Caldwell & Ross v. Province of New Brunswick –, 2019 NBQB 101

Citation: Caldwell & Ross v. Province of New Brunswick – 2019 NBQB 101 Docket: FC-106-2006 Date: 2019 05 29 IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF FREDERICTON BETWEEN: CALDWELL & ROSS LIMITED Plaintiff - and - THE PROVINCE OF NEW BRUNSWICK, as represented by the MINISTER OF TRANSPORTATION Defendant BEFORE: Justice William T. Grant HEARING HELD: Saint John DATE OF HEARING: May 22, 2019 COUNSEL: L. Paul Elliott and Marci Wiggins, for the Plaintiff Richard A.

Williams, Q.C. and Maya Hamou, for the Defendant DECISION GRANT, J. [ 1 ] In this action the plaintiff, Caldwell & Ross (“C&R”), successfully sued the defendant, the Province of New Brunswick, for the amount owing to it on a unit price contract for the supply and placement of concrete in the construction of a high speed connector bridge in Fredericton known as the Vanier Underpass.

[ 2 ] In this Court’s decision dated January 16, 2019 C&R was awarded judgment in the amount of $449,303.00 plus HST. The award concludes with the following statements concerning interest and costs: INTEREST [132] The parties agreed that the contract provides for payment of interest on outstanding amounts and that in the event there is judgment in favour of the plaintiff, they will try to agree on the amount. If they are unable to do so the Court will hear further submissions and resolve the issue.

COSTS [133] The plaintiff is entitled to costs which I assess on Scale 3 under Tariff “A” of Rule 59 based on an amount involved of $450,000.00 plus all taxable disbursements. [ 3 ] The decision was not appealed and the parties agreed on the amount of pre-judgment interest based on the rate set out in the contract.

They also agreed on the amount of HST payable at the time the disputed claim was submitted and the amount of the costs owing under Tariff “A” of Rule 59. [ 4 ] They have not been able to agree on the amount of the plaintiff’s taxable disbursements or the amount of post-judgment interest owing by the defendant to the plaintiff. [ 5 ] As a consequence, the plaintiff has brought this Motion in which it seeks the following relief: 1. pursuant to Rule 59 of the Rules of Court , and in particular Rules 59.08, 59.11, the Defendant reimburse the Plaintiff for its reasonable disbursements in accordance with Tariff “D” under Rule 59, in the total amount of $28,993.49, or such other amount as this Honourable Court may deem just; 2. pursuant to Rule 60.08 of the Rules of Court , and in particular Rules 60.08(1) and (3) thereof, and pursuant to the Judicature Act , R.S.N.B. 1973, c J-2 generally and in particular sections 45 and 46 thereof, the Defendant pay the Plaintiff post- judgment interest on the judgment amount at the rate of 7% per annum from the date of judgment, being January 16, 2019, to the date of this motion, or such alternative dates as this Honourable Court may deem just; 3. pursuant to Rule 59 of the Rules of Court and in particular Rules 59.03 and 59.11, the Plaintiff shall be entitled to costs on this Motion; … DISBURSEMENTS [ 6 ] C&R claims disbursements in the amount of $28,993.49 of which $25,496.54 represents the cost of its expert, Peter Pheeney, a biologist and senior geotechnical engineer with the engineering firm, Stantec.

Its remaining disbursements are not contested. [ 7 ] Mr. Pheeney’s curriculum vitae demonstrated that he had a broad range of experience in the field of geotechnical engineering, having worked over the last 20 years on various mining projects, dams and environmental impact assessments all over the world. In the 1990’s, before the Vanier Underpass was built, he was also involved in the defendant’s re-write of its specifications for highway construction which were ultimately adopted as the standard for highway construction contracts in New Brunswick. [ 8 ] At trial C&R offered Mr. Pheeney as an expert in the

interpretation of construction contracts and, more particularly, in the

interpretation of Crown construction contracts.

