HB Construction v. Potash Corporation et al

SJC-404-2010

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK

TRIAL DIVISION

JUDICIAL DISTRICT OF SAINT JOHN

BETWEEN:

Citation: HB Construction v. Potash Corporation et al 2020 NBQB 180

Date: 10-01-2020

HB CONSTRUCTION COMPANY LTD. (formerly

COMSTOCK CANADA LTD.)

Plaintiff

- and -

POTASH CORPORATION OF SASKATCHEWAN INC.

and WOOD CANADA LIMITED (formerly AMEC

AMERICAS LIMITED

Defendants

AND BETWEEN:

SJC-596-2010

HB CONSTRUCTION COMPANY LTD. (formerly

COMSTOCK CANADA LTD.)

Plaintiff

- and -

POTASH CORPORATION OF SASKATCHEWAN INC.

Defendant

BEFORE:

The Honourable Madam Justice M. Deborah Hackett

DATES OF HEARING:

January 7, 8, 9, 10, 11, 14, 15, 16, 17, 18, 22, 23, 24, 25, 28, 29,

30, 31, February 1, 5, 6, 7, 8, 11, 12, 13, 14, 15, 19, 20, 21, 22, 25,

26, 27, May 8, October 21, 22, 23, 24, 28, 29, 30, 31, November

1, 4, 5, 12, 13, 14, 15, 28, 29, December 13, 2019.

DATE OF DECISION:

October 2, 2020.

APPEARANCES:

Howard M. Wise, Robert M. Creamer, Q.C., Mark Dunn, Matthew Letson

& Jesse-Ross Cohen for HB Construction Company Ltd.

Peter T. Zed, Q.C., Patrick Dunn & Laura Boyd for Potash Corporation of

Saskatchewan Inc.

Fred McElman, Q.C., Conor O’Neil & Clarence Bennett for Wood Canada

Limited

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DECISION

HACKETT, J.:

INTRODUCTION

[1] The plaintiff in these actions, formerly known as Comstock Canada Ltd., (referred to in this

Decision as “Comstock”) was a contractor on a construction project owned by the defendant,

Potash Corporation of Saskatchewan (referred to as “PCS”). The defendant Wood Group Limited,

formerly AMEC Americas Limited, (referred to as “AMEC”) was the engineer responsible for the

design and contract management of the project.

[2] In the first action, Comstock claims damages from the defendants for breach of contract and

negligent misrepresentation, among other causes of action. Comstock alleges the defendants

caused it delay that prevented it from completing the work in the contractual timeframe and claims

PCS` wrongfully terminated it for default. It claims damages including amounts it says it is owed

for work completed under the contract, as well as for loss of productivity and extended overhead

costs it says arise from the defendants’ breaches of the contract and/or the duty of good faith and/or

tortious actions.

[3] The defendants deny any liability to Comstock and state that Comstock is solely responsible

for its losses on the project. They submit Comstock was dismissed for cause. PCS claims a set off

for the cost of completion and deficiencies against any damages it may owe Comstock.

[4] In the second action, Comstock seeks to recover from PCS amounts held back under the

Mechanics’ Lien Act, R.S.N.B 1973, c. M-6.

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FACTS

[5] In 2007, PCS embarked on an expansion of its potash mine in Penobsquis, New Brunswick

(the Picadilly mine expansion project). The mine expansion project had an approximate value of

$1.7 billion. PCS contracted with AMEC to provide engineering, procurement, and construction

management (EPCM) services for the project. PCS had contracted with AMEC to provide these

services on several other mine expansion projects throughout North America.

[6] As part of the overall mine expansion project, PCS built a new potash compaction plant with a

value of approximately $120,000,000.00.

[7] In late 2008 the global market for potash was strong. PCS wished to have the new compaction

plant built as soon as possible. Mr. Bailey, then Vice-President of PCS and responsible for the

project, testified that PCS preferred lump sum tenders as they allocated the risk to the contractor

in the event of an underestimate in the bid.

[8] However, in early February 2009, the engineering and drawings were not sufficiently advanced

to issue the tender on a lump sum basis and bids for CP-15 were sought on a cost reimbursable

basis.

The tender

[9] AMEC was responsible for the tendering of the contract. Comstock, a contractor out of

Burlington, Ontario, was one of four contractors invited to bid on the contract for the mechanical,

HVAC, piping, electrical and instrument work for the compaction plant. The contract was known

as CP-15 pursuant to a Request for Proposals issued February 9, 2009.

[10] Prospective bidders were invited to a pre-tender meeting and a site walk on February 18,

2009. Comstock participated in this meeting and site walk.

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[11] Comstock submitted a bid in the amount of $34,943,170.00 on April 3, 2009. Comstock

reduced the bid amount by $1,005,000.00 based on identified savings on April 17, 2009.

[12] Comstock attended an on-site bid clarification meeting with representatives of AMEC and

PCS on April 30, 2009. Comstock’s bid was discussed in detail and a tour of the site took place.

Change to Lump Sum tenders

[13] By May 1, 2009, AMEC and PCS had decided that the engineering design work on the

compaction plant had progressed sufficiently to proceed with tenders on a lump sum (also referred

to as fixed price) basis. On May 1, 2009 a bid clarification letter was sent by AMEC to all cost-

plus bidders asking each to confirm its interest in submitting a tender on a lump sum basis. On

May 4, 2009 Comstock wrote to confirm its interest.

[14] The Invitation to Tender was issued May 30, 2009. It indicated a closing date of June 19,

2009, contract award by July 31, 2009 and work under the contract to be completed by May 14,

2010.

[15] AMEC issued several revisions of engineering drawings and specifications referred to as

Requests for Contract Action (“RCA”) over the course of the tendering process. Bidders on the

lump sum tender were working from RCA 8.

[16] Comstock and the other contractors invited to submit lump sum bids were invited to another

site meeting on June 10, 2009 with AMEC representatives. Issues discussed included the drawings,

heat, and site exclusivity. Another site walk through took place.

[17] AMEC issued a revised set of drawings and specifications, RCA 9, on June 13, 2009. The

tender closing date was extended to July 3, 2009.

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Comstock’s lump sum bid

[18] On July 3, 2009, Comstock submitted its lump sum bid for CP-15. The bid amount was

$34,479,169.41. It was the lowest bid by a significant margin. The other three lump sum bids were

$43,841,202.00; $45,912,278.00; and $48,374,166.00.

[19] Comstock stated in its tender submission the work would commence on or before August 30,

2009 and the construction period would be 210 working days, based on a five day, 10 hour per

day, work week as required by the tender documents. Substantial completion would be by April

15, 2010 and final completion by May 30, 2010.

[20] Comstock’s bid submission included in Trial Exhibit 1 indicates its estimated peak workforce

for contractor and subcontractor forces would be 200 people. Estimated total on-site hours were

250,500 of which 155,000 were for contractor workers, 75,000 were for subcontractor workers

and 20,500 were for on-site staff.

Comstock’s Execution Plan

[21] In its Execution Plan submitted with its July 3, 2009 bid proposal Comstock indicated among

other things that:

 It intended to begin mobilizing August 17, 2009;

 It would install a construction elevator in the plant if possible for access to higher

elevations;

 It would install temporary washrooms located within the building;

 The overhead cranes (owned by PCS and intended to be used after construction of the

compaction plant as maintenance cranes) would be used by Comstock for material handling

to the different elevations;

 After the cranes were certified and turned over to Comstock for use during construction it

would add a second shift to hoist equipment/materials while day crews would install

equipment hoisted the previous night;

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 The natural gas system included in the scope of work would be installed early in the

schedule to allow use of gas to fuel temporary construction heaters for winter heat.

Bid clarification meeting

[22] On July 15, 2009 AMEC held a bid clarification meeting with Comstock representatives to

review in detail the tender documents. Another walk-through of the site took place.

RCA 10

[23] RCA 10 was released July 10, 2009. The majority of these drawings were marked “IFC” –

Issued for Construction.

[24] On July 23, 2009 Comstock submitted a revised lump-sum bid of $36,279,170.35 based on

these new drawings, an increase of $1,162,801.00. Comstock did not revise its May 30, 2010

completion date.

Comstock is awarded the contract

[25] On August 12, 2009, PCS issued a Letter of Intent confirming that Comstock was awarded

the contract. Although the contract was not signed until sometime after December 18, 2009, it is

agreed by the parties it was effective as of August 14, 2009 when Comstock acknowledged receipt

of the letter of intent.

[26] The contract provided work would commence on or before August 30, 2009, substantial

completion would be by April 15, 2010 and final construction completion would be by May 30,

2010.

The Contract

[27] The contract contains over 1,000 pages. Article 1 of the “Agreement for Contract” states:

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ARTICLE 1

1. This Agreement together with the following documents:

Letter of Intent

Service Provider Undertaking Agreement

Correspondence

1.1.1. Contractor Offer

Introduction

Construction Execution Plan

Schedule A – Schedule of Unit Rates

WCB Experience Rate Statement and Letters

Certificate of Insurance

1.2

General Conditions

General Conditions of Contract

Additional Special Conditions

1.3

1.4

Scope of Work

Drawing List (RCA 10)

As per Specification List.

1.5

1.7

Specification List (RCA 10)

As per Drawing List.

Exhibits

Exhibit 1 - Construction Management Plan (CMP)

Exhibit 2 - Quality Assurance/Quality Control

Exhibit 3 - Administration Forms

Exhibit 4 - AMEC/PCS Safety, Health & Environmental Library CD

and the Contract Drawings listed in the Drawing List, together with the

Construction Schedule and the Construction Drawings form the Contract and shall

together be referred to hereinafter as the Contract or Contract documents.

2.

The Contract Documents shall constitute the entire agreement between the

parties for the Work to be performed, and shall supersede and cancel all

previous agreements between the parties in regard to the Work whether oral

or in writing, whether expressed or implied.

3.

The Contract may only be amended as provided in the Contract Documents.

[28] Article 2 of the Agreement for Contract states:

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CONTRACTOR undertakes and agrees to perform all the Work as shown or

described in the Contract Documents and to do and fulfill everything to be done

and performed by CONTRACTOR shall commence on Site on or before 30^thday

of August, 2009 and to achieve full and final completion of the Work on or before

30^thday of May, 2010 and CONTRACTOR does hereby agree to perform the Work

for the estimated, not to exceed, sum of Thirty-Six Million Two Hundred Seventy

Nine Thousand, One Hundred Seventy Dollars and Thirty Five Cents

($36,279,170.35), hereinafter called the Contract Sum, and that there shall be no

further charges to OWNER whatsoever other than those expressly provided for in

the Contract Documents.

[29] Article 3 states:

OWNER undertakes and agrees to pay CONTRACTOR, in lawful money of

Canada, the Contract Sum for the performance of the Work, subject to additions or

deductions as provided for in the Contract Documents, and to make payments on

account thereof as stipulated in the Contract Documents.

[30] The contract contains numerous General Conditions. These were included with the tender

documents.

Comstock holds internal contract meeting

[31] On August 17, 2009, Comstock held an internal kick-off meeting in Ontario. Mr. McLellan,

Comstock’s Project Manager and primary fact witness, testified that Comstock was aware RCA

11 was going to be issued at the time of this meeting.

[32] At the meeting, Comstock discussed change order management. The minutes of the meeting

reference under the heading “Change Orders/Extras:

A lot are expected for this job and need to be managed effectively from the start.

All extras are to be logged whether CCL plans to charge for them or not.

Need excellent Change Order Managers.

[33] Under item 5 “Site Personnel, Change Order Management” the minutes state:

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Need a strong overall Change Order Manager to manage all trades, as well as one

for each of Electrical and Mechanical.

On-site Kick-off meeting

[34] Comstock attended a kick-off meeting on August 20, 2009 on site with representatives from

the PCS/AMEC project team. The Scope of Work, drawings and schedule were discussed.

RCA 11 issues

[35] RCA 11 was posted to the project’s website on August 28, 2009 and was transmitted to

Comstock on September 2, 2009.

Comstock mobilizes to site

[36] Comstock began to mobilize to site by August 31, 2009 and mobilization continued into mid-

September, 2009.

Comstock Submits Baseline schedule

[37] G.C. 19.2.1 required Comstock to submit its baseline construction schedule 14 days after the

award of the contract, i.e. by the end of August 2009. Doug Breed, AMEC’s construction

coordinator for structural, mechanical, HVAC, insulation and piping work, provided Mr. McLellan

with the latest equipment status report for compaction plant equipment to be incorporated into the

baseline schedule on September 1, 2009 and requested a response by September 8, 2009.

[38] On September 8, 2009 Mr. Breed wrote to Mr. McLellan and indicated that AMEC did not

yet have a baseline schedule prior to the first contract meeting scheduled for September 14.

[39] Mr. McLellan submitted a preliminary schedule on September 10, 2009. He indicated a

scheduler was on site that day working on the baseline schedule.

[40] Mr. McLellan worked with Matt Semmens, a Comstock scheduler assigned to the project on

an “as required” basis to prepare the baseline schedule. Mr. Semmens and another scheduler, Sean

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Murray, carried out the scheduling work from Ontario primarily. Neither was assigned full-time

to the project.

[41] On September 25, 2009 the baseline schedule was submitted to AMEC and was accepted by

AMEC on September 29, 2009.

Schedule updates

[42] Comstock was required under the contract to update the schedule weekly. AMEC requested

the updates be provided 48 hours before weekly coordination meetings that took place on site

between Comstock and AMEC representatives.

[43] The schedule was prepared using Primavera software as required under the contract. As Mr.

McLellan did not use Primavera software (her reviewed the schedules in PDF format) the schedule

was updated by Matt Semmens or Mr. Murray in Ontario. They would receive information from

the foremen and superintendents on site and input the information into the schedule.

Change Order request for RCA 11

[44] On September 25, 2009, Comstock submitted to AMEC a Change Order request in the

amount of $1,172,000 for pricing of changes arising from RCA 11. However, it was not accepted.

Comstock and AMEC went back and forth on price. Comstock submitted a revised price for RCA

11 in the amount of $911,000.00 on November 18, 2009 which was signed off on by AMEC and

PCS. A Change Order in that amount was issued to Comstock in February 2010, increasing the

contract value to $37,190,170.35.

[45] Comstock requested from AMEC four copies of RCA 11 and other IFC drawings transmitted

after Comstock arrived on site. Comstock eventually obtained copies of these documents before

the end of October 2009 and was reimbursed by PCS for the costs.

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Cranes

[46] As PCS and AMEC were aware, Comstock intended to use for construction purposes two

overhead cranes, the 25-ton and the 10-ton crane. These cranes were owned by PCS and would

become maintenance cranes after completion of the compaction plant.

[47] The cranes were “rough set” in the compaction plant by September 17, 2009. Comstock

was responsible for installing the cranes and commissioning them. Comstock had to access

certain elevations in order to run power to the cranes. This took place some time after October

24, 2009.

