding the typical flow of funds in large construction projects. The BC Court of Appeal noted that parties lower in the contractual chain are more vulnerable to non-payment. Further, the purpose of the holdback is to limit owner liability and protect unpaid lienholders.

The BC Court of Appeal considered the criticisms of Shimco – that it disrupted commercial certainty, allowed for a broader class of lien claimants, granted procedural advantages to holdback lien claimants, and did not subject holdback liens to the same rules or procedures as those applying to liens against land and improvements under section 2 of the BLA.

The Court of Appeal also acknowledged that allowing a separate lien against the holdback might be unfair to subcontractors that complied with the BLA to perfect their lien claims but would have to share the holdback with others who did not. However, in its view, the disharmony among subcontractors was not enough to overcome the “dual lien” model provided for in the BLA.

Despite acknowledging the problematic implications arising from Shimco, and recognizing that there was a plausible alternative interpretation of the BLA to provide for only a single type of lien, the BC Court of Appeal ultimately refused to overturn Shimco. The BC Court of Appeal held that mere disagreement with the Shimco decision did not warrant overturning it. The proposed alternative interpretation of the BLA required the BC Court of Appeal to read words into the statute that simply were not there. It was for the legislature to correct any deficiencies in the BLA by statutory amendment and it was not within the judiciary’s power to modify the plain text of the BLA to effectively establish the single type of lien as the sole remedy available to subcontractors. Only the legislature had the authority to abolish the Shimco lien and restore the three distinct mechanisms—the lien against the land and improvements, the holdback, and the statutory trust—created to enhance financial security in construction projects in British Columbia.

Confirming the Shimco Lien – Here to Stay (For Now)

Overall, the Shimco lien is a legal concept unique to British Columbia. No other Canadian jurisdiction includes a dual lien model as a component of its construction lien legislation. It has been the subject of debate for many years and industry stakeholders have called for judicial intervention or amendments to the BLA. Substantial uncertainty in all dealings with holdback funds still remain among owners, general contactors, lenders, and the construction bar. The BC Court of Appeal affirmed the Shimco lien, but its comments make clear the Shimco lien is ripe for legislative reform.

Only time will tell if future amendments to the BLA will serve to abolish the Shimco lien. While the BC Court of Appeal recognized multiple possible approaches to amending the BLA as proposed by the British Columbia Law Institute over the years and at the appeal, we observe that it will be some time before the provincial government acts on any recommendations. We note that on June 30, 2025, the Commercial Liens Act, S.B.C. 2022, c.9 [CLA], came into force. The CLA aims to significantly modernize the law governing various types of liens that are not governed by the BLA and reduce risks and costs for labour providers and material suppliers across various industries by introducing major changes to their respective lien legislation. However, it does not include any legislative changes to the BLA.

For now, Kingdom Langley confirms the Shimco lien and the BC Court of Appeal’s position that the BLA treats liens against land and holdbacks as separate legal mechanisms. When making a claim of lien, applying to discharge or cancel a lien, or releasing holdback funds, owners and contractors must ensure they have turned their mind to the distinct nature of builders lien legislation in British Columbia and taken all proper steps to protect their interests.

Our group has experience dealing with builders lien claims and other legal issues that arise under the BLA. If you have any questions or concerns regarding the filing, prosecuting, or defending of builders lien claims, or any other construction-related legal matters, please contact our Construction group for assistance.