[ 9 ] Mr. Pheeney had prepared a report which he described as his “Professional Opinion in Regards to NBDOT Contract 03-3558 Route 2 High Speed Connector Underpass” which is the contract in question. He also prepared a report criticizing the report of the defendant’s expert, James Wood. [ 10 ] Based on Mr. Pheeney’s admission that he was not an expert in contract

interpretation and the fact that he was being offered as an expert in that very field the Court refused to qualify him as an expert in the field of expertise in which he was offered by the plaintiff. The plaintiff then withdrew Mr. Pheeney as a witness. [ 11 ] The defendant submits that it should not be required to reimburse the plaintiff for the expense it incurred in hiring Mr. Pheeney as he was not qualified as an expert or permitted to give evidence at the trial.

It further submits that neither the Court nor the parties benefitted from his report. [ 12 ] In support of this motion the plaintiff relies on the affidavit of Paul DeMerchant, the owner of C&R who deposes, inter alia , at paragraph 15 that despite Mr. Pheeney not being qualified as an expert at trial: … the substance of Mr. Pheeney’s evidence, which the trial judge held met the threshold requirements of relevance and necessity, was available to both parties in their preparation for trial. The Plaintiff intended to introduce Mr.

Pheeney’s evidence at trial, and the Plaintiff’s solicitor informs me, and I believe, that such evidence and opinion was required by the Plaintiff’s solicitor to analyze the substance of the Defendant’s expert report and prepare for cross-examination of the Defendant’s expert witness. [ 13 ] I accept that evidence because this case was not based on evidence that was easily understandable by a lay person which would include both the plaintiff’s counsel and the Court. The evidence was very technical in nature as evidenced by the fact that the defendant also hired an expert, Mr.

Wood, whose evidence the Court found to be “both helpful and frank because he did not attempt to deny the obvious conflicts and deficiencies in the contract” (see para. 108). [ 14 ] Among the reasons why the court found that Mr. Wood’s evidence was helpful was because he was asked relevant and important questions on cross-examination (see paras. 84 – 87), which questions were, according to Mr. DeMerchant’s affidavit which I accept, based on assistance which counsel received from its own expert, Peter Pheeney. [ 15 ] The defendant submits that the plaintiff’s counsel could have obtained this assistance from Mr.

DeMerchant who is an engineer himself. While that is true, his obvious interest in the outcome of the litigation would have placed him in a position where he would not view the evidence with sufficient objectivity to perform what I find was both a necessary and a reasonable function for the plaintiff in the conduct of this litigation. [ 16 ] Tariff “D” under Rule 59 deals with disbursements allowable to a party entitled to costs.

Paragraph 2(14) includes in those disbursements: All other reasonable expenses necessarily incurred, . . . [ 17 ] Based on the nature of the evidence in this case I find that it was necessary for C&R to incur the expense of retaining Mr. Pheeney to conduct this litigation. [ 18 ] That leaves the issue of the reasonableness of Mr. Pheeney’s account.

While his report and his viva voce evidence were not admitted into evidence, C&R was nevertheless successful in this litigation so, while I find that his accounts should be discounted as set out below, it is not, in my view appropriate to disallow them. [ 19 ] The defendant questioned the reasonableness of Mr. Pheeney’s accounts but based on both the nature of the evidence in this litigation and the evidence before the Court on this motion I am satisfied that the accounts are reasonable.

I, therefore, allow the plaintiff to recover as a taxable disbursement $20,000.00 or approximately 80 percent of the cost of retaining Peter Pheeney/Stantec to assist it in the conduct of this litigation. POST-JUDGMENT INTEREST

[ 20 ] Rule 60.08 of the Rules of Court states:

(1) Subject to subsection 46(2) of the Judicature Act , and unless ordered otherwise, a verdict or judgment taking effect from a date on or after March 15, 1994 bears interest at the rate of 7 per cent per year. (2) …

(3) Costs bear interest from the date of judgment. [ 21 ] Sections 46(1) and (2) of the Judicature Act , R.S.N.B. 1973 c.

