No Holdback Costs Customer $5,000

The Browns entered into an oral contract with Smith & Son Ltd. for the construction of a new home on a piece of land that the Browns owned. Pursuant to the terms of the oral agreement, the builder was to supply all materials. To that end, Smith & Son Ltd. contracted with ABC Building Supplies for just under $25,000 worth of materials. The builders finished their work, and were paid the full $33,500 by the Browns. The Browns did not hold back 15% of the payment, as is required by the New Brunswick Mechanic's Lien Act.

However, Smith & Son Ltd. never paid ABC Building Supplies for the materials used in the construction of the Browns' home. ABC Building Supplies responded by bringing an action against both the builder and the Browns. The judge found that Smith & Son Ltd. were liable for the amount outstanding. However, it also found that the Browns were liable to the extent of the amount that they should have held back, namely 15% of the contract price, or $5,025. The court gave Smith & Son Ltd. 90 days to pay, failing which it stated that ABC Building Supplies could then take whatever steps necessary to satisfy its judgment against the Browns.

NEW BRUNSWICK COURT OF QUEEN'S BENCH - TRIAL DIVISION[1997]
N.B.J. No. 443