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Appeals court sinks Marine Atlantic's wharf suit win

The port of Argentia is home to the eastern Newfoundland stop for the Marine Atlantic ferry service, the Canadian Coast Guard, industrial service companies like MetalWorld and, now, Husky Energy’s wellhead platform offshore oil construction project. — Telegram file photo
The port of Argentia is home to the eastern Newfoundland stop for the Marine Atlantic ferry service — Telegram file photo

Rules corporation not entitled to freeze funds; overturns $1.3M in damages

A year and a half after RJG Construction was ordered to pay Marine Atlantic $1.3 million for an unfinished wharf in Argentia, an appeal court judge has ruled in the construction company’s favour.

Justice Francis P. O’Brien wrote that the construction company entered into a contract, valued at over $2.8 million, with federal crown corporation Marine Atlantic in March 2013 to build a ferry wharf structure in Argentia but was not paid for the work.

Marine Atlantic had claimed it was entitled to freeze all funds owing the company, and in response, the construction company purported to terminate the contract. 

O’Brien wrote that the following is the essence of what was under consideration in the appeal:

“In this circumstance, was the project owner entitled to freeze funds, or did the freezing of funds constitute a repudiation of the contract, thereby entitling the company to terminate the contract and seek damages for breach?”

In February 2018, the trial judge rejected RJG’s repudiation argument and awarded the over $1.3 million damages to Marine Atlantic for breach of contract. On appeal, RJG argued the trial judge erred while Marine Atlantic argued the judge was correct.

On Monday, O’Brien rendered his decision, concluding Marine Atlantic’s freezing of funds with respect to the project constituted a repudiation of the contract, and that RJG accepted and terminated the contract on Jan. 7, 2014.

The appeals judge concluded there was no justification for Marine Atlantic’s action in freezing funds, and that Marine Atlantic’s repudiation of the contract entitled RJG to terminate the contract without reference to the contractual provisions. 

In O’Brien’s disposition, he wrote that the trial judge’s dismissal of RJG’s claim at the trial meant there was no assessment of the construction company’s damages.

O’Brien said RJG is entitled to court costs, plus he remitted the matter to the Supreme Court to determine assessment of damages.

On Tuesday, The Telegram left a message with RJG Construction for comment but the company did not respond at press deadline. 

A Marine Atlantic spokesperson told The Telegram they were not in a position to offer a comment by press deadline because they were currently reviewing the judge’s decision.  

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