J-2 state: 46 ( 1 ) Subject to subsection (2) and unless otherwise ordered by the Court, a verdict or judgment bears interest at the rate fixed by the Rules of Court from time to time from the time of the rendering of the verdict or of the giving of the judgment, as the case may be, notwithstanding that the entry of judgment upon the verdict or upon the giving of the judgment has been suspended by any proceedings in the action whether in the Court in which the action is pending or on appeal. 46 ( 2 ) Where the Court has made an order under subsection 45(1) for interest at a specified rate or rates on the whole or any part of the debt or damages for the whole or any part of the period referred to in that subsection, the whole or such part or parts of the debt or damages shall, subject to any order as to interest made on any appeal or appeals, continue to bear interest at the same rate or rates until the final determination of any appeal or appeals taken in the action and the judgment shall be deemed to include the amount of interest accrued under this

section and shall bear interest in accordance with subsection (1) from the date of the final determination of any appeal or appeals. [ 22 ] Section 45(1) of the Judicature Act , supra ., states : 45 ( 1 ) In any proceedings for the recovery of any debt or damages, the Court may order that there shall be included in the sum for which judgment is given interest on the whole or any part of the debt or damages for the whole or any part of the period between the date the debt was due or the amount subsequently awarded as damages ought reasonably to have been paid and the date of judgment. [ 23 ] The Province submits that the Court dealt with the issue of post-judgment interest at paragraph 132 of the decision supra .

I disagree. The paragraph says nothing about the rate of interest, either pre or post-judgment, only that C&R is entitled to interest.

It leaves any other interest-related issues to the parties to resolve, failing which the Court will resolve them. [ 24 ] To date the parties have resolved the issues concerning pre-judgment interest as contemplated by paragraph 132 of the Decision and now the Court must deal with post-judgment interest issues including the rate, the items to which it applies and its duration. [ 25 ] The Province submits that post-judgment interest should be at the same rate as pre-judgment interest because the Court did not distinguish between pre and post-judgment interest at paragraph 132 of the decision. [ 26 ] C&R submits that the wording of paragraph 132 does not constitute “an order otherwise” as provided for in Rule 60.08 and section 46(1) of the Judicature Act supra . [ 27 ] I agree.

Paragraph 132 of the decision simply states that the Court is leaving it to the parties to resolve the issue of interest beyond the fact that it is payable in this case. That was done because they represented to the court that they believed they could do so. The fact that the Court included in that paragraph the proviso that it would resolve the issue if they couldn’t agree makes it clear that the paragraph does not constitute an order of the Court on the issues raised in this motion.

I therefore find that it is not an order respecting interest as contemplated by Rule 60.08 or the relevant sections of the Judicature Act , supra .

[ 28 ] There being no such order, I find that the post-judgment interest rate applicable on this judgment is determined by Rule 60.08(1) which is seven percent. [ 29 ] The Province further submits that post-judgment interest should not be applied to HST on either the judgment or the costs, both of which attract HST. That submission is based on the assumption that HST is payable to the government once it is collected. However that is not the case. HST must be remitted to the government once it is billed not when it is collected.

I therefore find that there is no reason to treat HST any different from the principal amount of the judgment or the costs on both of which it is payable. [ 30 ] The Province further submits that it should not be required to pay post-judgment interest on the pre-judgment interest as that would be interest on interest. While that may be so, it is hardly a novel concept; it is better known as compound interest. [ 31 ] In Saint John Regional Hospital v.

Comeau et al 2003 NBCA 17 the Court of Appeal acknowledged at paragraph 20 that under section 46(1) of the Judicature Act supra . a judgment includes accrued interest and bears interest at the rate fixed by the Rules of Court . [ 32 ] I therefore find that in this case the judgment, including the principal, HST, pre-judgment interest, costs and HST on costs bear interest at the rate of seven per cent as provided for in Rule 60.08(1) of the Rules of Court from January 16, 2019. [ 33 ] Finally the Province submits that since it delivered cheques to counsel for C&R on March 7 th , 2019 for the principal amount of the judgment, HST, pre-judgment interest and the costs awarded to C&R (“the funds”), then those amounts should only attract post- judgment interest to that date. [ 34 ] However, the funds were delivered to the plaintiff’s counsel on the condition that they be held in trust pending the filing of a judgment and memorial of satisfaction of judgment, neither of which can be filed unless and until the issues raised in this motion are determined.

I therefore find that since the plaintiff does not yet have the use of the funds, post-judgment interest continues to accrue on them and on all outstanding amounts until the date that those outstanding amounts are paid to the plaintiff or its solicitors unconditionally. COSTS [ 35 ] The plaintiff is entitled to costs on this motion which I fix at $2,500.00 inclusive of disbursements. __________________________________________ William T. Grant Judge of the Court of Queen’s Bench of New Brunswick