[48] The cranes were ready for commissioning by November 9, 2009 however delays arose on

their commissioning due to a defect with the 10-ton crane. The 25-ton crane was commissioned

and turned over to Comstock on December 1, 2009. The 10-ton crane was not turned over until

January 28, 2010 due to a wait for the parts needed to complete its commissioning. Both cranes

broke down frequently after turnover.

MCC Room

[49] Comstock was supposed to have access to the MCC room at elevation 141 on October 19,

2009. It was not available as work was still ongoing to pour concrete on the floors. The MCC room

at elevation 141 was turned over to Comstock on November 16, 2009. However, the structural

steel contractor did not finish the ramp for lifting equipment into the MCC room until November

28, 2009.

Schedule starts to slip

[50] Comstock’s schedules in November, 2009 showed completion of some activities extending

past the May 31, 2010 contractual completion date into June 2010. The minutes of the weekly

coordination meeting on November 17, 2009 indicate Comstock was behind schedule in some

areas due to “access issues”. AMEC did not accept Comstock’s schedule submitted for the

November 24, 2010 weekly meeting on the basis it showed some items being completed past

May 31, 2010.

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November 17, 2009 Notice of Delays

[51] On November 17, 2009 Mr. McLellan issued a CIC (project electronic correspondence)

entitled “Notice of Delays” to AMEC. In the correspondence Mr. McLellan expressed concerns

with access to elevation 95, the Motor Control Centre (“MCC”) room, and the foundations for the

cooling towers. Mr. McLellan also raised concerns with delay in accessing the 25-ton and 10-ton

cranes and issues with east side cladding.

[52] At the end of the correspondence Mr. McLellan writes:

We are bringing the previous item to your attention, at this time, to inform AMEC

that there may be a schedule impact due to the delays. However Comstock will

continue to strive to work the affected tasks and areas and lessen the impact on

the schedule.

[53] Mr. Breed wrote back. He disputed that the items Mr. McLellan had raised were impacting

the schedule.

Heat in compaction plant

[54] Comstock was responsible to provide temporary heat to the compaction plant building. The

building was not fully enclosed until February 2010. Comstock says it could not heat the building

properly as a result and workers were impacted by snow and ice in the building.

[55] In December 2009 Comstock indicated to AMEC that due to conditions in the compaction

plant and lighting outside on pathways it would work eight-hour days rather than the contractually

required 10-hour days, five days a week. AMEC did not object. Comstock worked this reduced

schedule between December 14, 2009 and February 2, 2010.

The schedule slips again

[56] The January 24, 2010 schedule showed a completion date of June 7, 2010. AMEC did not

accept the schedule. In correspondence Mr. Breed stated incorrect or missing logic ties between

activities had caused the schedule to show incorrect durations or completion dates. He also stated

that Comstock had not shown in any of the previously submitted schedules why the completion

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date would slip past the May 31^stdate so AMEC anticipated Comstock would meet the May 31st

construction completion milestone.

Crane Claim

[57] On January 29, 2010, Mr. McLellan prepared a submission regarding Comstock’s claimed

cost impacts in relation to crane issues up to January 28, 2010. He calculated the impact at $1.547

million. At the end of the correspondence Mr. McLellan wrote:

Although work has continued the delays in moving equipment and materials have

also affected the schedule. The schedule will be re-planned around the date when

the crane is ready for service but at this time the delay to mechanical completion is

at least 2 weeks.

[58] AMEC responded February 19, 2010 and stated that it agreed there were cost impacts

associated with the unavailability of the cranes but did not agree with Comstock’s assessment of

the extent of the impacts on the various trades. AMEC made a without prejudice offer to address

the claim in the amount of $457,000.

[59] Comstock replied February 23, 2010 with revised calculations that brought the claim to

$1,253,673.78. It adjusted prior calculations to take into account that the site was shut down on

December 9, 2009 and it included additional lost time for when the 10-ton crane was down in

February 2010.

[60] AMEC responded to Comstock’s adjusted claims but did not move from its position. No

amount was accepted or paid for Crane issues.

Comstock begins expressing concern with timing of issuance of change orders

[61] After RCA 11, AMEC continued to issue revised IFC drawings. Comstock sought and

received change orders in relation to design changes and modifications arising from revisions to

the drawings and from instructions from AMEC transmitted by way of the CIC system.

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[62] By termination on July 12, 2010 approved change orders were at $4.5 million, a substantial

portion of which was in relation to design changes.

[63] Starting in early February 2010 the weekly meeting minutes reflect that Comstock began

requesting quicker turnaround of change orders so as not to cause schedule delays. Comstock’s

position, confirmed by Mr. McLellan in his evidence, was that Comstock was not authorized to

proceed with changed work until it received a signed change order. AMEC’s position was that IFC

drawings were authorization to proceed with the work shown on the drawings and approval was

only required for out-of-scope work.

[64] Also beginning in February 2010 Comstock included in its quotations of price for changes to

the work a statement to the effect that quick turnaround was required to avoid delay costs and that

upon approval of the change order Comstock would adjust the schedule accordingly.

Comstock is 10% behind schedule as of February 2, 2010

[65] Comstock’s schedule submitted for the February 2, 2010 weekly meeting showed a May 31,

2010 completion date. The minutes of this meeting indicate the schedule showed 38.5%

completion and Comstock was approximately 10% behind schedule.

Comstock begins night shift

[66] In early February 2010 Comstock commenced a night shift. The weekly meeting minutes

indicate that as of February 9, 2010 electrical work was the biggest concern and two crews were

to start pulling cable that night. AMEC noted that earned man-hours needed to pick up in order to

meet the schedule and that Comstock required 12,000 hours per week for the next six weeks.

[67] The night shift continued until May 2010. Comstock’s reported hours showing on the weekly

minutes indicate it obtained over 12,000 manhours every week until June 1, 2010 after the night

shift was cancelled and Comstock began to reduce its work force.

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Completion date extending to July 2010

[68] Despite operating the night shift, the schedule was delayed. The February 26, 2010 schedule

showed a completion date of July 7, 2010. At the March 2, 2010 weekly coordination meeting,

AMEC indicated that an updated, accurate schedule, recovery plan, and cost implications were

required from Comstock.

[69] By correspondence to AMEC dated March 3, 2010, Mr. McLellan stated the anticipated

schedule was extending out to July 15, 2010, and he included cost estimates for extending the

project, which totalled approximately $90,000 per week on a preliminary basis.

[70] Mr. McLellan indicated the schedule was extending out to July 15, 2010 for various (non-

Comstock caused) reasons including:

 late delivery of the dust collection duct which delayed the start of duct installation from

November to mid January, which in turn delayed the start of insulation on the duct;

 delay in the fabrication of the HVAC by approximately one month as there was confusion

as to which revision of the specification was to be used. (Mr. McLellan testified that

Comstock saw this as AMEC responsible delay, but AMEC did not agree);

 three week delay because the 10-ton crane was not available for December and January;

 areas of the building not being available early in the project;

 delays in other companies’ schedules such as cladding, concrete, structural etc.;

 large number of changes on drawings and scope which took a very long time to approve.

[71] The schedule Mr. McLellan was referencing was not attached to his March 3, 2010

correspondence. However the March 5, 2010 schedule sent to AMEC March 8, 2010 showed a

July 15, 2010 completion date. This schedule was not accepted by AMEC.

[72] The weekly meeting minutes of March 9, 2010 indicate AMEC had a number of concerns

regarding the schedule including questioning the accuracy of the percent complete (Comstock was

reporting it was 41% complete overall), major equipment not being accounted for in the schedule

and activities not being linked in the schedule. AMEC stated that without an accurate schedule it

could not plan activities.

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[73] At the March 9, 2010 weekly meeting AMEC reiterated its request that Comstock have a full-

time scheduler on site. The minutes indicate Comstock’s scheduler was to be on site Mondays and

Tuesdays going forward. Mr. McLellan testified that he believed Sean Murray came to site around

March or April 2010, and that Mr. Matt Semmens was on site one day a week or so starting in May

2010.

[74] Comstock submitted another schedule on March 15, 2010. It showed a construction

completion date of August 11, 2010. AMEC did not accept the schedule submitted. It appears a

separate schedule meeting was to be held the next day i.e. March 17, 2010. However there are no

minutes of a meeting on that date in evidence.

[75] On March 22, 2010 Mr. Breed forwarded to Mr. McLellan and others at Comstock a

spreadsheet that AMEC had completed for CP-15 schedule activities that showed 90% or greater

percent complete. AMEC provided its assessment of what it believed was a more accurate

reflection of current progress. The spreadsheet indicates that in AMEC’s view many of the items

that Comstock was showing 90% or greater complete were much less complete.

[76] On March 24, 2010, a special schedule review meeting took place at which AMEC told

Comstock it had “grave concerns with respect to the direction the project was heading. If the

schedule info is correct the project is in big trouble.”

[77] Comstock acknowledged it had incorrectly included 30,000 hours for scaffolding and labour

which should not have been part of the schedule. According to Mr. McLellan, this was an error

made by Comstock, that had the effect of showing the construction completion date as extending

out to August, 2010. However Comstock was still indicating to AMEC it could complete the work

by July 15, 2010. According to the minutes, Comstock indicated it would have a workable

schedule by Friday [March 27, 2010].

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[78] On March 29, 2010 a further schedule review meeting took place. AMEC questioned the 59%

overall completion estimate given by Comstock. The schedule was back to showing a construction

completion date of July 15, 2010.

[79] On March 30, 2010, Mr. Bowes, AMEC’s contract administrator, responded to Comstock’s

March 3, 2010 letter. With respect to extending the construction completion date to July 15, 2010,

Mr. Bowes indicated that AMEC was entitled to a weekly updated schedule that “meets the criteria

set out in G.C. 19.0 of the Contract” and that this schedule and the supporting information would

confirm whether the completion date would extend beyond May 31, and to what extent.

[80] In terms of supporting information, Mr. Bowes requested that Comstock provide cost of the

delay, i.e. details of any costs relating to Comstock having to remain on site beyond May 31, and

cost of recovery, i.e. details of the costs associated with doing what is necessary to pull the schedule

back to the original contractual finish date as per G.C. 22 (acceleration of the work). Mr. Bowes

indicated if Comstock believed AMEC was responsible for any portion of the above cost, it should

identify that portion and provide the rationale to attribute costs to AMEC.

[81] On April 1, 2010 Comstock submitted a schedule that showed a construction completion date

of July 16, 2010. The minutes of the next weekly meeting, April 6, 2010, state that the current

format of the schedule was fine but indicates late deliveries were to be incorporated.

Comstock submits Notice of Claim and Request for Extension of Time

[82] In April 2010, Brian Guite, Comstock’ Senior Vice-President, Corporate, arrived on site. On

April 16, 2010 he wrote to Tony Vecchio, AMEC’s project manager, Wally Roul, AMEC’s

contract manager and Mr. Bailey seeking damages of an approximate minimum of $8.5 million

and claiming a net project delay of three months (based on a construction completion date of July

15, 2010). He attributed delays to a number of issues, for which he claimed Comstock bore no

responsibility including lack of quality and reliability of tender documents, lack of crane

availability and crane breakdowns, lack of access to Master Project Schedule, and delays in the

MCC room.

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[83] At the end of the April 16, 2010 correspondence, Mr. Guite wrote:

In accordance with the contract provisions that suggest that the Project Engineer is

to make an initial determination on the above claim and request for time extension,

we are prepared to discuss the same with you at this stage. However, given AMEC’s

involvement in respect of the above claim, we suggest that AMEC is in a conflict

of interest as it is being asked to make a determination on a claim that emanates

from certain actions taken by AMEC and ask that you defer making any

determination on that basis and further ask that this claim be sent to mediation as a

first step for dispute resolution. If not resolved at that stage, we can then discuss

the potential for arbitration.

AMEC does not accept Comstock’s April 17, 2010 schedule

[84] Mr. Breed wrote to Sean Murray on April 20, 2010 and stated that the April 17, 2010 schedule

submission, which showed a construction completion date of July 16, 2010 was not accepted by

AMEC, as AMEC had not agreed to a July 16, 2010 construction completion date; Comstock had

added a section titled “extras” into the schedule for additional work that was awarded to Comstock

for the contract or claims for additional compensation that had not yet been agreed to by AMEC

and AMEC continued to disagree with Comstock’s activity percent complete for some of the

equipment and with certain aspects of the schedule with respect to logic.

[85] Mr. Breed was asked on cross-examination if July 15, 2010 would have been an acceptable

date, but not July 16. He responded that neither was acceptable.

[86] The schedule discussed at the weekly coordination meeting on April 27, 2010 showed a

construction completion date of July 15, 2010. Comstock indicated at the meeting that it felt July

15, 2010 could be met. AMEC did not indicate the schedule was accepted. However, AMEC

requested immediate notification from Comstock if the end date of July 15, 2010 was not

achievable.

Comstock submits a further claim for compensation and extension of time April 28, 2010

[87] On April 28, 2010, Mr. Guite sent further correspondence to AMEC and PCS. In this

correspondence, Comstock requested specific extensions of time, including 20 weeks for late

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availability of the cranes and subsequent breakdowns, 12 weeks for late and changed IFC

drawings, eight weeks for unresolved change orders, and six weeks for extra material handling.

[88] On May 4, 2010 Mr. Vecchio responded and requested further details regarding the alleged

costs and schedule impacts. A revised schedule and a quantification of the additional costs was

requested.

[89] The same day, May 4, 2010, Mr. Guite wrote back to Mr. Vecchio, asking for “fair and urgent

considerations and Change Orders for the severe changes and associated huge additional costs to

our negotiated and competitive lump sum tender” for the contract. By this point, Comstock’s claim

amount was at $16,008,000.00 broken down as follows:

1. Crane Issues (Net): $1,547,475

2. Extended Duration Costs (CCL): $1,600,000

3. Drawing Revisions (BtC [bid to construct]):$1,500,000

4. Unresolved Change Orders: $1,300,525

5. Additional Overtime/Acceleration: $3,500,000

6. Tender vs As-Built Quantities: $800,000

7. Extra Material Handling: $1,100,000

8. Subcontractors: $2,500,000

9. General and Miscellaneous Items: $1,560,000

10. Late responses to RFI’s and Critical Items: $600,000

[90] Mr. Guite indicated Comstock was willing and able to accommodate what it called PCS’

accelerated completion date however:

…with manpower loadings of more than 400 men versus planned levels of about

180 men, extra overtime and second shifts that have an extra cost of over $3.5

million, it would be unreasonable and very unfair to expect [Comstock] to

continue expending many millions of dollars on extra or changed works without

fair and reasonable Change Orders. To date the Owner’s consultant AMEC has

not issued any Change Orders for extension of time, not a single day, and has not

addressed or processed claims for huge delays and change conditions associated

with the late cranes and revised drawings.

