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Duplex 'lockup' dispute between Victoria builder and client to return to court

Dec 11 2012

A dispute between a Victoria builder and client over what is meant by the construction term "lockup" will be the focus of a second trial in B.C. Supreme Court.

In 2007, Paula Buchholz decided to build a duplex on her Dallas Road property and hired Skadberg Construction Ltd. to complete the project. The contract stipulated that Buchholz would pay 30 per cent of the $625,000 cost at lockup stage, but the contract did not define what lockup meant.

When Skadberg Construction advised Buchholz the building had reached lockup stage, Buchholz disagreed and refused to pay the full 30 per cent.

Some windows had not been installed but the frames had been boarded over. Temporary exterior doors were in place and an interior staircase had not been built.

The builder stopped work, filed a lien and began court action. Buchholz took the position that Skadberg abandoned the project. She launched a countersuit and hired another builder to complete the project.

The case went to trial in B.C. Supreme Court in January 2010, with the lawyer representing Skadberg Construction calling two expert witnesses to testify that their definition of lockup was in line with Skadberg's.

Harald Skadberg, the owner of the company, testified that lockup, to him, meant some doors would be installed but not necessarily all of them.

He told the court that lockup means "it's not essential that you have a key and actually lock it up."

The builder who took over the project from Skad-berg, Peter Schultze, testified that he believed installed doors were required for a structure to be deemed at lockup stage.

Schultze's definition was given little weight by the court because he hadn't been recognized as an expert witness.

The B.C. Supreme Court justice concluded that Skad-berg Construction had completed the project to lockup and was entitled to payment of 30 per cent of the contract price: $171,000 plus interest.

He defined lockup as a term that has flexibility: "It does not absolutely require the windows, exterior doors or temporary staircases to be installed.

"Its specific meaning must be derived from the construction agreement itself."

Buchholz paid the judgment against her but also appealed the decision to the B.C. Court of Appeal, using a different lawyer, arguing the Supreme Court failed to accurately define lockup.

Had the justice heard Schultze's expert opinion on lockup, "she may well have reached a different conclusion on the critical issue of whether Skadberg Construction had completed the project to lockup," said Justice David Frankel in ordering a new trial.

He also ordered Skad-berg Construction to repay Buchholz the earlier costs and for the money to be held in trust pending further court action.


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