Site Owner is unable to create sub sites - Access denied

Special thanks to Neville Pinto and Brain Farnhill who helped me with this problem.

The problem:
1. Owner of site C which is located under http://top/sites/siteC cannot create a subsite under site C
2. Owner has read only rights on http://top
3. http://top/sites inherits all permissions from parent site
4. Access denied error when creating a subsite on site C

The solution is that straight forward, just that it didn't occur to me!!
1. The site owner needs to have contribute rights to the Site Directory.
2. Break inheritance on site list on http://top/sites and give owner of site C contributor rights

Problem solved!