May 4, 2010 weekly meeting

[91] The May 4, 2010 weekly meeting minutes indicate:

18

Most recent schedule shows an end date of July 15^th, which is not acceptable to

AMEC. Currently showing 66.01% complete with 1.88% achieved last week.

Comstock is constantly monitoring & reviewing the schedule – AMEC is

expressing concern regarding the achievability of this end date. CIC to be issued.

The current accepted end date is May 31.

AMEC HAS REQUESTED IMMEDIATE NOTIFICATION FROM

COMSTOCK IF JULY 15^thIS NOT ACHIEVABLE – Comstock feels they will

meet this date, the biggest concerns are currently ductwork & insulation.

[92] At item 8.5 of the minutes, AMEC is noted as being “concerned that activities are being

pushed out until there is no float left”.

[93] On May 5, 2010 Mr. Bailey spoke with Peter Semmens, Executive Vice President of

Comstock in three telephone conversations. Mr. Bailey’s notes of the phone calls are recorded in

an email he sent to Clint Weiland (PCS in-house counsel) and Mark Fracchia, plant manager of

the Penobsquis site. In summary, Mr. Bailey indicated he discussed having a claims person come

in on behalf of PCS, but stated that this was in no way a settlement meeting and that Comstock

was still obligated to put forth their change order claims in accordance with the contract. Mr. Bailey

recorded that Mr. Semmens stated Comstock would not agree to continue the contract with change

orders and a fixed price contract. However, Mr. Semmens called back within 10 minutes and stated

Comstock was okay with allowing PCS to introduce a claims person to come in and look at the

site and Comstock’s work and claims and they were okay to continue without cost-plus.

Comstock presents two options

[94] On May 6, 2010, Comstock sent AMEC and PCS correspondence indicating two options.

Option one would be to complete the work by July 15, 2010, with a change order for $5.2 million.

Option two was to revert to a standard work week to achieve a completion date of November 6,

2010 at an estimated additional cost of $2.6 million.

[95] By email dated May 7, 2010. Mr. Fracchia stated to Mr. Bailey regarding Comstock:

I think we need to talk about the option of terminating them and bringing another

contractor on board.

[96] Mr. Vecchio replied to Comstock’s May 6 correspondence on May 7, 2010. He indicated

option two, with a November 26, 2010 end date, was not acceptable. He also indicated AMEC

19

wanted more detailed backup regarding the first option set out in the letter and a resource loaded

schedule demonstrating that the July 15, 2010 date was achievable. Mr. Vecchio cited General

Conditions 47.9.1 and 47.9.3 of the contract dealing with change orders and the engineer’s

authority to determine the validity of any claims when sufficient information and documentation

had been received.

[97] On May 8, 2010 Mr. Guite wrote back. In summary, he refuted the suggestion that AMEC

had not received sufficient information from Comstock to make a determination on the request for

a change order as set out in option one. He stated that AMEC was only delaying the process by

asking for more information and not requesting to enter into discussions, at a minimum, which

Comstock considered to be bad faith in terms of contract management. He indicated that Comstock

took Mr. Vecchio’s letter as a rejection of the request for a change order to support a July 15, 2010

completion date, and in the circumstances Comstock would revert to option two until AMEC made

a final determination of the first option.

[98] The minutes of the May 11, 2010 weekly meeting note that the most recent schedule showed

an end date of July 15 which was not acceptable to AMEC. The schedule was currently showing

68.46% complete. The current accepted end date was May 31. The minutes also state:

COMSTOCK HAS GIVEN NOTIFICATION THAT THE END DATE IS BEING

PUSHED OUT TO NOV 26TH AND THEY WILL BE LAYING OFF 200

PEOPLE, EFFECTIVE IMMEDIATELY.

AMEC REQUESTED WRITTEN NOTIFICATION OF THE NOV 26TH DATE

AND MANPOWER ADJUSTMENT. COMSTOCK STATED THEY ARE

PROCEEDING WITH OPTION 2 STATED IN THEIR LETTER DATED MAY

6TH, 2010.

[99] In his testimony, Mr. McLellan disagreed that Comstock stated they would be laying off 200

people effective immediately. He said that Comstock’s head office was reviewing a reduction of

their crews and would be telling Comstock when they would be doing it.

[100] Mr. Breed testified that he recalled Comstock stating that they will be laying off 200 people,

effective immediately.

20

[101] At the May 11 meeting AMEC requested a revised schedule be issued to reflect the new end

date (November 26). Comstock agreed to submit it by the end of week.

[102] On May 16, 2010, Comstock submitted a schedule. However, it was not revised to reflect a

November 2010 end date. The covering email from Mr. McLellan states:

Attached is our updated schedule.

We are maintaining the July 15 end date and have not changed this date at this time

and at this time do not have a firm finish date due to the following:

1) Unknown date when the current changes in for approval will be approved.

2) Continuing engineering changes

3) The availability of the overhead cranes is an unknown

4) Bucket Elevator Components being sent back to manufacture, Unknown when

these will return.

5) Chutes being sent back to fabricator Unknown when these will return.

6) Open CIC’s unanswered

[103] The next day, May 17, 2020, Mr. Bowes wrote to Mr. McLellan and stated:

Based on a preliminary review of the CP15 – Comstock Construction Schedule

AMEC has concerns regarding Comstock’s ability to complete the Contract Work

in a timely fashion, in particular your ability meet the current indicated overall

construction completion date of July 15, 2010.

Effective immediately, please forward a weekly report with your weekly

construction schedule as follows;

1. A three week lookahead schedule showing planned versus actual for the previous

week, and the planned work for the current week and the following week. The

activity breakdown should be such that no activity is longer than 10 days, and should

include all Subcontractor’s work.

2. Detailed explanations, in point form, for planned activities that did not get

completed the previous week and the remedial action planned to ensure overall

schedule and construction completion date is maintained.

3. Planned activities on the forthcoming two week period that are dependant on

outstanding Engineering information, materials deliveries, or Owner information

should be clearly identified.

4. A compilation/distillation of the information contained in the Daily Reports for

the previous week, in particular daily manpower on site for the period, broken down

by trade classification.

21

Continuing with our current submittal schedule, please provide the weekly report

and schedule 48 hours before the CP15 - Weekly Construction Progress Meeting.

[104] Mr. McLellan responded on May 18, 2010:

We would be happy to bring in additional forces to comply with your request for

additional submissions. However to complete this we would require a change order

for the additional staff required. Upon the receipt of the change order we will

comply with your request.

In the meantime the July 15 date will be unachievable and we are reviewing the

schedule and will provide a revised schedule as per contract.

[105] Mr. Bowes responded the same day that the requested submissions were not additional to

Comstock’s scope of work but were required by General Condition 20.3.2.1 of the contract.

Comstock requests extensions to the schedule for changes to the work

[106] In May 2010, Comstock began seeking extensions of time in relation to ongoing changes to

the work that were being issued by AMEC. Mr. McLellan initially wrote in the extension of time

sought on the approved Change Order when it was returned to him signed by AMEC and/or PCS.

[107] Mr. Bowes wrote to Mr. McLellan and advised this practice of marking up signed change

orders was unacceptable and did not comply with the requirement that Comstock give seven days

notice of any delay/anticipated delay, pursuant to G.C. 23.3.

[108] Comstock also submitted some quantified requests for extensions of time along with its price

quotations for a number of changes that resulted in Change Orders. AMEC accepted that two of

these warranted an extension of time.

[109] On May 17, 2010, in response to a request from AMEC for a quotation to remove and

reinstall the force feeders, Mr. McLellan submitted a quote for a total lump sum price of $67,604

and included on the correspondence the following statement:

Please Note! Any delay in responding to these changes may result in additional

charges for delays or rework.

22

The schedule will require to be extended by two weeks for the work to be completed

on this change.

The schedule will be required to be extended a further 6 weeks after the work

associated with this change is completed to complete assembly of Compactors.

A further schedule extension of four weeks is required to install chutes that cannot

be accessed due to the above work being completed

Based on the above we are requesting a 12 week extension to the schedule. This

extension will start 5 days after the receipt of the change order.

Additional charges for Overhead Site Expenses shall be extra after May 31 2010

and will be charged under a separate change.

[110] On May 18, 2010, Mr. Bowes responded to the quotation given by Mr. McLellan for the

force feeders stating:

Brian:

Please proceed with this work in accordance with the total lump sum price

submitted. Based on your quotation a schedule extension of 12 weeks to the

Contract schedule end date of May 31st is accepted. This schedule extension

pertains only to the work of the force feeders. A Contract Change Order will follow.

[111] Also on May 17, 2010 Mr. McLellan submitted a quotation in relation to CCL 9127: reinstall

cooling tower pumps. He provided a quote of $52,226. Mr. McLellan wrote:

Please Note! Any delay in responding to the changes may result in additional

charges for delays or rework.

The schedule will require to be extended by two weeks for the work to be completed

on this change.

The schedule will be required to be extended a further 2 weeks after the work

associated with this change is completed to compete the alignment.

A further schedule extension of two weeks is required [to] complete the electrical

after the alignment is completed.

Based on the above we are requesting a 6 weeks extension to the schedule. This

extension will start 5 days after receipt of this change order.

Additional charges for Overhead Site Expenses shall be extra after May 31, 2010

and will be charged under a separate change.

23

[112] Mr. Bowes responded on May 18, 2010 stating that Comstock was to proceed with the work

in accordance with the total lump sum price submitted and that a schedule extension of six weeks

to the contract schedule end date of May 31, 2010 was accepted. However, the schedule extension

pertained only to the work of reinstallation of the cooling tower pumps.

[113] On May 19, 2010 Mr. Guite responded to Mr. Bowes’s correspondence regarding the

marked-up change orders not being acceptable requests for extensions of time. Mr. Guite called

his correspondence on behalf of Comstock a “reservation of rights”. He pointed out the length of

delay associated with approval of four change orders (023, 026, 028, 034) ranged from 24 to 55

days and stated that PCS was in breach of the contract in terms of delayed approvals of requested

changes. Mr. Guite wrote that AMEC could “treat the whole issue as a further notice of claim”

that the damages incurred are ongoing.

[114] At the end of the letter Comstock stated:

“You are already on notice of our request for extensions. Our April 16, 2010 letter

requested an extension of time to July 15, 2010. With the more recent rejection of

our request for premium time, you have notice of a November 2010 completion

date. Why would Comstock submit a further letter for an extension of time in

respect of the above change orders, as AMEC has suggested, when the actual time

extensions requested on each change order has been noted on that specific change

order?”

[115] On May 20, 2010, Mr. Guite wrote to AMEC and PCS requesting their design engineers

attend the weekly coordination meetings and be on site as a means to try to manage ongoing design

changes which did not appear to be declining in number. Mr. Guite also asked for a copy of the

AMEC/PCS agreement.

[116] Mr. Guite sent further correspondence dated May 20, 2010 to AMEC and PCS. He stated

Comstock was consistently being asked to update schedules and that it could not account in

schedule updates for the volume and timing of changes or the time it would take to approve

changes. He included a table setting out the total quantity of drawing revisions between August

24

2009 to April 2010 and stated it would greatly help if Comstock knew the status of drawing

revisions from AMEC.

May 21, 2010 Meeting between Comstock and PCS

[117] On May 21, 2010, a meeting took place in Toronto between Comstock and PCS. No

representatives from AMEC were present. Mr. Bailey, Mr. Fracchia and Mr. Frehlich, PCS’

surface project coordinator met with Bob Quinn, then President of Comstock and Peter Semmens.

Mr. Bailey testified that PCS agreed to the meeting to hear Comstock’s concerns.

[118] Mr. Frehlich took meeting notes. These notes indicate Mr. Quinn and Mr. Semmens outlined

Comstock’s complaints and frustrations with the crane issues and AMEC engineering issues,

among other things they believed had impacted Comstock’s productivity and Mr. Quinn indicated

that Comstock thought the project was a $60 million job and that the build was something totally

different than what they had bid on.

[119] The minutes indicate Comstock put forward a recommendation that it be paid for work to

date and complete the remainder of the job under a T and M (time and materials) contract. Mr.

Quinn is noted as stating that if nothing was resolved soon Comstock would have to end all

premium time and go to a 40 hour work week with approximately 250 personnel which would

push the schedule out into the new year. He is recorded as stating we (Comstock) have no intention

to leave the job, but are downsizing to match engineering.

[120] The minutes indicate Mr. Bailey said PCS had to take this back and find some middle ground

in order to make a decision on the path forward. He also stated that if any of the previous finish

dates were of major concerned to PCS, Comstock would have heard from PCS long ago. He

indicated that basically there were three options:

1. Terminate Comstock’s contract

2. Continue with current contract and use the change order process

3. Proceed with Comstock’s recommendation.

25

[121] Mr. Bailey agreed on cross-examination he was referring to termination for convenience at

this point.

AMEC requests schedule update

[122] On May 28, 2010 Mr. Vecchio wrote to Mr. Guite indicating Comstock’s schedule

submission for that week was late. He noted G.C. 19.3 (schedule format) and G.C. 20.3.2.1 (weekly

reports).

[123] Mr. Vecchio stated that Comstock was required to provide an updated schedule to be

presented and reviewed before the next weekly meeting scheduled for June 1, 2010 and that the

schedule must incorporate the requirements in GC 21.1 (hours of work) including but not limited

to a defined critical path, complete with logic and finish/start relationships, and it should reflect

the current scope of work including approved change orders and any field work orders.

[124] Also on May 28, 2010 in partial response to Mr. Bowes’ May 17, 2010 request, Mr.

McLellan sent a list of planned activities not completed, and planned activities for the next week

dependent upon approval. Mr. McLellan noted that a number of items were reliant on AMEC: for

example Comstock was waiting for AMEC to advise about modifications and to provide support

material for certain chutes.

Comstock’s schedule shows completion dates in October 2010

[125] On May 30, 2010 Comstock submitted a revised schedule, showing a construction

completion date of October 6, 2010. In the accompanying correspondence Mr. Guite again

indicated that Comstock could not account for the volume and timing of changes and time it would

take to approve changes by AMEC and PCS in its scheduling updates and requested the status of

drawing revisions from AMEC.

[126] Mr. Guite wrote:

This requested information is key for Comstock to prepare any reasonable form of

schedule. You have not answered our request and as a result, we have not been able

to prepare revise schedules.

26

You will recall that GC 19 of the contract makes time of the essence. Here we are

some 10 days after our request without a response from you on that request and

without an explanation for the non-response. Given that conduct, PCS is in breach

of GC 19 and its conduct interfered with her ability to prepare schedules.

Despite your inability or unwillingness to respond to our May 20, 2010 request, we

attach an updated schedule which remains qualified to the extent that further design

changes are to come, and further, on the continued impact of cash flow delays and

delays with approvals for change orders, changes, RFIs etc.

