Executive Summary: Key Legal and Evidentiary Issues

• Aragon sought cancellation of Mazzei's builder's liens under s. 25(2)(b) of the Builders Lien Act, arguing the claims were frivolous or an abuse of process.

• Mazzei's delay claim lacked sufficient evidentiary support, with the court finding repeated failures to particularize actual work performed or materials supplied.

• The Revay Report relied upon by Mazzei contained multiple unsupported assumptions, including attribution of all delays to Aragon and allocation of all labour hours to Phase 2.

• Costs such as overhead, financing, markup, and performance bonds have been held to fall outside the scope of lienable claims under s. 2 of the BLA.

• Security was significantly reduced in both decisions — from $2,924,711.66 to $285,717.88 in the first hearing, and from $2,097,286.41 to $350,000 in the second — reflecting the court's discretion under s. 24 of the BLA.

• Aragon was awarded costs in both applications as the primarily successful party, while Mazzei's right to file further liens was preserved.

Background and the contractual relationship

In October 2019, Aragon (English Inn) Development Corp. entered into a stipulated price contract with Mazzei Electric Ltd. for a sum of $3,538,880.00, exclusive of taxes. Mazzei was engaged as the electrical contractor for the redevelopment of a heritage hotel located in Victoria, British Columbia. The contract was subject to change orders and contained provisions governing delays, claims for changes in the contract price, dispute resolution, and retention of rights. Commencement of Phase 2 of the project was delayed to January 2022, and while the parties settled material escalation costs related to the delayed start of Phase 2, Mazzei claimed escalation of labour costs and delay and disruption related costs, which Aragon disputes.

The dispute and the first lien (2024 Lien)

Mazzei submitted four Change Directive/Change Order requests for a contract extension between August 2024 and April 2025, all of which were refused by Aragon. On November 18, 2024, Mazzei filed a claim of lien against Aragon's lands for $2,924,711.66, which it claimed "is or will become due and owing to Mazzei Electric Ltd. on 2024-10-31." The claim of lien was assigned registration number CB1717489 by the Victoria Land Title Office. The lien comprised three components: $308,611.38 in invoices, a $2,298,070 delay claim, and $318,030.28 representing a holdback account. Aragon applied to the Supreme Court of British Columbia to have the lien cancelled under s. 25(2)(b) of the Builders Lien Act as abusive, or alternatively to reduce the required security under s. 24 of the Act.

The first decision (Mazzei #1, 2025 BCSC 1435)

Justice LeBlanc heard the application on July 7, 2025 and delivered reasons on July 25, 2025. Mazzei conceded that the invoices totalling $308,611.38 had been paid and that the holdback figure should be adjusted to $285,717.88, effectively admitting the lien should be reduced by a total of $340,923.78. Regarding the delay claim, the court found that Mazzei had not put before it a summary of the actual work and material costs as of the filing date of the lien. The delay invoices contained only an entry code of "09042 delay claim" and an allocated amount, with no further detail provided. Mazzei admitted that the delay claim was an estimated amount, submitting that the actual costs were continuously fluctuating and precision at that time was not possible. The court noted that accepting the entire amount of an inflated lien would undermine the purpose of the Act and create the kind of situation cautioned against in Atlas Painting. Despite its serious misgivings concerning the inflated lien and the approach taken by Mazzei, the court found that portions of the lien gave rise to an arguable case and declined to cancel the lien pursuant to s. 25(2)(b). Exercising its discretion under s. 24, the court ordered security be posted in the sum of $285,717.88, representing the holdback account. The defendant, Aragon, was primarily successful on the application and was awarded its costs in the cause.

The second lien (2025 Lien) and renewed proceedings

On July 4, 2025, Mazzei issued a notice to arbitrate to Aragon, seeking payment of its delay claim. On July 18, 2025, Aragon issued its response, in which it claimed that Mazzei was directly responsible for delays to the construction schedule, including 252.2 days. On November 20, 2025, Mazzei issued invoice D006230 to Aragon for $3,012,489.74 (inclusive of tax), covering costs for additional labour hours, wage escalation for regular labour hours, wage premium for overtime hours expended, wage escalation for overtime hours, staff costs, indirect costs during the delay period, markup on labour costs at 10%, unabsorbed head office overheads, financing costs for delayed invoice payments, financing costs for delayed holdback release, and GST. On December 11, 2025, Mazzei filed a second lien for $2,097,286.41 under instrument number CB2513177. In support of its 2025 Lien, Mazzei commissioned a report from Revay dated November 18, 2025. Aragon once again applied to cancel the lien or reduce the security.

The contract provisions and lien composition at issue

The parties directed the court's attention to several contract clauses, including Article A-4 Contract Price, GC 6.5 Delays, GC 6.6 Claims for a Change in the Contract Price, Part 8 Dispute Resolution, and GC 83 Retention of Rights. Mazzei's 2025 Lien was calculated by taking a subtotal of $2,019,701.45 in labour-related delay costs, adding the current unpaid holdback value of $363,302.84, and subtracting the $285,717.88 already held in trust as security from the first decision, arriving at a final lien amount of $2,097,286.41. Aragon argued that items such as staff costs, indirect costs during the delay period, markup, unabsorbed head office overheads, and financing costs had previously been held as being outside the scope of the Builders Lien Act and that the 2025 Lien represented amounts that had been re-labeled or repackaged in the invoice.

Evidentiary weaknesses and the Revay Report

The court identified significant evidentiary problems with the Revay Report on which Mazzei relied. The conclusions set out in the Revay Report were not sworn evidence, and Mr. Hale did not adopt Revay's conclusions in his affidavit — instead, he relied on advice from his counsel that the Revay Report supported the amount of the 2025 Lien. The court highlighted five unsupported assumptions in the Revay Report: that Phase 1 was completed when Phase 2 began and all hours expended beyond that date were for work with Phase 2; that the hours expended by Mazzei were to address deficiencies; that salaried employee time could be allocated to the project based on percentages without evidence indicating those costs represented the price of work performed on the project; that all delays on the project were attributable to Aragon; and that Mazzei did not underbid on the project and all additional hours were attributable to Mazzei's delay claim. Supporting documents such as the Mazzei cost ledger and labour hour details, actual pay records, and payroll data for salaried employees were referenced in the Revay Report but not attached, and Mr. Hale did not verify the accuracy of the documents provided to Revay.

The second ruling (2026 BCSC 562)

Justice LeBlanc delivered the second decision on March 31, 2026. The court found that the parties raised competing delay claims against one another and it was not plain and obvious based on the material before the court that the delay claim of either party would succeed or fail — that would be the subject matter of the outstanding arbitration. Accordingly, Mazzei established it had an arguable case to the right to the lien, and the court declined to cancel the 2025 Lien pursuant to s. 25(2)(b) of the BLA. However, applying the principles from Q West, the court determined that Mazzei had done little to support its claim that the amounts in the 2025 Lien represented the price of work performed or provided or material supplied or were so closely connected that it was reasonable and proper to include them. The court exercised its discretion under s. 24 and set the appropriate amount of security at $350,000, taking into account the amount claimed in the 2025 Lien relative to the amount agreed to be paid pursuant to the contract and change orders, the amounts that had been paid pursuant to the contract, and the competing delay claims. Aragon was awarded its costs on the application as it was primarily successful in having the 2025 Lien significantly reduced. The court expressly noted that it was not adjudicating the delay claims of the parties, which would be the subject of a different proceeding, and the exact amount that may ultimately be recoverable remains to be determined.