Executive Summary: Key Legal and Evidentiary Issues

• The application arose from a Mechanics' Lien Act claim connected to hazardous remediation work at a St. John's property.
   
• MC Construction Management Ltd. sought to vacate the Claim for Lien and Certificate of Action against it, arguing no privity of contract existed with the lien claimant.
   
• Justice Khaladkar held that a lien claim attaches to the owner's interest in the property, not to a construction manager retained without privity.
   
• Capital Environmental's breach of contract claim against MC Construction Management was struck for disclosing no reasonable cause of action.
   
• Negligent misrepresentation and negligent performance of a service claims survived because such claims do not require contractual privity.
   
• Despite the mixed result, costs of the application were awarded to MC Construction Management given the late timing of the negligence amendment.
   

Facts of the case

96886 Newfoundland & Labrador Ltd./Calusade Developments (2025) Ltd. (the "Owner") owned property at 120 Lemarchant Road, St. John's, Newfoundland and Labrador, that required remediation. It retained Capital Environmental (2025) Limited (the "Respondent") for hazardous abatement at the property, and also contracted MC Construction Management Ltd. (the "Applicant") to provide supervision and construction management for the work. The scope of the required work was set out in a Pinchin Hazardous Building Materials Assessment (preconstruction) dated April 2, 2025. During the project, the Respondent concluded that some of the work it was being asked to do fell outside its engagement and requested a change order from the Applicant, which was not provided. The Respondent stopped providing further services under the agreement, and another firm was retained to complete the outstanding work. The Applicant took the position that there was no privity of contract between it and the Respondent, and sought to have the Claim for Lien and Certificate of Action against it vacated, along with an order striking the Amended Statement of Claim for disclosing no reasonable cause of action. The Respondent maintained that it had provided work and materials toward the remediation without reimbursement, claimed damages for breach of contract, and — through a second amendment to its Statement of Claim — added a claim against the Applicant for negligent misrepresentation and/or negligent performance of a service.

Policy and legislative provisions at issue

Under the Mechanics' Lien Act, R.S.N.L. 1990, c. M-3, section 6(1) gives a person who performs work or supplies materials for an owner, contractor or subcontractor a lien for the price of that work upon the owner's estate or interest in the land, without requiring privity of contract between the lien claimant and the owner. Section 36(4) allows the court to determine questions arising in the action that are necessary to dispose of it and to adjust the rights and liabilities of the parties before it. Rule 14.24(1)(a) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, permits the court, at any stage of a proceeding, to strike a pleading that discloses no reasonable cause of action or defence.

Reasoning and analysis

Justice Khaladkar found that because the Act does not require privity between a lien claimant and the owner, a lien arising from the Respondent's work attaches only to the Owner's proprietary interest, not to the Applicant or any property of the Applicant. Since no lien attached to the Applicant, there was no Claim for Lien against it capable of being vacated, rendering that branch of relief misconceived. The Court noted that declaring a lien invalid at an interlocutory stage is reserved for the clearest of cases, citing Fairview Investments Ltd. v. J.D. Irving Ltd. and Terra Services Inc. v. Her Majesty the Queen. On the contract claim, since the Amended Statement of Claim contained no allegation that the Applicant owed contractual liability to the Respondent — whose contract was with the Owner, not the Applicant — no reasonable cause of action in contract was disclosed. Applying the plain-and-obvious test from Atlantic Lottery Corp. Inc. v. Babstock for strikes under Rule 14.24(1)(a), the Court struck the breach of contract claim. The claims for negligent misrepresentation and negligent performance of a service, added by the second amendment, were treated differently: relying on Deloitte & Touche v. Livent Inc. (Receiver of), the Court held these are recognized causes of action that do not depend on contractual privity. Accepting the pleaded facts as true, the Court could not conclude it was plain and obvious those claims must fail, so they were not struck. The Court also held that the tort claims, arising from the same remediation work underlying the lien claim, could be resolved within the existing proceeding under section 36(4) rather than requiring a separate action.

Ruling and overall outcome

The Applicant's request to vacate the Claim for Lien and Certificate of Action against it was dismissed, with the Court clarifying that nothing in the decision determines the ultimate validity or enforceability of the lien against the Owner's interest in the property. The Respondent's breach of contract claim against the Applicant was struck, while its claims for negligent misrepresentation and negligent performance of a service were permitted to proceed. Although the result was mixed, the Court awarded costs of the application to the Applicant against the Respondent in any event of the cause, calculated under Column III of the Schedule of Costs, noting that the need to address the sufficiency of the pleaded claim arose largely because the negligent misrepresentation allegation was not added until after the application had been commenced. No specific monetary damages were awarded or quantified in this decision, as it addressed only the lien-vacating request and the sufficiency of the pleadings.