The contractual completion date is not met

[127] The May 31, 2010 contractual completion date came and went. At the weekly coordination

meeting on June 1, 2010, it was noted that the construction schedule showed an end date of October

6, 2010. The minutes reflect that AMEC was of the view the schedule still required some review

and revision of manpower, as the critical path was not clear. AMEC noted Comstock was

overmanned. Comstock stated that they were trying to finish early and that a Comstock scheduler

would be on-site and would work with AMEC schedulers on this review. Comstock indicated it

would be constantly reviewing and reassessing its manpower requirements.

Mr. Bailey and Mr. Semmens have another telephone conversation June 3, 2010

[128] On June 3, 2010, Mr. Bailey had a telephone conversation with Peter Semmens. Mr. Bailey

reported in an email to Mr. Fracchia, Mr. Frehlich, Mr. Weiland and Duane Gingrich, AMEC’s

vice president of mining, that Mr. Semmens had indicated he had a lot more change orders to

submit, and he knew he was at $41 or $42 million with current base plus change orders to date and

he believed that his package would get them up to around $55 or $56 million.

[129] Mr. Bailey’s email notes indicate that Mr. Semmens still wanted to try to work on some

reimbursable deal but he clearly understood PCS was continuing with the base plus change order

process.

[130] Mr. Bailey’s notes also indicate he and Mr. Semmens talked about the schedule submittal

(i.e. the May 30, 2010 schedule that showed an October 6, 2010 completion date). Mr. Bailey’s

notes state:

27

…We believed that October 6, 2010 was an obtainable date. He just needed to keep

his productivity up and he could get there affordable. He believes that date is

obtainable as well.

[131] Mr. Bailey’s notes also indicate he asked Mr. Semmens: “Does Comstock want to finish this

job?” and Mr. Semmens answered “Absolutely yes”. Mr. Bailey then asked: “Would Comstock

rather just try and stop the bleeding and/or mitigate their losses at this point in time?” Mr. Semmens

answer was “No, want to finish the job and get back on our good side and AMEC’s good side”.

[132] The conversation concluded with Mr. Bailey and Mr. Semmens agreeing that Mr. Semmens

and his team would come to New Brunswick to spend a day or two going over everything they had

to present.

[133] On June 7, 2010, Mr. Vecchio responded to the May 20, 2010 letter from Comstock asking

for an engineer to be on site. He stated that a mechanical engineer had been assigned to the site

team. Mr. Vecchio declined to provide Comstock with a copy of the AMEC agreement with PCS.

Arrival of Mr. Neis and Mr. McElhinney

[134] Mark Neis, a professional engineer and employee of AMEC had arrived on site June 6, 2010

at the request of Mr. Vecchio. Mr. Neis was tasked with reviewing Comstock’s claims in order to

make a determination in accordance with the contract.

[135] Around the same time, Owen McElhinney was brought on site by PCS. Mr. Fracchia testified

Mr. McElhinney was retained by PCS counsel to review and provide opinions on some of the

claims received from Comstock. Mr. Neis testified he understood Mr. McElhinney was to assist

him in determining the claim. Mr. McElhinney set up an office in AMEC’s trailer.

The Mackenzie Report

[136] At some point prior to June 9, 2010, Mr. Mackenzie, an AMEC estimator came to site and

prepared a report. The report, entitled “June 3 Contract Cost Summary Report” stated that the total

28

forecast to complete CP-15, including deviations but not including claims, was $42,805,854, of

which $2.1 million was miscellaneous deviations (changes) waiting for approval.

[137] The report is broken into two columns, one with the heading “Comstock” and the other with

the heading “AMEC”. Total potential claims under Comstock’s column are $16,008,000. Under

AMEC’s column, total potential claims are $6,798,825.

[138] The report states the project total, including deviations and potential claims, due to “schedule

creep” of five months (i.e. the project completion extending to October 2010) is $58,813,854 under

the Comstock column and $49,604,679 under the AMEC column.

[139] There is a note at the bottom of the first page of the document that states:

It was discussed with Cheryl Collins that it is AMEC’s conclusion that Comstock

has an additional 172,100 man-hours left to finish the work

-If this is the case; based on 200 hours per month you would need 866 man months

to complete

-To be completed in 5 months, Comstock would need an average of 173 men for

the duration to meet the October deadline

[140] On June 9, 2010, Mr. Vecchio sent this report to Mr. Bailey and others at PCS and AMEC.

June 11, 2010 meeting between Comstock, AMEC and PCS

[141] On June 11, 2010, at the request of Comstock, a meeting took place between representatives

of Comstock and AMEC, with a representative of PCS present, to discuss “unresolved issues”.

Peter Semmens, Mr. Guite, and a Senior Estimator and an Estimating Manager attended on behalf

of Comstock. Mr. Bailey and Joe Holmes, mill general superintendent, attended on behalf of PCS.

Mr. Vecchio, Mr. Roul, Brad Thompson, construction manager, Mark Thompson, assistant

construction manager and Mr. Neis attended on behalf of AMEC.

[142] Comstock had sent out the proposed agenda for the meeting the day before. It included seven

items for discussion (totaling $25.6 million):

1. Out-of-sequence delivery of Owner-supplied equipment and materials as well

as double and multi handling … cost: $1,483,981

29

2. Lack of timely and proper promised cranes (10T & 25T) … Cost: To follow

3. Misrepresentations as to completeness of design at tender time and lack of

promised IFC drawings and major changes between Tender and Revised

drawings … Cost: $19,547,700…

4. Extended duration costs due to imposed delays and changes… Cost: $4,576,552

5. Major acceleration (Premium time, 2^ndShift, additional manpower, extra

resources, etc.) to mitigate the imposed delays. Price is included in Item 3

above. We have provided actual back-up for the money spent.

6. Subcontractor’s claims & general and miscellaneous items … Cost: To Follow

7. Comstock has reviewed the approved change order process and we feel that the

approval has no real facts to cutting prices. So, due to the project’s unknown

inefficiency factor, we feel we have the right to go back and re-price each

change.

[143] Mr. Holmes prepared a summary of the meeting which Mr. Bailey reviewed during his

testimony. The notes indicate that Comstock presented the following options:

 Re-estimate lump sum and stick with current contract, but revised amounts

 Convert to cost-plus

 Hybrid of above 2 options

 Finish as-is and litigate

[144] The notes state that Comstock indicated they can and will finish the job with an October 6,

2010 completion. However, Mr. Vecchio did not believe this was possible unless there were

significant changes, i.e. project management.

[145] Mr. Neis proposed the plan forward was for AMEC to review the re-estimate and provide a

recommendation to Mr. Vecchio which would be presented to Mr. Bailey. Comstock agreed to

provide its re-estimate to Mr. Neis for review.

[146] Either at or following the meeting Comstock provided AMEC with five binders of

documents in support of its claims.

Mr. Vecchio indicates AMEC will provide an initial determination of Comstock’s claims

[147] On June 15, 2010 Mr. Vecchio wrote to Mr. Quinn in response to Comstock’s letters dated

April 16, 2010 and June 10, 2010. Mr. Vecchio referenced the documents provided by Comstock

30

and also noted that in Comstock’s April 16, 2010 letter it had recorded an expectation that a net

delay to the project might be three months.

[148] Mr. Vecchio wrote:

..it is my intention to issue an initial Determination for your disputed items no later

than Friday, June 18^th, 2010. Following receipt and review of the remainder of your

supporting documents and your demonstration of entitlement to compensation

under the Contract I will prepare a final Determination of the items in dispute.

[149] By correspondence the same day to Mr. Quinn, Mr. Vecchio delegated his authority to Mr.

Neis. The delegation reads:

Pursuant to Article 12.4 of Schedule “B” – General Conditions of the Contract, I

am delegating my duties and powers under the Contract to Mr. Mark Neis, Claims

Manager, Picadilly Project whose signature appears below with the exception of

articles 1.16, 5.2, 12.4, 24.0, 49.0, 50.0, 51.0, 52.0, 53.0 and 56.0. Mr. Neis will be

responsible for the negotiation of all claims and disputes under the Contract.

[150] Mr. Neis spent approximately a week reviewing the information Comstock had provided at

the meeting, and obtained electronic documents from Al Wilson, Comstock’s estimating manager

and Primavera versions of schedules from Matt Semmens.

June 18, 2010 schedule update

[151] In the meantime, Comstock’s June 18, 2010 schedule update still showed October 6, 2010

as the construction end date. According to the June 22, 2010 weekly meeting minutes, Comstock

stated they were trying to finish early. The schedule was not accepted by AMEC. Comstock is

recorded as stating that they were not willing to spend additional resources on the schedule if it

was not acceptable. AMEC is recorded as stating that it could not accept the schedule without

knowing the cost implications of that acceptance. A formal CIC was to be issued by AMEC,

requesting cost implications.

[152] The minutes note that the schedule was showing 80% complete, but included several

activities showing 100% that had not been signed off by AMEC. A CIC was to be issued by

AMEC with clarification of the requirements for 100% completion for items to be commissioned.

31

Mr. Neis’ report

[153] Mr. Neis completed his review. He forwarded a draft of his report to Mr. Bailey and Mr.

Gingrich on June 18, 2010. On June 23, 2010, he signed his report and sent it on to Mr. Vecchio.

In summary, Mr. Neis’ report indicated that Comstock may be entitled to compensation in relation

to changes to construction drawings, specifications or other documents; lack of crane availability;

the premium portion of overtime labour, and major acceleration. His initial estimate of value of

Comstock’s claims was $5,466,609.92 (versus Comstock’s claimed amount of $26,552,459.20)

and initial estimated entitlement was 51%. Mr. Neis calculated an initial determination value of

$2,803,226.94.

[154] With respect to an extension of time, Mr. Neis indicated Comstock had not provided

supporting documents to request an extension of the completion date of the work required in the

agreement, and in particular the contractor had not provided a schedule showing a cause and effect

which impacts the critical path. However, he had considered the items in dispute and possible

delays to the work and at the most, he could recommend a one month extension to the completion

date, i.e. to June 30, 2010.

[155] Mr. Neis prepared a draft of a letter from AMEC to Comstock, along with his report. The

letter stated that AMEC was recommending to PCS that it make three payments of $1 million and

was granting Comstock a one-month extension such that the new completion date shall be June

30, 2010. The draft letter also indicated payments shall be made on evidence Comstock Canada

Ltd. remains committed to completion of the work at the earliest possible date and a final

determination shall be made for the claims once Comstock submitted full and final supporting

documents for each of the claimed items.

[156] Although Mr. Neis had been delegated authority for the negotiation of all claims and disputes

under the Contract, upon submitting his report to Mr. Vecchio, he went off site for approximately

three weeks.

32

Mr. Vecchio indicates AMEC is prepared to recommend PCS pay Comstock $2.8 million

[157] On June 26, 2010 Mr. Vecchio sent a letter to Peter Semmens. He stated that the information

provided by Comstock at the June 11, 2010 meeting was insufficient to provide a final

recommendation to the PCS. However, in a gesture of good faith and subject to reduction and/or

claw back dependent on the outcome of the complete assessment, AMEC was prepared to

recommend to PCS additional payments of $2.8 million. No extension of time was offered.

[158] Mr. Vecchio concluded:

To be clear, payments of any amounts will not be made unless Comstock can

provide appropriate support to substantiate its claim. It is anticipated that Comstock

will continue to work under the existing contract terms including processing of

claims, conducting work relative to any scope changes and executing the work in

accordance with the agreed weekly work week. We await explanation of your

current de-staffing, non-compliance to work submitted via change order requests,

FWOs or site instructions and the logic to support your schedule submittal that

indicates a completion date of October 6, 2010.

We will be in touch with details regarding the additional information and supporting

materials Comstock will need to provide in order that AMEC carry out the final

review of your claims.

AMEC continues to seek schedule information from Comstock

[159] On June 29, 2010 Mr. Bowes followed up on his email dated May 18, 2010 requesting from

Comstock submissions regarding the schedule (three week lookahead schedule with no activity

longer than 10 days; explanations of work not completed the previous week and remedial action

planned; activities dependant on outstanding Engineering information, materials deliveries, or

Owner information; compilation/distillation of the information contained in the Daily Reports for

the previous week). He stated to Mr. McLellan that AMEC had yet to receive the contract

deliverables requested.

[160] Mr. McLellan replied the same day and reiterated his previous response that until Comstock

received a change order for the letter delivered to AMEC in June, Comstock would be unable to

submit the requested information.

33

No schedule update submitted for June 29, 2010

[161] According to the June 29, 2010 weekly coordination meeting minutes, Comstock did not

submit an updated schedule for that week. The minutes also note that the contractor was obligated

to work a 50-hour week and was currently working five 8-hour days and was looking at working

four 10-hour days starting the next week. Comstock stated they were awaiting a change order to

continue the work for this contract and that all manpower and schedule issues would be addressed

in a corporate letter to be issued to AMEC.

Comstock responds to AMEC’s initial determination

[162] On June 30, 2010 Mr. Peter Semmens wrote a 6 page letter to a number of people at AMEC

and PCS including Mr. Bailey and Mr. Bailey’s superiors in response to Mr. Vecchio’s June 26,

2010 correspondence indicating AMEC was prepared to recommend to PCS additional payments

of $2.8 million.

[163] Mr. Semmens indicated Comstock’s view that it was being led along by PCS into believing

that PCS intended to try to resolve the situation and he reiterated Comstock’s view that AMEC

was in a conflict of interest. He referred to the meeting between PCS and Comstock, without

AMEC present, on May 21, 2010 and stated that Mr. Bailey suggested at that meeting three options

for potential resolution:

1. Call in a third party auditor to settle on a cost plus proposal with the negotiated

fee.

2. End the current contract and come to a settlement to date and continue to finish

on a cost plus basis.

3. Stay with the current contract and proceed with the claims via legal processes

[164] Mr. Semmens also referred to the June 11, 2010 meeting at which Comstock submitted in

excess of 2500 pages of documentation to support their claims (totaling over $25 million). Mr.

Semmens went through what Comstock felt were deficiencies in AMEC’s response in providing

the preliminary assessment of $2.8 million.

34

[165] At the end of the letter Mr. Semmens requested Mr. Bailey provide a written answer as to

which of the three options as described at the May 21 meeting PCS wished to follow and a detailed

response to its submissions on June 10.

[166] In the interim Mr. Semmens asked that Comstock’s May and June draws be paid immediately

with an additional $6 million to be credited towards claims resolution in lieu of the $2.8 million

“apparently suggested” by AMEC’s preliminary assessment.

Notice of Default

[167] On June 30, 2010 Mr. Vecchio sent Peter Semmens a Notice of Default of Contractual

Obligations. It stated:

This is notice of Comstock Canada Ltd.’s (the “Contractor”) default of the

contractual obligations set out in the above mentioned contract, and is instruction to

correct the default in the ten (10 ) Working Days immediately following the receipt

of this notice.

Specifically, with reference to the General Conditions of the Contract, GC 46.5.1,

in the opinion of the Engineer;

1. Contractor has failed, or is failing, to prosecute the work

diligently.

