Background: Sterling Parkway Residences Inc. (Sterling), the owner and developer of a Winnipeg apartment complex, terminated its contract with Boretta Construction 2002 Ltd. (Boretta), the general contractor, due to alleged performance and delay issues. Boretta then registered two builders' liens on the property. Sterling sought to recover part of the money it paid into court to discharge these liens.

Legal Arguments/Issues: Sterling argued that the holdback funds, required under The Builders' Liens Act (BLA), should be returned to pay subcontractors, as the project was complete. Boretta opposed, claiming the funds were alternate security for the liens and could not be distributed until litigation over the liens and related issues was resolved. Sterling also argued that Boretta had no claim to the holdback funds and that set-offs against these funds were not permitted under the BLA.

Court's Decision: The court dismissed Sterling's motion, ruling that the holdback funds retained their character as holdback despite being paid into court. The funds were not to be distributed until all related disputes, including claims of deficiencies and set-offs, were resolved. The court emphasized that the statutory provisions of the BLA must be followed, and Sterling's interpretation of the legislation was not upheld.

Costs/Award: The motion to release the funds was dismissed. Costs were to be addressed separately if the parties could not reach an agreement.