Stewart McKelvey

5 Doing Business in AtlAntic cAnADA Spring 2014 Rather than following the earlier New Brunswick case, Justice McNally reviewed a number of Ontario decisions which considered that province's similar protections under its Construction Lien Act, R.S.O. 1990, c. 30. Among these, McNally J. considered the more recent decision of 1276761 Ontario Ltd. v. 2748355 Canada Inc., [2006] O.J. No. 4740, where the landlord was provided with, what the Ontario Superior Court of Justice deemed, "notice events" which included details of the work, meetings with the landlord and contractor relating to the work, review and approval of plans by the landlord, the landlord's awareness of additional work, and its own awareness of the construction costs. The On- tario Court found that notice sufficient to make the landlord or owner liable could not be overshadowed or buried in a document, but needed to be something "attention-getting" and which provided a trigger point so that the landlord would be made aware of when the clock started to run for his time to disclaim responsibility to contractors. Justice McNally found this approach to be a prac- tical one and stated that what is required under the Act is that such a notice from a builder must "clearly signal a potential liability on the part of the land- lord" to make them liable to the builder as an owner. He then found that Penniac had not intended to put Cominar on notice for the purposes of the Act, but had sent the quote and plans only to ensure that Cominar approved of the nature and scope of the work to be done in its building. McNally J. added that even if the forwarding of that information to Cominar by Penniac had consti- tuted notice, Cominar's advice that Penniac needed to get approval from Focus to do the work would have constituted notice that Cominar would not ac- cept responsibility. This decision was not appealed. leasehold proVisions in other proVinces The Nova Scotia's Builders' Lien Act, R.S.N.S. 1989, c. 277 provides landlords with protection similar to that in New Brunswick. In Acadia Drywall Supplies Ltd. v. BBL Con Design Build Solutions Ltd., 2013 NSSC 13, the tenant of a property retained a con- tractor who special ordered 26 barrels of product. The contractor accepted only six of the barrels before refusing to take delivery of the remaining barrels. The Plaintiff supplier subsequently filed a Claim for Lien against the contractor, tenant and landlord (the "Defendants") pursuant to which the Defendants brought a motion to vacate and discharge the lien. The Nova Scotia Supreme Court recognized that the landlord's fee simple interest was not subject to a lien without the statutorily mandated consent, which had not been provided. Without this consent, the lien could only attach to the leasehold interest in the real property, not the fee simple interest, and only for the value of the materials delivered to the site. Equivalent mandatory notice provisions can be found in section 8(1) of the Newfoundland and Lab- rador Mechanics' Lien Act, RSNL 1990, c M-3 and section 11(1) of Prince Edward Island's Mechanics' Lien Act, RSPEI 1988, c M-4. In Newfoundland and Labrador landlords and owners have 15 days to re- spond and avoid a lien on their property once they receive proper notice, while in Prince Edward lsland the time period is just 10 days. future considerations Despite the fact that Justice McNally found that there was insufficient notice to make Cominar liable to Penniac for a lien on Cominar's real property and, therefore, not liable to pay Penniac its claim, owners of real property and landlords must remain diligent when dealing with their tenants and their tenant's contractors to ensure that they, and their property, do not become liable to contractors when tenants fail to pay such contract- ors for improvements to their leasehold interest in real property. The representative of Cominar at the trial testified that despite all his many years and experience in the commercial leasing business, he was not even aware of the provisions of Section 12 of the Act and its po- tential to subject the fee simple interest of a landlord to a Mechanics' Lien for work done at the request of a tenant. Owners and landlords should ensure that when they receive any information in writing from a tenant's contractor, with respect to work done or to be done on a tenant's property, a clear and immedi- ate message is sent to such a contractor that they will not be responsible for payment for a tenant's debt. Lara MacDougall, associate Fredericton, n.B. 506.443.0151 lmacdougall@stewartmckelvey.com Hugh Cameron, partner Fredericton, n.B. 506.443.0120 hcameron@stewartmckelvey.com

• Cover