2. Contractor has failed, or is failing, to provide sufficient skilled

and qualified labour and supervision.

3. Contractor has failed, or is failing, to provide sufficient Plant or

Materials or services.

4. Contractor has failed, or is failing, to complete the work by the

completion dates in the construction schedule.

5. Contractor is performing the work in an inefficient manner.

6. Contractor has failed to comply with the instructions of the

Engineer with respect to the contractually required format and detail

of the Construction Schedule [ GC 19.3.1] and the contents of notice

of claims [ GC 47.6.1].

[168] The Notice of Default concludes by stating:

Comstock Canada Ltd. is hereby instructed to correct the defaults by July 15, 2010

failing which PCS may, without prejudice to any other right of remedy PCS may

have, suspend or terminate Comstock’s right to continue with the Work or terminate

the Contract.

35

[169] Peter Semmens responded to the Notice of Default on July 6, 2010 with a 29 page letter.

Among other things, he indicated that the Notice of Default contained insufficient detail and gave

Comstock no direction on what items need to be specifically addressed.

[170] Mr. Semmens then reviewed in detail Comstock’s claims and indicated Comstock believed

it was entitled to at least a 10 month extension of time (net) and the projected total claim on a cost

versus revenue basis was $25 million, in addition to amounts currently outstanding on the contract

which Comstock put at $3.174 million. He requested an interim payment of $10 million and an

extension of time from May to November 2010, failing which Comstock would commence legal

proceedings within 90 days.

No schedule update submitted July 6, 2010

[171] The minutes of the July 6, 2010 weekly meeting note that Comstock did not submit a

schedule update for the week. Comstock indicated it was waiting for Brian Guite to return to site

before deciding how to proceed with the schedule.

[172] On July 7, 2010 Mr. Vecchio wrote to Mr. Semmens reminding him that as per the contract

Comstock was required to provide an updated schedule prior to the start of each weekly meeting

and that in this regard the schedule submission was now late.

Comstock submits schedule showing construction completion end date of October 29, 2010

[173] On July 12, 2010 Comstock submitted a schedule dated July 9, 2010 showing a construction

completion end date of October 29, 2010. In the cover letter, Comstock stated:

As requested, attached herewith please find a copy of our updated schedule. Special

attention is directed to the following items that cannot be determined or properly

reflected in our updated schedule at this time. Namely:

1. Despite numerous and repeated requested for change orders for

extension of time to the original contract, we still do not have

even a single day extension granted.

2. Ongoing design and engineering changes prevent

determinations of realistic completion dates. Please confirm

when Comstock will receive this outstanding data.

3. In excess of $4 Million for change orders have already been

approved or certified and an additional $2.6 million are pending

or outstanding. I.e. about $7 Million of changes, however not a

36

single day of extension of time has been granted to Comstock.

Be also advised that such changes cannot be determined and

properly scheduled until we receive the change orders and fair

extensions.

4. As of July 12, 2010 a few months after the original completion

date, numerous RFI’s remain outstanding, which creates

“Holds” on many work areas . Again it is not possible to properly

reflect such belated and frustrating disruptions in our attached

schedule.

5. Our previous request for acceleration/overtime were not

accepted or addressed; accordingly we cannot reflect such

mitigated efforts into our schedule.

In summary we reiterate the fact that it is not possible to prepare definitive or

accurate schedules without fair, proper and reasonable design/engineering data,

viz:

1. Change Orders

2. Final IFC drawings and revised IFC drawings

3. Final IFC specifications and revised IFC specifications

4. Reasonable and timely responses to RFI’s

5. Notice when final IFC data will be provided

6. Confirmation of deleted scope of work

7. Confirmation of any more additional scope of work

We respectfully request your urgent provision to the above listed information so

that we may be in a position to determine the true status for an accurate revised

schedule. A detailed listing or holds, late RFI’s and outstanding change orders will

be prepared and issued later this week.

[174] The July 13, 2010 weekly coordination meeting minutes state: “hours have been added,

percentage complete has dropped a bit, but Comstock states they are still trying to achieve this

date [October 29, 2010].” The minutes do not indicate what percentage complete was showing on

the schedule.

[175] By letter dated July 16, 2010 Mr. Vecchio responded to Comstock’s July 12, 2010 schedule

submission, stating:

May we remind you that the purpose of the work schedule is to provide, along with

three-week look-ahead schedules and daily, weekly and monthly reports, the

information needed to plan the completion of the work.

37

AMEC has reviewed your listed “items” and finds that they are not relevant to the

provision of an updated work schedule.

Using the numbering system in your July 12, 2010 letter, we respond as follows:

1. The completion date for the work has not been extended because Comstock has

not provided a quantified request for extension of time for completing the Work

that meets the requirements of GC 23.3 or that satisfies the conditions of GC 23.8,

Critical Path Delays.

2. The schedule can be updated based on the known Construction Documents at the

time.

3. The schedule can be updated based on the work to complete, which includes

changes in the work. There is no need to wait for the finalization of Change Orders.

4. The schedule can be updated to show the date that “holds” need to be removed

for performance of that part of the work.

5. The Contractor is obliged to take all steps to complete the work as soon as

possible at its own expense unless directed otherwise by the Engineer.

Consequently, AMEC does not accept that it is not possible to prepare an updated

schedule of the work to complete. Comstock was notified on June 30, 2010 of its

default of the Contract with respect to submission of schedules and Comstock is

required to correct this default forthwith.

[176] On July 16, 2010 Mr. Bailey responded to Comstock’s June 30, 2010 letter in which it had

indicated it felt PCS was leading it on with respect to its claims. Mr. Bailey stated PCS’

disagreement with Comstock’s position that PCS had agreed to a resolution of Comstock’s claims

at the meeting on June 11, 2010, or that AMEC was in a conflict of interest. At the end of the letter

Mr. Bailey referred to Comstock’s repudiation of the contract and misuse of without prejudice

discussions at the June 11, 2010 meeting.

[177] On July 17, 2010, Mr. Neis who had returned to site, wrote Mr. Bailey an email attaching a

flowchart for termination of the CP-15 contract with Comstock. He stated:

Our letter No.8.6.1 E156930-Ltr022 dated June 30^th, 2010 alleges the contractor is

in Default without specifying any specifics. However, to my knowledge the

contractor’s methods of construction have been consistent throughout the entire

contract.

38

Notwithstanding that the contractor’s performance has been pour and that the

Contractor is unlikely to complete the Works by the end of October (without a

substantial improvement in performance) more detail is required to terminate the

Contract for default by the Contractor.

I would also point out the following:

i.

“GC 46.2 Termination for Convenience” provides seven (7) days continued

work and five (5) days to finalize the contract sum.

ii.

“GC 46.5.1 Termination for Default by Contractor” is effective

immediately on issue of a Suspension or Termination Notice.

As such, termination under GC 46.5.1 would enable Comstock to just walk away

and leave everything!

I have walked through the site yesterday and today. Completion by the end of

October is possible but not the way the work is being executed by Comstock. I

agree that changes need to be made to ensure completion in a timely manner.

Schedule is submitted July 19, 2010

[178] The final weekly coordination meeting took place July 20, 2010. The minutes indicate

Comstock had submitted a schedule on July 19, 2010 and AMEC was reviewing it. Changes would

be made and the finishing schedule would be submitted. Energization of the compaction plant was

scheduled for August 20.

[179] The minutes also indicate that Bill Sargent (Navigant) was in attendance on behalf of

Comstock. Mr. McLellan testified that he was a “third party” scheduler that Comstock brought in

because of all the complaints from AMEC. He was going to be involved in the finishing schedule.

However no finishing schedule was prepared or submitted, as CP-15 was terminated on July 21,

2010.

The contract is terminated

[180] With respect to the decision made by PCS to terminate the contract with Comstock, Mr.

Bailey testified he had not wanted to terminate the contract in May 2010 when Mr. Fracchia was

suggesting it, as starting with a new contractor always adds cost and time. However, by July 21,

2010 no headway was being made with Comstock. He said he did not think Comstock had a clue

how long it would take to finish the contract.

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[181] Mr. Neis was delegated to deal with the termination. He invited Mr. Guite and Mr. McLellan

to meet with him and Mr. Fracchia on July 21, 2010. Mr. McLellan and Mr. Guite attended the

meeting and Mr. Fracchia handed them a notice of termination of CP-15 signed by Mr. Bailey, and

asked that Comstock be off site by 4:30 p.m. that day.

[182] The Notice of Termination states:

We are writing further to AMEC’s letter of June 30, 2010 (No.8.6.1 E156930-

Ltr022) providing notice of Comstock’s defaults of its contractual obligations. In

consultation with the Engineer, we have determined that Comstock has failed to

correct the defaults in the 10 Working Days following the receipt of that

correspondence.

Despite PCS and AMEC’s efforts to work with you, particularly over the past three

months, you have failed to carry out the work in accordance with the provisions of

the contract. Due to a number of such contract breaches, which continue to occur,

we do not believe you have the ability or intention to complete your obligations

under the contract in a timely and cost-effective manner. The fact that the schedule

completion date has passed means that PCS will suffer significant losses which can

only be mitigated by bringing the job to completion without further delay. In our

view this can only be accomplished by terminating our contract and hiring a third

party to complete the work remaining.

Accordingly, PCS is terminating the Contract with Comstock in accordance with

section 46.5.2 of the contract effective immediately.

This termination is without prejudice to any other right or remedy PCS may have.

In order to effect an orderly transition, we ask that you please direct all future

communications to the Mark Neis of AMEC. This would include requests for

access to the site and inquiries regarding the return of equipment…

Events after termination

[183] The next day, Mr. McLellan met with Mr. Neis who advised that AMEC was hiring another

contractor, Lockerbie and Hole, to remove tools from the site and return them to Comstock. Mr.

Neis sent correspondence dated July 22, 2010 directing Comstock to vacate the site and outlining

the transition process for returning tools and equipment to workers, returning files, etc. The same

day Mr. Neis recommended that AMEC and PCS suspend all payments to Comstock under the

contract.

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[184] On July 26, 2010 Peter Semmens wrote Mr. Bailey in response to the notice of termination.

He stated Comstock was disputing PCS’ ability to terminate it for cause and would proceed as if

it was terminated for convenience.

Completion of the project

[185] Mr. Bailey brought AMEC in to assist with completion of the project. He testified PCS and

AMEC determined it was best to do the completion work on a time and material basis because it

would be difficult to finish the project on a lump sum basis, due to the risk on the completion

contractor if the first contractor had made mistakes.

[186] Tender documents were issued for the completion contract for the compaction plant

mechanical, HVAC, piping, electrical and instrumentation work on a time and materials basis. The

completion contract was referred to originally as CP-15A and later changed to CP-78.

[187] An Invitation to Tenderers issued July 30, 2010, with a tender closing date of August 11,

2010. It indicated work a tentative start date for the work of September 7, 2010. Construction was

to be completed by late November or early December 2010.

[188] The Scope of Work included in the tender documents stated at section 1.1:

General Work Scope Description

The contractor will complete the remaining work in the Compaction Plant in

Mechanical, Piping, HVAC and Electrical and Instrumentation. The necessary

Construction Drawings and Specifications will be provided to the Contractor by the

Engineer. The Work will encompass an estimated 100,000 man-hours.

Attachment A to this Scope of Work contains the original Scope of Work for the

Compaction Plant which was issued on a lump sum basis and was only partially

completed. This attachment is included for information only.

[189] Three contractors were invited to submit bids: Lockerbie and Hole Eastern Inc.

(“Lockerbie”), Lorneville Mechanical and Black & McDonald. Black & McDonald did not

submit rates. Lockerbie had bid on the original tender for CP-15 and was doing other work in the

compaction plant under a different contract. Lockerbie submitted a bid of $13,463,013.93

41

compared to Lorneville Mechanical’s bid of $14,574,480.83 to complete the work over 15 weeks

with 150,000 manhours. AMEC recommended Lockerbie.

Lockerbie is awarded completion contract

[190] PCS and Lockerbie entered into contract CP-78 on August 19, 2010. The value of the

awarded contract was $14,072,373.60.

[191] Through a series of change orders, the estimated man-hours and the contract sum increased

as Lockerbie performed the work. On December 14, 2010, Lockerbie estimated total man-hours

to completion would be 236,140 direct and 13,600 indirect hours. This increased the contract sum

by $8,348,005 as indicated in Change Order 6 for CP-78.

[192] Change Order 9, dated February 11, 2011 revised manhours to 310,000 man-hours. This

increased the contract sum by $5,885,719.02 to $29,031,363.85.

Final Completion of the work occurs in July 2011

[193] Lockerbie completed CP-78 on a substantial completion basis in April 2011. A certificate of

final completion was issued in July 2011 with a final contract price excluding HST of

$34,655,798.29.

Financial Records

a) Comstock’s financial records

[194] Dennis Forlin, Comstock’s VP of Finance, gave evidence about Comstock’s financial

records. These records, marked as Exhibit 25 volumes 1 to 5, were relied upon by Comstock’s

expert, Mike Dean of PCCI in preparing his job cost variance analysis.

[195] Mr. Forlin’s evidence satisfies me that these records were made in the regular course of

Comstock’s business, are relevant to matters in issue and were made at or near the time of the

event that they record, being the labour hours and costs incurred on CP-15. I therefore accept these

records are admissible as evidence of the matters stated in the records pursuant to section 49 of the

Evidence Act, R.S.N.B. 1973, c. E – 11.

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b) Comstock’s losses on project

[196] I accept from Mr. Forlin’s evidence that Comstock’s records showed actual costs on CP-15

were $50,757,902. Its original cost estimate, plus change order costs, totaled $37,103,342.

[197] Mr. Forlin indicated Comstock had a revenue loss of $12,678,000, not including the

outstanding Mechanics’ Lien holdback amount and unpaid amounts for work completed in June

and July 2010. The amount of the outstanding Mechanics’ Lien holdback is disputed.

c) Comstock’s Applications for Payment

i) Comstock’s Application for payment for May 2010

[198] On June 16, 2010 Mr. Breed certified Comstock’s Application for Payment for the month of

May 2010. Comstock had submitted an invoice of $3,174,000.89 (total billing for the period of

$3,304,529.82 less 15% holdback +13% HST). The amount was approved.

[199] According to the information on the application, approved change orders as of May 31, 2010

were $3,943,724.18 for a total contract amount of $40,222,694.53.

ii) Comstock’s June 2010 application for payment

[200] Comstock’s submitted an Application for Payment for June 2010 in the amount of

$2,353,102.53 on June 26, 2010.

[201] AMEC did not agree with the amount submitted. On July 21, 2010, Mr. Breed certified

payment to Comstock for the month of June 2010 in the amount of $656,894 ($683,908.61

inclusive of holdback). Ultimately, Mr. McLellan signed the certification for payment. Comstock

has not been paid the amount certified.

[202] Total contract change orders were at $4,210,071.00 for a total contract value of

$40,489,241.91 with the June 2010 amount that AMEC certified for payment.

