R.J.G. Construction Limited Plaintiff And: Marine Atlantic INC. Defendant, 2020 NLSC 137

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : R.J.G. Construction Limited v. Marine Atlantic Inc. , 2020 NLSC 137 Date : October 19, 2020 Docket : 201401G0057 Between: R.J.G. Construction Limited Plaintiff And: Marine Atlantic INC. Defendant Before: Justice James P. Adams Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: December 4 – 8, 2017 December 11 – 13, 2017

Summary: The parties had entered into a contract for the Plaintiff to construct a wharf structure for the Defendant. The Defendant breached the contract by failing to pay the Plaintiff for work performed. The Plaintiff’s damages were assessed at $706,599.11 plus contract interest. Appearances:

R. Barry Learmonth, Q.C. Appearing on behalf of the Plaintiff Daniel W. Simmons, Q.C. Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: RJG Construction Limited v. Marine Atlantic Inc ., 2019 NLCA 51 STATUTES CONSIDERED: Judgment Interest Act , R.S.N.L. 1990, c. J-2 RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT (DAMAGES) Adams, J. : INTRODUCTION [ 1 ] This matter proceeded to trial from the 4 th to the 13 th of December 2017 following which a decision was filed on 23 February 2018 in favour of the Defendant, Marine Atlantic Inc. (hereinafter “Marine Atlantic”). The decision was appealed to the Court of Appeal on 12 August 2019 and the Court of Appeal filed a decision overturning the trial decision and finding in favour of the Plaintiff, R.J.G. Construction Limited (hereinafter “R.J.G.”).

Since the trial decision had ordered damages to be paid by Marine Atlantic to R.J.G., R.J.G.’s damages had not been assessed. The Court of Appeal ordered that the matter be remitted to this Court “to consider and determine the issues relating to damages and the assessment of damages” ( RJG Construction Limited v. Marine Atlantic Inc ., 2019 NLCA 51 at para. 192 , hereinafter “ RJG Construction Limited ”). [ 2 ] R.J.G. led its evidence on damages at the trial and counsel for both parties made submissions on the issue.

In a meeting with counsel preparing for this decision, counsel for both parties agreed that no further evidence was necessary or appropriate as R.J.G. had a full opportunity to present its evidence on damages at the trial. R.J.G. did so and closed its case. [ 3 ] There was also some debate on whether further submissions on damages were necessary or appropriate. Counsel eventually agreed that no further submissions were either necessary or appropriate unless I felt I needed them.

I have reviewed the pleadings, the evidence and submissions of counsel on the issue of damages presented at the trial and have come to the conclusion that the parties have had a full opportunity to present their evidence and submissions on damages and that the appropriate way for me to proceed is to rely on the record produced at the trial. background [ 4 ] This, then, is my decision on the damages of R.J.G. [ 5 ] In March 2003 R.J.G. contracted with Marine Atlantic to construct a wharf structure (known as a “Dolphin Replacement”) at Argentia, Newfoundland and Labrador.

There were delays by R.J.G. in completing the work and Marine Atlantic “froze” payment of monies owing to R.J.G. for work already performed as well as any future payment. [ 6 ] Agreeing with the position of R.J.G., the Court of Appeal determined that the freezing of payments due to R.J.G. constituted a repudiation of the contract by Marine Atlantic entitling R.J.G. to terminate the contract which it did on 7 January 2014 pursuant to its terms.

This entitled R.J.G. to consider the contract as at an end and to seek damages for breach of contract ( RJG Construction Limited at para. 67 ). [ 7 ] R.J.G. issued its Statement of Claim on 10 January 2014seeking damages as follows at paragraph 5: a) $495,765.17, for payments due and owing under the Contract as of January 10, 2013 [1] ;

b) damages for breach of the Contract, including damages for loss of profit, and damages for loss sustained upon Products and Construction Equipment;

c) pre-judgment interest;

d) costs; and

e) further or other relief. [ 8 ] R.J.G. filed an Amended Statement of Claim by consent on 22 November 2017 which repeated paragraph 5 (becoming paragraph 6 in the Amended Statement of Claim). EVIDENCE ON DAMAGES [ 9 ] R.J.G. led evidence on damages from Mr. Robert Giovannini, the president of R.J.G., as well as from other witnesses and also entered several documents in support of its claim. Evidence on damages was also elicited on cross-examination of witnesses of Marine Atlantic. Marine Atlantic had retained CBCL Limited as its consultant to administer the contract.

Calvin Hollett was a senior civil technician working for CBCL who was principally responsible for determining when and if payments would be made to R.J.G. under the contract. The contract provided that CBCL would monitor progress on the contract and R.J.G. would submit progress claims periodically as work was completed.

