B.C. appeal revives contractor’s payment claims and orders security restored

A security contractor’s payment claims can proceed in the B.C. Supreme Court after the province’s appeal court overturned a ruling that treated overlapping small-claims litigation as an abuse of process.

In 1866noentry.com Systems Ltd. v Surrey (City), 2026 BCCA 430, the British Columbia Court of Appeal also ordered Graham Construction to restore security that had been released while a separate claim against construction holdback funds remained unresolved.

Justice Warren, writing for a unanimous panel on October 23, 2026, found that the chambers judge had overlooked important circumstances, including the security company’s stated intention to abandon its small-claims action and Graham’s counterclaim in the Supreme Court proceeding.

The appeal restored the claims and required reinstatement of their financial security; it did not establish an entitlement to payment. Graham denied owing anything, and the court did not decide the underlying contract dispute. The declaration extinguishing the company’s original lien on the land was not reversed.

Two kinds of lien, with different treatment

The company, formerly known as Intercon Security Ltd. and called Intercon in the reasons, alleged that it had not been paid for services and equipment supplied under its contract with Graham for a project on City of Surrey land.

Intercon registered a $139,646 lien against the land in April 2024. A November 2024 consent order removed that lien from title in exchange for security of the same amount held in trust by Graham’s counsel.

Crucially, the consent order said that the security also covered any lien claim against the statutory holdback. Under the Builders Lien Act, that holdback lien, commonly called a Shimco lien, is independent of the lien against land and improvements.

Section 33 requires a Supreme Court action to enforce the land lien within one year of its filing. Intercon did not start such an action in time. Instead, it began a Provincial Court small-claims action in March 2025 and abandoned the portion of its monetary claim above that court’s $35,000 limit.

In November 2025, Intercon started the Supreme Court action, seeking $65,257.25 in contractual or alternative monetary relief and a declaration of entitlement to a holdback lien. That action did not seek to enforce the expired land lien.

The Court of Appeal emphasized that the land-lien deadline did not govern these contract, unjust-enrichment or holdback-lien claims. The expiry of that particular deadline therefore did not justify treating the later action as unfair.

Duplication required a fuller analysis

Graham asked to have the Supreme Court action dismissed, arguing that it duplicated the earlier small-claims proceeding and attempted to reclaim money Intercon had already abandoned.

The chambers judge struck every claim except the holdback-lien claim, stayed that remaining claim pending the small-claims result, declared the land lien extinguished and released the security.

Warren held that finding two proceedings did not complete the abuse-of-process analysis. The court had to consider whether allowing the action to continue would undermine judicial economy, consistency, finality or the integrity of justice.

Intercon had explained that it initially chose small claims as a less expensive way to recover unpaid invoices, then pursued Supreme Court proceedings because a holdback lien could not be adjudicated in Provincial Court. It expressly offered to abandon the small-claims case to eliminate the overlap and withdrew it after the chambers ruling.

The judge had also overlooked Graham’s Supreme Court counterclaim, which arose from the same underlying dispute. Requiring Intercon to litigate elsewhere while Graham’s counterclaim remained could itself create duplicative proceedings.

The appeal court added that seeking an amount above the small-claims limit in Supreme Court is not inherently abusive. The Small Claims Rules expressly contemplate transfers where the possible monetary outcome exceeds the limit, including a claim for an amount previously abandoned.

Security must be reinstated

The consent order expressly secured both types of lien claim. Releasing the security because the land lien had expired overlooked the surviving holdback claim and the agreement that it would be pursued against the security instead of the owner’s holdback.

Although Graham said Surrey retained holdback funds, there was no order requiring that retention to continue. The appeal court found that the supposed protection for Intercon’s remaining claim could not simply be assumed.

Because the security had already been released, Graham was directed to restore it within 30 days in the same amount, or a lower amount the parties agreed would secure the holdback-lien claim. It must be in an equivalent form and held in trust under the consent order. Disputes about its mechanics or form were left to the Supreme Court, where the restored claims and Graham’s counterclaim remain to be resolved.