43

iii) Comstock’s July 2010 application for payment

[203] Comstock’s application for payment for the period July 1, 2010 to July 31, 2010 is dated

July 31, 2010 and is in the amount of $3,256,065.00 ($389,968.78 less 15% holdback plus 13%

HST).

[204] On September 13, 2010 Mr. Breed indicated $0 was certified for payment.

[205] However, information provided by AMEC in response to an undertaking given at

Examination for Discovery by Mr. Roul indicates that at some point after termination AMEC

determined work had been done in July 2010. AMEC determined the value of the work at

$625,245.09 for the period July 1, 2010 to July 30, 2010. It is not clear that this was ever conveyed

to Comstock by AMEC. It is not disputed that Comstock did not accept this amount, and no amount

has been paid for work completed in July 2010.

Payments to Comstock

[206] Cornell DeWinter, senior accountant for Nutrien (PCS’ parent company) testified about

PCS’ financial records. He testified PCS paid Comstock $31,396,728.31 (HST included) for work

approved for payment up to the end of May 2010. This includes an amount that PCS says it paid

to Comstock in error as it should have been held back as part of the Mechanics’ Lien holdback.

Payments to Lockerbie

[207] Mr. DeWinter testified PCS paid Lockerbie and Hole $34,655,798.29 plus 13% HST for a

total of $39,161,052.06.

[208] I accept Mr. DeWinter’s evidence as to what PCS’ records show was paid on CP-15 and CP-

78.

COMMENCEMENT OF THESE ACTIONS

[209] On August 3, 2010 Comstock commenced these actions. The proceedings were stayed after

Comstock received creditor protection from the Ontario Superior Court of Justice on July 9, 2013.

44

[210] The Ontario Court approved an Asset Purchase and Sale Agreement dated November 28,

2013 between HB Construction Company Ltd. and Comstock. As part of that Agreement, HB

purchased this litigation. (This Court found in a prior hearing in these proceedings that HB

Construction acquired this litigation as part of the purchase and sale agreement at no cost to it.

That finding was not appealed and the plaintiff did not lead any evidence to the contrary at trial.)

[211] This Court issued Orders to Continue dated February 27, 2014, by which these actions were

continued with HB Construction Company Ltd. (formerly Comstock Canada Ltd.,) as plaintiff.

THE PLEADINGS

[212] Comstock’s Third Amended Notice of Action with Statement of Claim attached (“the

Claim”) was filed with the Court on January 7, 2019. At paragraph 23, Comstock claims that PCS

and AMEC actions resulted in a number of breaches as follows:

As a result of the impugned conduct described in the preceding paragraph and

throughout this amended statement of claim, Comstock states that:

(a) PotashCorp breached the contract in several material respects;

(b) further or in the alternative, PotashCorp committed, in its own right or through

its agent AMEC, a series of repudiatory breaches of the contract;

(c) further or in the alternative, PotashCorp breached the collateral warranties

and/or conditions made which induced Comstock into the contract;

(d) PotashCorp and AMEC made misrepresentations, in the alternative negligent

misrepresentations, about material elements in the Project Documents and Contract

which induced Comstock into submitting a lump sum bid and into entering into the

Contract;

(e) further or in the alternative, Comstock states that AMEC undertook tortious

interference with Comstock's contractual relations and economic interests with

PotashCorp by inducing breach of contract by PotashCorp;

(f) further or in the alternative, PotashCorp wrongfully repudiated the Contract; and

(g) further or in the alternative, PotashCorp and AMEC breached their respective

duties to act in good faith including having AMEC continue in its decision making

powers while it was in a clear conflict of interest and in an appearance of bias and

further, purportedly terminating the Contract.

45

[213] Comstock states at paragraph 31:

As a result of AMEC’s and/or PotashCorp’s breaches of the Contract,

misrepresentations, negligent misrepresentations, breaches of duties of good faith,

AMEC’s tortious interference in the Contract and breaches of collateral warranties,

Comstock has suffered damages and incurred costs and expenses including, but not

limited to, additional labour and supervisory costs, premium, shift and overtime

costs, extended site overhead costs, equipment and material costs, for which AMEC

and/or PotashCorp is/are, at law, responsible.

[214] Comstock claims damages as follows:

76.1 In or around the time of the purported termination described herein, there

remained:

(a)

(b)

(c)

$656,894.22 (HST Included) owing to Comstock from Comstock’s

June 2010 application for payment,

$1,709,122.78 (HST included) owing to Comstock from

Comstock’s July 2010 application for payment,

$2,215,178.00 (HST included) in statutory holdback (up to and

including the July 2010 application for payment)(after payment of

$3,297,962 to subcontractors, which was made after this proceeding

was commenced to settle lien claims),

for a total of $4,581,195.00.

76.2 In addition, Comstock claims the sum of $13,500,613.98 representing

damages incurred as a result of the wrongful acts committed by AMEC and

PCS…

77. Comstock claims against

(a)

PotashCorp for:

i.

payment of the sum of $4,581,195.00 for breach of contract,

as described in paragraph 76.1 above;

ii.

in addition to the foregoing, damages currently estimated in

the amount of $13,500,613.98 for:

(1)

breach of contract and/or breaches of collateral

warranties;

46

(2)

(3)

in the alternative, for breach of the duty to act in good

faith;

in the alternative for misrepresentation or negligent

misrepresentation;

iii.

iv.

in the alternative, on Comstock’s election, compensation

currently estimated in the amount of $18,081,808.98 on the

basis of quantum meruit for wrongful repudiation of the

Contract or independent of the wrongful repudiation of the

Contract.

and/or in the alternative, compensation and/or restitution

currently estimated in the amount of $18,081,808.98 for

unjust enrichment;

v.

HST on any applicable sums; and

vi.

further, or in the alternative, a declaration that the Contract

is void for uncertainty or in the alternative, voidable;

(b) AMEC for:

i.

Damages currently estimated in the amount of

$18,081,808.98 plus HST as applicable for:

(1)

tortious interference with the contractual relations

and economic interests,

(2)

(3)

in the alternative, inducing breach of contract;

in the alternative, misrepresentation or negligent

misrepresentation;

(4)

in the alternative, for breach of the duty to act in good

faith;

(c) Both Defendants:

i.

damages arising from the Defendants’ wrongful conversion

of Comstock’s Personal Property (forming part of the

$18,081,808.98 in damages claimed);

ii.

punitive and/or aggravated and exemplary damages;

costs of this action on a solicitor and client basis;

iii.

47

iv.

v.

interest pursuant to ss. 45 and 46 of the Judicature Act, R.S.N.B.

1973, c. J-2, and/or the Contract, as well as any applicable taxes;

and

such further and other relief that this Honourable Court may deem

just.

[215] Comstock’s claim against PCS and AMEC for punitive and/or aggravated and exemplary

damages were specified at trial to be $5,000,000. Comstock indicated in its closing arguments it

was not pursuing a claim on the basis of quantum meruit or a claim for wrongful conversion of

property.

[216] PCS filed an Amended Statement of Defence and Counterclaim on January 8, 2019. PCS

denies any liability for breach of contract or misrepresentation, breach of the duty of good faith in

contractual relations or unlawful interference with economic interests. It claims that the contract

specifically excludes any tortious liability on the part of PCS.

[217] PCS claims a set off against Comstock as follows:

105.

The Defendant repeats the allegations contained in paragraphs 1 to 104 of

the Amended Statement of Defence above.

106.

The Defendant pleads and relies on the Form of Tender whereby Comstock

agreed to diligently and faithfully perform and complete the work for the lump sum

value stated therein.

107.

The Defendant states that Comstock represented, through its Execution

Plan, that Comstock would execute its plan and schedule to maintain and control

the cost of the project.

108.

The Defendant pleads and relies on s. 55.1.1 of the General Conditions

of the Contract:

55.1.1

the Work

CONTRACTOR represents, warrants and guarantees that

and all Materials, products, assemblies and goods

and all components and parts thereof, supplied by CONTRACTOR

and Subcontractors shall be free of defects and deficiencies in

design, Materials and workmanship throughout the warranty

period(s) stated herein; and, CONTRACTOR further represents,

warrants and guarantees to make good any and all defects and

deficiencies in the Work arising from the use of improper or

48

defective Materials or by reason of poor workmanship or

inadequate design which may appear during the warranty period.

CONTRACTOR is not relieved from this obligation by reason of

the Certificate of Final Completion, final payment or anything

contained in the Contract to the contrary.

109.

The Defendant states that Comstock carried out its work in a manner that

resulted in cost overruns, project delays, and defects in the work.

110. The Defendant states that Comstock has breached the Contract.

111. The Defendant states that it has incurred damages due to Comstock's breach

of the Contract.

112. Therefore, the Defendant claims against the Plaintiff, as follows:

i) Damages representing the incremental costs of retaining a new contractor to

finish the work on the compaction plant;

ii)

Damages representing the costs to rectify deficiencies in Comstock's

work; and

iii)

Interest pursuant to sections 45 and 46 of the Judicature Act. R.S.N.B. 1973.

c. J-2 and/or the Contract.

113. The Defendant pleads the damages and interest set out in paragraph 112 above

by way of set-off in defence of the Plaintiff's claim, and the Defendant pleads and

relies upon section 26 of the Judicature Act, R.S.N.B. 1973, c. J-2, including but

not limited to subsections 26(4) and 26(5) and further pleads and relies upon section

50.2 of the General Conditions of the Contract ("SET OFF BY OWNER").

[218] AMEC filed its Second Amended Statement of Defence on January 7, 2019. AMEC denies

any liability to Comstock, and argues that liability on the part of AMEC is specifically excluded

under the contract.

WITNESSES AND CREDIBILITY

[219] The Court heard from 18 witnesses over 11 weeks, including the expert witnesses for the

plaintiff and the defendants. This was a document-driven trial with well over 100,000 pages of

documentary evidence tendered as exhibits.

Factual witnesses

[220] Comstock takes the position that none of the defendants’ witnesses were credible. The

defendants take the position that most of Comstock’s witnesses lacked credibility.

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[221] The factual witnesses for all parties had little independent recall of events. This is not

surprising given that almost ten years had passed between the time Comstock was on the project

and the trial itself. Most of the evidence-in-chief consisted of witnesses testifying to the contents

of contemporaneous documents.

[222] I do not reject the evidence of any witness outright. However there were areas of evidence

from some witnesses that I did not find credible. Where it is relevant to my findings I will indicate

the evidence I do not accept in my reasons.

[223] Minutes of weekly coordination meetings between AMEC and Comstock were maintained

by AMEC, and were circulated to attendees who had the opportunity to submit any revisions they

felt were necessary. The CIC correspondence reflects the discussions on the issues as they arose

at the time. Both the weekly coordination meeting minutes and the CIC correspondence were

entered as exhibits on the agreement of the parties.

[224] In light of the underlying frailties in all parties’ evidence, where there are discrepancies

between evidence of a factual witness and the above noted contemporaneous documents, I have

deferred to the contemporaneous documents.

The Expert Witnesses

[225] Comstock retained Michael Dean of Pacific Construction Consultants Inc. (“PCCI”) as its

expert witness. PCS and AMEC jointly retained Richard Fogarasi of HKA Global (Canada) Inc.

as their expert witness.

[226] On consent of the parties, the Court qualified both Mr. Dean and Mr. Fogarasi as follows:

The Plaintiff’s and Defendants’ experts are qualified as expert in the analysis and

quantification of construction claims, qualified to give opinion evidence,

including in respect of the following:

 Schedule and delay analysis;

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 Labour productivity and deficiencies;

 Quantification of damages;

 Quantification and management of changes, including design changes;

 Contract management, construction progress and project delivery;

as set out in their expert reports filed in these proceedings.

Mr. Dean’s opinion

[227] Mr. Dean’s expert report is dated December 2017. At page 6 of the report he sets out his

mandate as follows:

Both before and after termination, Comstock claims that it suffered significant

losses as a result of circumstances outside of its control and which are the

responsibility of AMEC and PCS. PCCI’s mandate (which is described in more

detail below) was to assess and quantify these losses. As part of this analysis, PCCI

has reviewed the Contract. Where appropriate, PCCI has referred to relevant

portions of the Contract below. PCCI has not been asked to provide, and has not

provided, its opinion with respect to any of the legal issues that are disputed

between the parties, including the disputes with respect to the parties’ rights and

obligations under the Contract.

PCCI’s analysis encompasses Comstock’s entire performance. On the project from

the commencement of its work in September 2009 through its termination in July

2010. As discussed in this report and supported by the enclosed exhibits, PCCI has

concluded that the issues identified by Comstock and discussed below caused

compensable losses totaling $18,082,995.

[228] Mr. Dean reviewed a number of documents that are listed at page 4 to 5 of his report

including schedules, the contract, Comstock’s summary JCR, Comstock’s pay applications for

May, June and July 2010, change orders, field work orders, purchase orders, photographs,

correspondence between Comstock and AMEC and marked up plans.

[229] Mr. Dean prepared various “impact logs” to plot on graphs the impact of what he attributed

as causes of Comstock’s delays on the work “as planned” versus “as built”. He also used

proprietary software to create his “JCVA” ( Job Cost Variance Analysis) using Comstock’s payroll

and other accounting records. His work product is listed at page 5 of the report.

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[230] Mr. Dean testified that in addition to reviewing the documentation listed in his report, he

also met with Mr. McLellan, principally, and to a lesser extent Rick Allison, who was Comstock’s

electrical superintendent and Barry Glassford, Comstock’s lead electrical estimator.

[231] In summary Mr. Dean is of the opinion that:

 Comstock was precluded from timely performance and completion of its work on or before

May 30, 2010 due to AMEC and PCS responsible delays including:

o AMEC’s late completion of the building shell and enclosure;

o AMEC’s late supply of construction documents for the Project;

o AMEC’s late, incomplete and ever–evolving design of the Project;

o AMEC/PCS’ dilatory change order processing on the Project;

o AMEC’s improper rejection of Comstock’s request to use manlifts in connection

with its work on the project;

o AMEC’s numerous material and equipment procurement problems relative to

Comstock’s work on the Project;

o PCS’ failure to timely provide permanent power for the Project.

 Termination of the contract for default was not supported by materials he reviewed.

 At the time of termination on July 21, 2010 Comstock had completed approximately 86%

of its contract scope;

 As of termination Comstock had pending quotations for over $1.8 million in added costs

to perform changed and added work, for which Comstock would not otherwise have been

responsible and that would have been necessary to perform before the Project could be

completed. This $1.8 million in pending changes would have further delayed completion

of the work.

 Comstock requested time extensions from AMEC/PCS, and AMEC recognized entitlement

to some of those extensions and these would have prolonged the Project beyond the

completion date of the contract and beyond the date of termination.

[232] Mr. Dean is of the opinion that Comstock suffered losses totaling $18,082,995.00 including

HST for which PCS/AMEC are responsible.