Once CBCL certified a progress claim and notified Marine Atlantic, payment became due in accordance with the terms of the contract. [ 10 ] Following disagreement between Marine Atlantic and R.J.G. respecting progress on the contract, Marine Atlantic “froze” payment of progress payments number 5 and number 6. These progress claims were for work which had been completed and in respect of which R.J.G. was entitled to payment. [ 11 ] R.J.G. also claims for progress payment number 7. This claim was never certified by CBCL as it had been instructed by Marine Atlantic not to do so.

The only material item in dispute following R.J.G.’s leaving the job site on 7 January 2014 following termination of the contract was its claim for demobilization; that is, the cost to R.J.G. of removing its equipment and personnel following termination of the contract. However, in cross-examination Mr. Hollett stated that if it had been determined that it was Marine Atlantic and not R.J.G. which had been held to be in breach of the contract, then he would have approved the demobilization claim of R.J.G. I am also satisfied that the balance of the claim in progress claim number 7 would also have been approved.

In the result, I find that had Marine Atlantic not breached the contract, CBCL would likely have certified PC No. 7 in its entirety. I therefore allow progress claim number 7 in the amount of $201,100 plus the 10% holdback and HST as set out in R.J.G.’s claim. [ 12 ] R.J.G. acknowledged that it was responsible for delaying the project for various reasons which resulted in extra costs to Marine Atlantic. As well, sheet steel piles which had been attached to the Dolphin had to be removed by a subsequent contractor and replaced which also resulted in additional costs to Marine Atlantic. Mr.

Giovannini testified that even if R.J.G.’s claim were to be allowed, the costs attributable to these delays would have amounted to $144,692.91 and that that amount should be deducted from R.J.G.’s claim. As well, Mr. Giovannini testified that R.J.G. did not dispute the claim by Marine Atlantic for onsite staff following R.J.G.’s departure from the work site to secure the project in the amount of $10,999. He testified that he thought this amount was reasonable and should be deducted from R.J.G.’s claim. These two amounts add up to $165,691.97. [ 13 ] I accept Mr. Giovannini’s testimony in that respect.

He presented his evidence in a credible, straightforward fashion. This amount therefore should be deducted from R.J.G.’s claim. conclusion [ 14 ] R.J.G. submitted the following claim which I find fairly represents its damages:

[ 15 ] I therefore find that the claim for damages for R.J.G. under the contract is $872,291.08 including HST. From this must be deducted the $165,691.97 which R.J.G. acknowledged should be deducted even if it was successful in its claim. This leaves a total of $706,599.11 owing to R.J.G. under the terms of the contract, inclusive of HST. [ 16 ] Both parties have claimed pre-judgment interest. I am satisfied that pre- judgment interest should be calculated at the rate set out in the contract. The contract states in

Article A-5.3: 5.3 Interest .1 Should either party fail to make payments as they become due under the terms of the Contract or in an award by arbitration or court, interest at two percent (2%) per annum above the prime rate on such unpaid amounts shall also become due and payable until payment. Such interest shall be compound and adjusted on a monthly basis. The prime rate shall be the rate of interested quoted by CIBC for prime business loan. (Insert name of chartered lending institution whose prime area is to be used) .2 Interest shall apply at the rate and in the manner prescribed by paragraph 5.3.1 of this

Article on the settlement amount of any claim in dispute that is resolved either pursuant to

Part 8 of the General Conditions – DISPUTE RESOLUTION or otherwise, from the date the amount would have been due and payable under the Contract , had it not been in dispute, until it is paid. [ 17 ] Therefore, in light of the finding that Marine Atlantic breached its contract with R.J.G., interest on the above amount due and owing to R.J.G. by Marine Atlantic should be calculated by applying the above formula set out in

Article A-5.3 as follows: 1) In respect of progress claims 5 and 6, from the time the claims were certified for payment by CBCL: that is, 16 December 2013 in respect of progress claim number 5 and 19 December 2013 in respect of progress claim number 6. 2) In respect of progress claim number 7, since the claim had not been certified and R.J.G. acknowledged that $165,691.97 should be deducted from its total claim for delay, I find that the equitable thing to do for the purpose of interest calculation is to deduct that amount from progress claim number 7.

Progress claim number 7 (inclusive of holdback and HST) is $244,738.70. From this must be deducted the $165,691.97, leaving a balance of $79,046.73.

[ 18 ] I therefore conclude that in respect of progress claim number 7, contract interest is payable pursuant to the above formula on $79,046.73 from 7 January 2014, the date of the termination of the contract by R.J.G. [ 19 ] If the parties cannot agree on what the calculation of interest should be, either party may apply to have the Court calculate it and may present evidence and argument in that regard. [ 20 ] R.J.G. is also entitled to post judgment interest on the total owing in accordance with the Judgment Interest Act , R.S.N.L. 1990, c.

J-2 . [ 21 ] R.J.G. shall have its costs under Column 3 of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D as ordered by the Court of Appeal in RJG Construction Limited at paragraph 193 . [ 22 ] Judgment accordingly. _____________________________ James P. Adams Justice