Executive Summary: Key Legal and Evidentiary Issues

• Defendants applied to invalidate a construction lien and discharge a Certificate of Pending Litigation filed by the plaintiff.

• Dispute focused on whether Northwoods Excavation Ltd. was a direct contractor, an assignee, or a subcontractor under the Construction Remedies Act.

• The Stewarts argued that Northwoods failed to issue a timely Notice to Owner, rendering the lien invalid under section 54(4) and 54(8).

• Northwoods contended it was a subcontractor, and thus protected from notice failures under section 54(9).

• The judge found material factual disputes over the parties’ legal relationships that required determination at trial.

• Motion to dismiss was denied; Northwoods retained its lien rights and was awarded $1,500 in costs.

Background and contract formation

In Northwoods Excavation Ltd. v. Stewart et al., 2024 NBKB 40, Heather and Robert Stewart hired Michael Bishop, operating as M.V.B. Contracting, under an oral agreement to perform excavation and related construction work on a residential lot in Kingston, New Brunswick. The project included land clearing, foundation excavation, septic system installation, and driveway construction. No fixed price was agreed upon, but the Stewarts referenced comparable quotes in the range of $40,000 to $50,000. Bishop informally committed to delivering within that price range.

By mid-July 2022, the Stewarts had paid Bishop $33,000. Work began, but delays occurred—particularly with the septic system—causing the Stewarts’ contractor, Ross Fowler, to postpone key construction milestones. By April 2023, the home was still not move-in ready.

Emergence of lien dispute and third-party claim

In April 2023, the Stewarts received an invoice from Northwoods Excavation Ltd. for an additional $58,276.30, taking the total project cost to over $90,000. The Stewarts asserted they had no contract with Northwoods and that they continued to deal only with Bishop. Northwoods, through its owner Terry Wood, claimed that Bishop had informally transferred remaining responsibilities to Northwoods around November 2022 due to personal issues. Wood stated that this transfer was acknowledged during an on-site conversation with Robert Stewart, although no written contract was produced.

On May 26, 2023, Northwoods registered a claim for lien against the property in the amount of the unpaid invoice and filed a Certificate of Pending Litigation. The Stewarts filed a defence and counterclaim and issued a third-party claim against Bishop. However, Bishop had filed for bankruptcy, staying the proceedings against him under the Bankruptcy and Insolvency Act.

Motion to discharge lien and legal arguments

The Stewarts brought a motion to have the lien and the CPL declared invalid and removed from the land title. They argued that Northwoods had not provided a Notice to Owner within 45 days of starting work, as required by section 54(4) of the Construction Remedies Act (CRA). If Northwoods was the contractor or assignee of Bishop’s contract, its lien rights would be subject to strict compliance with this notice requirement. The Stewarts also argued that Bishop himself had never issued a Notice to Owner, which would mean that any assignment of his rights would have expired by early September 2022.

Northwoods argued that it was not Bishop’s assignee but rather a subcontractor, and as such was protected under section 54(9) of the CRA, which states that a subcontractor’s right to register a lien is not affected by a contractor’s failure to issue notice.

Court’s analysis and decision

Justice William T. Grant held that the legal relationship between the Stewarts, Bishop, and Northwoods was central to determining the lien’s validity. If Northwoods was a subcontractor, it would not be prejudiced by Bishop’s failure to provide notice. However, if it was an assignee or contractor, it would need to have issued a Notice to Owner within the statutory 45-day period.

The judge found the evidence on record inconclusive and emphasized that such a determination could not be made at the motion stage without a full trial. There was no “clear and almost demonstrative proof” that Northwoods had no legal basis to pursue the lien. Therefore, the Court refused to vacate the lien or discharge the CPL.

Judgment and outcome

The Court dismissed the defendants’ motion. Northwoods Excavation Ltd. retained its lien and Certificate of Pending Litigation, and the litigation was allowed to continue. Costs of $1,500 were awarded to Northwoods. The question of whether Northwoods is entitled to a lien will be decided following trial on a full evidentiary record.