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Mr. Fogarasi’s opinion

[233] Mr. Fogarasi’s report is entitled “Independent Review of Contractor Performance and

Claims” for contract CP-15 PCS Picadilly compactor project. Mr. Fogarasi’s report reviews the

claims as set out in Comstock’s second Amended Statement of Claim, which was further amended

after Mr. Fogarasi completed his report in April 2018. Mr. Fogarasi did not review Mr. Dean’s

report before preparing his. Counsel did not provide it to him.

[234] Mr. Fogarasi also reviewed the contract, and other documentation including Comstock’s

claims submission summary, the RFI logs, minutes of weekly meetings, the daily reports, change

orders, various correspondence, Comstock’s payment applications and the CP-15 Purchase Order

revisions.

[235] Mr. Fogarasi did not undertake a delay analysis. In his opinion Comstock’s scheduling

practices, change management, organization and supervision of the work were deficient and

prevented Comstock from being able to address its productivity issues and also prevented AMEC

from being able to respond effectively to these issues.

[236] Mr. Fogarasi is of the view that Comstock’s failure to follow the contractual requirements

to obtain extensions of time and to support its claims for additional compensation preclude it from

being entitled to any damages.

[237] In the event that Comstock established entitlement to certain claims, Mr. Fogarasi prepared

hypothetical calculations.

Criticisms of the expert reports

[238] Both sides say the other side’s expert was not credible, and submit that the Court should give

little weight to the opposing expert’s opinion.

[239] PCS and AMEC’s principal criticism of Mr. Dean’s opinion and report is that he started with

the premise that Comstock had suffered losses at the hands of the defendants and focused on

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quantifying those losses. They argue that he was not an independent witness but rather an advocate

for the plaintiff.

[240] Mr. Dean’s analysis relied on a number of assumptions regarding causes of delay that were

not borne out by the evidence at trial. He did not attempt to quantify delay associated with any of

the individual claimed reasons for delay, including early delay that he says Comstock was initially

responsible for. As well, he relied mainly on Comstock’s own estimates in quantifying the “direct

cost claims.” This impacts the weight the Court was able to give to his conclusions on liability

and damages.

[241] With respect to Mr. Fogarasi’s opinion and report, the plaintiffs criticize it for focusing on a

claim that was no longer relevant at trial. However, Comstock did not amend its pleading until the

eve of trial. Mr. Fogarasi’s analysis of many of the claims contained in the second amended

statement of claim are relevant to the claim that was presented at trial.

[242] The plaintiffs also submit that Mr. Fogarasi’s credibility is questionable because he made

statements in his report that purported to give an opinion on schedules he had not reviewed at the

time he wrote the report. Although he testified he had reviewed all the schedules, I have some

concerns with Mr. Fogarasi’s evidence as it relates to the schedules.

[243] Ultimately, having heard all the evidence and reviewed the reports in detail, I do not

completely accept or reject either expert’s opinions. However where I prefer the evidence of one

expert over another, or accept or reject part of an expert’s opinion I will indicate this and my

reasons for doing so.

ISSUES

A.

Liability

Is there liability on the part of PCS/AMEC for delay resulting from:

I.

1. Late “notice to proceed”?

2. Drawing revisions/design changes?

a) Claim of breach of contract

b) Claims in negligence

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3. Failure to provide copies of IFC documents by September 14, 2009?

4. Cladding/heat issues?

5. Crane issues?

6. Late access to areas of the compaction plant?

7. Interferences from other contractors?

a) Claim of breach of contract

b) Claims in negligence

8. Delays in change order processing?

9. Late/defective equipment, materials, instruments?

II.

Did Comstock cause/contribute to its own delay through:

1. Issues with productivity?

2. Organization issues?

III.

IV.

V.

Were there other causes of early delay?

Was the contract breached by a failure to provide an extension of time?

Was Comstock dismissed without cause?

1.

Did PCS have grounds to terminate for default of the contract?

a. Did Comstock fail to prosecute the work diligently?

b. Did Comstock fail to provide sufficient skilled and qualified labour and

supervision?

c. Did Comstock fail to provide sufficient Plant or Materials or services?

d. Did Comstock fail to complete the work by the completion dates in the construction

schedule?

e. Did Comstock fail to perform the work in an inefficient manner?

f. Did Comstock fail to comply with the instructions of the engineer with respect to

the contractually required format and details of the construction schedule [GC

19.3.1] and the contents of the notices of claims [GC 47.6.1]?

2.

3.

Did PCS give Comstock clear Notice of Default?

Was the contract fundamentally breached by Comstock?

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VI.

Other breaches claimed by Comstock

1. Was there a breach of the duty of good faith that applies to all contracts?

2. Did AMEC induce PCS to breach the contract?

3. Are AMEC and/or PCS liable to Comstock for unlawful interference with its economic

interests?

B.

Damages

1. What damages is Comstock entitled to seek recovery of according to the contract?

a. Disputed Mechanics’ Lien holdback

b. Unpaid amounts for work in June and July 2010

c. Delay-related Claims

i)Loss of productivity claim

ii)Extended overhead claim

d. Direct Cost Claims

i) Claim for additional Material Handling and Piping Costs

ii) Claim for ccosts for additional impacts on Change Order already

provided

iii) Claim for aadditional work performed by Comstock (not in original

scope)

e. Claim for added burdens on direct cost claims

f. Claim for unpaid change order material

g. Termination costs

h. Profit of 5%

i. HST

2.

3.

PCS’ claim of set off

a. Does PCS have a right of set off?

Is Comstock entitled to punitive and/or aggravated and exemplary damages?

C.

Claims for Prejudgment Interest & Costs

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LAW AND ANALYSIS

A. Liability

I.

Is there liability on the part of PCS/AMEC for Comstock’s delay?

[244] The contract contains detailed provisions regarding requirements for notice and requests for

extensions of time arising from delay. These are set out at Appendix A to this Decision.

[245] The parties disagree on the interpretation of provisions of the contract, as they relate to

Comstock’s claims that PCS/AMEC are responsible for breaches that impacted its plan of work

and caused its delay. The Court is guided by principles of interpretation as summarized by the

Court of Appeal in J.A. MacFarlane Engineering Company Limited et al. v. Darcon Holdings Ltd.

et al., 2016 NBCA 45 (CanLII):

[23]

Several principles of contractual interpretation apply in this case.

Ambiguities in a contract should be resolved against the drafter: Algo Enterprises

Ltd. v. Repap New Brunswick Inc., 2016 NBCA 35, [2016] N.B.J. No. 149 (QL),

para. 42 per French J.A., writing for the Court. Rules of construction are applied to

resolve ambiguity; they do not operate to create ambiguity where there is none in

the first place. But the overall objective of contractual interpretation is to identify

the true intent of the parties as expressed in the contract: Robichaud et al. v.

Pharmacie Acadienne de Beresford Ltée., 2008 NBCA 12, 328 N.B.R. (2d) 205,

per Drapeau C.J.N.B. paras. 18-19. In Sattva Capital Corp. v. Creston Moly Corp.,

at paras. 57-58, the Supreme Court reiterated the interpretation of a written

contractual provision must always be grounded in the text and read in light of the

entire contract.

[246] In Sattva, cited above, the Supreme Court of Canada stated the following:

I now turn to the role of the surrounding circumstances in contractual interpretation

and the nature of the evidence that can be considered. […]

While the surrounding circumstances will be considered in interpreting the terms

of a contract, they must never be allowed to overwhelm the words of that agreement

(Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such

evidence is to deepen a decision-maker’s understanding of the mutual and objective

intentions of the parties as expressed in the words of the contract. The interpretation

of a written contractual provision must always be grounded in the text and read in

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light of the entire contract (Hall, at pp. 15 and 30-32). While the surrounding

circumstances are relied upon in the interpretive process, courts cannot use them to

deviate from the text such that the court effectively creates a new agreement

(Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 1997

CanLII 4085 (BC CA), 101 B.C.A.C. 62).

The nature of the evidence that can be relied upon under the rubric of “surrounding

circumstances” will necessarily vary from case to case. It does, however, have its

limits. It should consist only of objective evidence of the background facts at the

time of the execution of the contract (King, at paras. 66 and 70), that is, knowledge

that was or reasonably ought to have been within the knowledge of both parties at

or before the date of contracting. Subject to these requirements and the parol

evidence rule discussed below, this includes, in the words of Lord Hoffmann,

“absolutely anything which would have affected the way in which the language of

the document would have been understood by a reasonable man” (Investors

Compensation Scheme, at p. 114). Whether something was or reasonably ought to

have been within the common knowledge of the parties at the time of execution of

the contract is a question of fact.

[247] With respect to liability for delay, as stated in Twin Cities Mechanical & Electrical Inc. v.

Progress Homes Inc., 2005 NLTD 134 (CanLII) at paragraph 52:

The concept of delay, and its implications, which are pivotal to both liability

(arising from breach of contract) and damages is set out at p. 5-14 and 5-15 by

Goldsmith on Canadian Building Contracts:

An owner is entitled to have his work completed within the time

specified in the contract, or within a reasonable time if no specific

time is provided for. A contractor who delays completion beyond

such period is guilty of a breach of contract, and may be liable for

substantial damages. A sufficient delay will enable the owner to

terminate the contract.

If a contractor anticipates that he will be unable to complete within

the time specified, he may apply to the owner for an extension of

time, and if such an extension is granted, completion within the

period of extension is not a breach of contract. If the delay is due to

the fault of the contractor, an owner is under no obligation to grant

any extension of time for completion; and if such delay amounts to

repudiation of the contract, the owner may terminate the contract for

inexcusable nonperformance and have the work finished by others.

Furthermore, a contractor who incurs additional costs as a result of

his own delay is not entitled to recover such costs from the owner.

If, however, the delay has been caused by the owner, or by someone

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for whom he is responsible, he is not entitled to insist on completion

on the original completion date, and in substance cannot refuse to

extend the time for completion. Furthermore, he may be liable in

damages to the contractor for the loss suffered as the result of the

delay, unless the contract expressly excludes the right to such

damages. But even when the delay has been caused by the owner,

the contractor must still complete within a reasonable time, or within

the period of extension granted by the owner.

1) Is there liability for late “notice to proceed”?

[248] Comstock says it planned to begin mobilizing August 17, 2009 but did not receive what it

calls a “Notice to Proceed” from AMEC until August 31, 2009. PCS and AMEC deny there was

such a thing as a Notice to Proceed or that Comstock was delayed because it was waiting for one.

[249] Comstock did indicate in its execution plan it intended to begin mobilizing August 17, 2010.

However there is no reference to notice to proceed in the Execution Plan.

[250] The document referred to by Comstock as the “Notice to Proceed” is a cover sheet for an

attachment sent from the AMEC administrator to Comstock dated August 31, 2009 indicating that

the latest Purchase Order (PO) revision on file for the contract was attached. It states: “This is your

authority to proceed.”

[251] In my view the document gave Comstock authority to bill PCS for work. However, the

contract makes no mention of a Notice to Proceed being required before Comstock could begin

mobilizing its workforce.

[252] Following the award of the contract, Comstock held an internal meeting in Ontario on August

17 and 18, 2009. The minutes of these meeting indicate Comstock intended to mobilize beginning

on August 31, 2009. The minutes make no mention of concerns on Comstock’s part that it had not

received a notice to proceed. The minutes state there were no delays to the schedule at that point

in time.

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[253] AMEC, PCS and Comstock participated in a kick-off meeting held on site August 20, 2009.

The minutes of that meeting do not reflect Comstock raising a concern about late mobilization

arising from any delay with respect to a missing notice to proceed.

[254] I do not find that the contract required a notice to proceed be issued before Comstock could

begin mobilizing, Further, I do not accept that Comstock was delayed in beginning its mobilization

because it was waiting for a notice to proceed.

2) Is there liability in contract or tort regarding drawing revisions/design changes?

a) Claim of breach of contract

[255] The allegations in the Claim that relate to breach of contract regarding drawings and

design changes include PCS/AMEC:

(a) failing to provide to Comstock as part of the Project Documents, with clear, logical,

coordinated, unambiguous, complete design, engineering drawings, including IFC

Drawings, plans and specifications for Comstock’s scope of work and further or in

the alternative, providing design and engineering that was not to a standard of a

competent engineering firm or engineers undertaking similar work;

(b) failing to issue or have IFC Drawings issued and transmitted in a timely manner;

(c) failing to co-operate with Comstock and failing to resolve designs disputes arising

during construction in a timely or effective manner or at all;

…

(i) failing to provide Comstock with timely and accurate changes and revisions to the

design and accurate answers to RFIs.

…

[255] At paragraph 29 of the Claim, Comstock states:

Comstock states that the various delays and numerous design errors and/or design

problems (as particularized above with further particulars to be provided prior to

trial) were as a result of AMEC and/or PotashCorp’s failure to comply with its

obligations and representations described above. Further or in the alternative,

Comstock says that the various delays and numerous design errors and/or design

problems were beyond the contemplation of the Contract and Project Documents

and were, as a result, breaches of contract for which AMEC and/or PotashCorp are

60

liable. Comstock says that as a direct result of the extent a completion date for the

project, the numerous design errors and/or design problems and the various

interferences in Comstock’s work as described above, it incurred additional costs

and damages.

Relevant contractual provisions:

[256] “Construction Drawings” are defined as follows at G.C. 1.1.9:

…the drawings, detail sheets, sketches and maps issued by the ENGINEER for the

actual performance of the Work, including all revisions thereto pursuant to G.4.1.

These drawings will be marked by ENGINEER “Issued for Construction”.

[257] “Issued for Construction” is defined at G.C. 1.1.27 as:

...the particular issue of a Construction Document so identified; a representation by

the originator that the Construction Document is suitable for the purpose.

[258] GC 4.1.1 states:

The work shall be performed in accordance with the latest revision to the

Construction Drawings, Specifications and other Information issued to

CONTRACTOR at the Site.

[259] G.C. 4.1.2 states:

The drawings ENGINEER furnishes to CONTRACTOR for the actual performance

of the Work are the Construction Drawings. These drawings will be marked by

ENGINEER “Issued for Construction”.

[260] G.C. 4.1.3 states:

Two copies of each Construction Drawing will be issued to CONTRACTOR at the

Site, and up to two additional copies upon request of CONTRACTOR.

[261] G.C. 4.3 states:

The Construction Drawings may be revised from time to time during the course of

the Work. Some of the Construction Drawings may be revised many times. When

written instructions have been given to CONTRACTOR pursuant to G.C 5.0, the

Construction Drawings will be revised to show the Change in the Work to which

the instructions relate.

[262] G.C. 4.4 states:

61

Some Construction Drawings may be issued with certain areas of a drawing marked

HOLD where the ENGINEER is waiting for information from Vendors, or where

a portion of the design is incomplete for some part of the Work that

CONTRACTOR is not required to do at that time; in the event CONTRACTOR

shall proceed with parts of the Work not marked HOLD on the Construction

Drawings.

