Contractors' dispute hinges on lien for old Stanton Hospital renos

A contractor is arguing against the validity of a lien filedin relation toa renovations projectat Yellowknife's old Stanton Territorial Hospital.CANA Management Ltd. says the lien should be annulled.

SMI Construction, an Alberta-based company, was subcontracted by CANAto do the renovation work but claimsit still hasn't been paid for work it did there a year ago.

Mick Stack, SMI'sowner, says his company is still owed roughly $3.4 million by CANA, the main contractor on the project. SMI filed the lien in May after being taken off the project it had worked on for 15 months. SMI is also asking for $2 million in punitive damages.

CANA, however, argued inthe Supreme Court of the N.W.T. on Wednesday that thelien should be annulled because it is registered against Stanton Ventura Inc., an "innocent third party" whichleases the property from the territorial government.

The verdict could dictate how subsequent disputes between the parties are resolved.

Wednesday's arguments hinged on Ventura's involvement in the renovations and whether the companycould be considered an "owner" based on the territory's Mechanics Lien Act.

According to lawyer Toby Kruger, representing CANA, Ventura had no stake in the renovations anddoesn't qualify as an owner.

The Act defines an owner as a person with "an estate or interest" in the land where work is done or the materials provided. It says the owner is someone who requests or consents to the work and someone who directly benefits from the work.

Kruger told the court on Wednesday that the primary contract for the project at the old Stanton Hospital was between the territorial government and CANA. CANA thenhiredSMI for the project.

He said that the scope of work is limited to SMI and CANA and that "Ventura is an innocent third party."

Kruger said that Ventura didn't provide credit to SMI, wasn't involved in the project contracts and "wasn't even copied on emails, let alone asked for their input," and thattherefore Ventura could not have consented in SMI's construction work.

He points to a cross-examination he conducted on Stack in July. Hesaid Stack then confirmed that SMI answered to CANA during the project and that he didn't have knowledge of Ventura inspecting or providing direction on any of the work.

For that reason, Kruger said that Stack's affidavit on the lien provides false statements in referring to Ventura as an owner.

Doug McNiven, representing SMI, argued that Ventura is an agent of the territorial government who is a party on the prime contract between CANA and the territory.

He said that since his client believes CANA wrongfully terminated SMI, the only claim SMI can make is against the contract, involving the government of the Northwest Territories.

He told the court that Ventura does benefit from the construction work as the lease holder.

As a result, he said that Ventura's request on the work is implied and that the territorial government and Venturaare effectively both owners under the Act.

McNiven said that the court must look at "the overall picture" and "not just direct dealings."

In response to McNiven's point about Ventura's benefiting from the project,Kruger argued that benefit is rent, whichis paid to Ventura whether or not the construction is completed. As a result, Kruger repeatedVentura doesn't have an interest in the project and can't be defined as an owner under the Act.Krugeralso said there is no evidence of an agent relationship between the territorial government and Ventura.

Justice Karan Shaner said she would reserve her decision and issue a written response.She did not say when that would be.