[263] G.C. 23.4 states:

If CONTRACTOR has not received the Construction Drawings needed for

CONTRACTOR to make proper preparation to begin construction of a part

of the Work on the date indicated on the Construction Schedule,

CONTRACTOR shall make a written request to ENGINEER for the

required Construction Drawings not earlier than 21 Days nor later than

seven Days before the date indicated in the Construction Schedule.

CONTRACTOR will not be entitled to an extension of time pursuant to this

G.C. 23.0 based on lack of Construction Drawings unless CONTRACTOR

has made a written request for the Construction Drawings as prescribed

herein.

[264] G.C. 47.1.1 states:

At any time during the progress of the Work, OWNER or ENGINEER within

the general Scope of the Contract may make Changes by altering, adding to,

or deducting from the Work without invalidating the Contract.

CONTRACTOR shall perform Change in the Work as a condition of the

Contract.

Did AMEC fail to provide clear, logical, coordinated, unambiguous, complete design, engineering

drawings, including IFC Drawings, plans and specifications for Comstock’s scope of work or fail

to provide design and engineering that was to a standard of a competent engineering firm or

engineers undertaking similar work?

[265] Comstock led no expert evidence specific to the issue of AMEC’s standard of care or what

the standard of a competent engineering firm undertaking similar work is. I accept there are

examples of mistakes and late issued changes to the engineering. However, I do not find that

Comstock has established that AMEC provided design and engineering that was not to a standard

of a competent engineering firm or engineers undertaking similar work.

62

Was there a failure to co-operate with Comstock to resolve designs disputes arising during

construction in a timely or effective manner or at all?

[266] I do not find that Comstock has established AMEC failed to co-operate in resolving design

disputes during construction.

Was there a failure to provide timely and accurate answers to Requests for Information (RFI’s)?

[267] Numerous RFI’s were issued throughout the project. The evidence indicates that some

responses were delayed waiting for AMEC and others were delayed waiting for more information

from Comstock. The RFI log maintained by Comstock indicates a number of the RFI’s that

remained outstanding. I find however that the majority of the RFI’s were addressed, but Comstock

did not formally “close” them in the CIC system.

[268] I do not find that Comstock has established that there a breach of the contract respecting

Requests for Information.

Did PCS/AMEC fail to issue or have IFC Drawings issued and transmitted in a timely manner?

[269] At no time did Comstock make a request under G.C. 23.4 for construction drawings that

were required to begin construction on the date indicated in the construction schedule. I do not

find there was a failure to provide construction drawings.

[270] Comstock’s argument as stated at paragraphs 161 and 162 of its Closing Submissions is that

IFC drawings were issued late:

The contract provided that a full set of Issued for Construction (“IFC”) drawings

would be provided two weeks before mobilization. Comstock’s accepted baseline

schedule indicated that a complete set of IFC drawings was to be provided by

September 14, 2009, approximately two weeks after mobilization.

Receiving IFC drawings was critical because, pursuant to 1.1.27 of the Contract’s

General Conditions, the release of IFC documents to Comstock was a

“representation by the originator that the [drawing was] suitable for its purpose.”

In other words, Comstock ought to have received a complete set of drawings

suitable for construction of the Project before it arrived on site and a representation

by AMEC that the drawings were suitable for their intended purpose.

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[271] Comstock cites Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460 (CanLII).

In that case, the Court found that a delay in providing final construction drawings to the contractor

caused less efficient production and delay. The Court stated:

[528] Article I of the Form of Agreement provides that: “Time shall be deemed

to be material and of the essence of this Contract”. Although there is no specific

time requirements set out in GC 2.1, the duty imposed on Kemess was to supply

drawings and information in a reasonable time.

[529]

What constitutes a “reasonable time” is a question of fact with the

following criteria suggested by the learned authors of Hudson’s Building and

Engineering Contracts, 11^thedition, Vol. 1 (London Sweet & Maxwell 1995): “(a)

by far the most important, the contractor’s actual progress, if slower than that

shown by or to be inferred from any programme or the stipulated contract period

...; (b) the stipulated contract period or intermediate dates ...; (c) the need of a

contractor for reasonable advance knowledge of the work for pre-planning

purposes on his part, which obviously will vary considerably according to the

subject-matter of the information in question; (d) whether the information relates

to a variation; (e) any agreed or indicated programmes showing the intended order

of working or dates of completion of parts of the work; and (f) requests or notice

by the contractor indicating his need for the information in question” (at pp. 310-

11).

…

[532]

The obligation of Kemess under GC 2.1 must be considered in light

of the fact that it is a fundamental right of Golden Hill to have complete control of

the Work and: “... to perform the work at such times, in such order of procedure

and in such manner shall be most conducive to economy of construction” (GC

5.1). The failure to supply sufficient and timely information restricts this right. If

Kemess wanted to impose and enforce a strict schedule then they necessarily had

to provide the proper designs which were sufficiently complete: Dilcon

Constructors Ltd. v ANC Developments Inc. (1996), 28 C.L.R. (2d) 209

(Alta.Q.B.) at pp. 272-3 and 274. In Dilcon, the Court stated:

Because Dilcon was agreeing to a fixed completion date and a fixed

price, all without complete design drawings, it was essential for the

planning and management of their work that Dilcon be able to rely

upon the receipt of drawings from NLK, certified for construction,

in an orderly and timely sequence in accord with the schedule

provided to Dilcon at the time of the contract. NLK failed

repeatedly to meet that commitment. If one makes the rather

obvious inference that the drawings should arrive certified for

64

construction prior to the dates for which work was scheduled on the

construction schedule, then the drawings were very late. (at p. 252).

In any event, failure to provide instruction to the contractor in the

form of drawings certified for construction and in an orderly and

timely sequence was a breach of the owner’s obligation to the

contractor implicit in each of these contracts. (at p. 273).

When materials or drawings, or both, are not supplied by the owner

as scheduled, the contractor is deprived of the agreed period of time

in which to do his work. (at p. 274).

[533]

The Alberta Court of Appeal did not interfere with the decision that,

in not providing materials on a timely basis, the defendant breached its implied

agreement with the plaintiff: (2000), 2000 ABCA 223 (CanLII), 6 C.L.R. (3d) 34.

[272] Comstock argues that RCA-11 ought to have been released by August 17, 2009, two weeks before

mobilization. However, the reference to IFC drawings being provided 14 days before mobilization

appears to come from the information Comstock included when it filled out part 4 of the item called

“Construction Schedule” in its tender submission documents. Comstock was asked to indicate when it

would start construction. Rather than specifying a date, Comstock wrote the construction start date

would be 14 days after IFC drawings were released.

[273] The Agreement for Contract dated August 12, 2009, specified that construction would begin

on or before August 30, 2009. It did not incorporate Comstock’s reference to the release of IFC

drawings.

[274] The General Conditions indicate that IFC drawings are to be provided “at the site”. There

is no requirement that they be provided 14 days before mobilization.

[275] When Comstock submitted its request for a change order for the work arising from RCA 11,

it did not request a schedule extension in relation to this work.

[276] After discussions over the course of October and November, a price of $911,000 was arrived

at, and Mr. Breed submitted a change order for that amount. Change Order 6 for RCA 11 was

65

signed by Mr. Bailey on January 30, 2010 and by Mr. McLellan in early February 2010. No

extension request was ever made by Comstock in relation to RCA 11.

[277] I do not find the contract required RCA 11 to be provided two weeks before mobilization or

that the drawings in RCA 11 were issued unreasonably late. In any event, the evidence does not

establish Comstock was delayed waiting for the release of RCA 11.

Did the volume and timing of transmittals of ongoing IFC drawings and IFC drawing revisions

and design changes and revisions breach the contract?

[278] After RCA 11, AMEC continued to transmit IFC drawings and revised IFC drawings and

specifications on an ongoing basis. It also ordered design changes and modifications to the work

through instructions from the engineer that were not transmitted through IFC drawings or revised

IFC drawings.

[279] Comstock states at paragraph 231 of its Closing Submissions:

As a result of the ongoing design changes, Comstock could not perform its work

in the order or sequence that it had planned, could not properly schedule its work

to ensure that it had appropriate resources on site, or plan how best to perform

the constant and ongoing design revisions for the Project. This reduced

productivity, increased costs and delayed completion.

Evidence around the volume/timing of changes

[280] Mr. Dean states at page 7 of his report that:

AMEC’s design was substantially completed after Comstock’s tender and PCS’

Contract award to Comstock (as opposed to prior to or during the tender and prior

to Contract, which was necessary if Comstock’s lump sum, fixed price was to be

based upon a known scope of work). Excluding the initial set of “Issued for

Construction” (IFC) construction documents provided to Comstock by

AMEC/PCS shortly after Contract award, AMEC generated and sent a total of 212

separate Transmittals that included 1,794 to 2,057 new or revised construction

documents (plans, specifications, lists, schedules, etc.), which greatly contributed

to the added costs (both paid and unpaid) and delays that Comstock suffered on

the Project. The scope, quantum and impact of these changes exceeded what could

reasonably have been anticipated at the time of tender.

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(underlining added)

[281] Comstock argues that it was disrupted and delayed as a result of design changes.

[282] At page 121 of his report, Mr. Dean writes:

Comstock’s schedules showed anticipated finish dates of May 31, 2010 to

June 16, 2010, until March 2010 when its forecasted completion date was

extended to July 15, 2010. The schedule slippage is consistent with the

delays discussed above, and the forecasted completion dates were likely

also affected by the belated issuance of AMEC/PCS Change Orders and

AMEC Transmittals for new design changes that total $3,221,315 as of

February 25, 2010 and totaled $4,485,273 by April 20, 2010.

[283] Mr. Dean also prepared a ‘detailed comparison schedule” (“as planned” versus “as built”).

At his report at page 149, Mr. Dean describes this as a 20 sheet schedule graphic showing

Comstock’s work on an elevation by elevation and activity by activity basis that compares the “as

planned” and “as built dates”, durations and times of performance for Comstock’s work throughout

the project.

[284] He writes at page 150 to 151 regarding the Drawing Transmittal Log:

Plotted on the as-built schedule in time-scaled, numbered purple bars are some

of the 212 separate AMEC Transmittals that included 1,794 to 2,057 new or

revised construction documents (plans, specifications, lists, schedules, etc.) that

were sent to Comstock over the course of the Project. While some reasonable

level of design revisions is anticipated on a project (no set of construction

documents is perfect), the design changes on this Project were excessive and

untimely. The time-scaled and number Transmittal bars begin on the “sent” date

on the Transmittal and conclude on the “received” date (the date that Comstock

signed the Transmittal). The Transmittal Logs for Drawing and Specifications

can be found in Exhibit No. 23 and Exhibit C.

Transmittals that appear to have potentially delayed or impacted Comstock’s

work have been clouded and an arrow points to the affected block of work.

[285] PCS and AMEC dispute that Comstock has established that drawing revisions caused delay.

They submit that Mr. Dean’s analysis is flawed because he did not examine each of the 2,057 new

or revised contract documents. Mr. Dean acknowledged on cross-examination that he had not

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reviewed each of these documents to determine what changes were contained within them. He also

conceded he did not know how many of these documents may have been issued for information

only; how many involved a change that would not result in a cost difference, and how many would

not result in the need to extend the time for the work.

[286] Mr. Allison testified for Comstock about revisions to drawings related to the electrical cable

tray on elevation 95, originally released as IFC on March 27, 2009 and subsequently revised four

times, on May 22, 2009, July 17, 2009, December 18, 2009 and April 5, 2010. He testified that

according to Comstock’s February 26, 2010 schedule, work on this drawing was to commence

November 20, 2009 and be completed by March 2, 2010. The revisions issued in April 5, 2010

came after the completion date for the work on Comstock’s schedule and required Comstock to

mobilize workers to the area, procure a scissor lift, and make sure that they had all the materials

to finish the work.

[287] Mr. McLellan testified about changes made by AMEC to drawing 320 – 17 – 1043 by way

of CIC 3458 dated February 12, 2010 from Mr. Breed. The CIC indicated that the natural gas lines

shown on the drawing had to be rerouted. The piping for the lines had already been installed when

the CIC was received. Mr. McLellan testified this meant Comstock could not do electrical work

as planned.

[288] In his examination-in-chief, Mr. Glassford reviewed several revised drawings along with the

take-off sheets he had prepared when he was on site estimating pricing for changes to the work.

He testified that the drawings showed changes to the work, including addition of pushbutton units

and addition of receptacles and wiring for receptacles.

[289] Among the drawings released that Mr. Glassford testified about were a cable schedule,

instrumentation cable schedule and electrical wiring diagrams transmitted April 15, 2010.

Comstock estimated the value of these changes at $670,057. Mr. Dean indicates in his report that

Comstock completed $384,333 worth of this changed work before termination. However,

Comstock did not receive a change order from AMEC for this work. There is no evidence that

Comstock submitted notice of delay or a request for an extension of time in relation to this work.

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[290] AMEC called evidence that it says supports a conclusion that drawing revisions issued late

in the contract did not require significant work. Mr. Breed was asked to review certain drawings

and testified these did not contain changes to the work. Mr. McIntyre also gave evidence that a

number of drawings shown to him on examination-in-chief were principally loop and wiring

diagrams that did not did not contain significant changes to the work.

[291] Mark Ashley, AMEC’s engineering director on the project, testified it was not unusual on a

job like this project for 1,000 drawings to come out late in the project, in time for the contractor to

do the wiring. He testified that it would not be relevant to pricing the bid originally, because for

the purpose of the bid, the contractor would only need to know how much wire it was pulling and

how many connections were needed (not where the actual connections were). However, Mr.

Ashley agreed he could not say what changes were actually involved with the drawings issued by

AMEC, as he would have to look at each drawing revision to understand its true materiality.

[292] Mr. McIntyre also testified, without having all the documents before him in court, that he

had reviewed all 1,328 of the approximately 1,700 revised drawings contained in Mr. Dean’s list

of new and revised document that related to electrical drawings at the time they were issued to

Comstock. He also reviewed them in November 2018 at the request of counsel for AMEC and

provided counsel with his assessment of the number of those drawings that contained changes. His

testimony was that only a small percentage of the drawings would have created a change in the

work.

[293] Mr. McIntyre agreed on cross-examination that he was giving his opinion on these drawings

and that someone else might have a different view of whether there was a change or not.

[294] In its Closing Submissions, Comstock argues that this evidence is inadmissible as Mr.

McIntyre was called as a factual witness and therefore was not entitled to give opinion evidence.

Comstock further argues that Mr. McIntyre could not have been qualified to give opinion evidence

because he was not an independent witness.

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[295] AMEC argues that Mr. McIntyre was providing factual evidence based on his experience

and knowledge, not opinion evidence.

[296] I note that Mr. McIntyre, Mr. Breed, Mr. McLellan, Mr. Allison, and Mr. Glassford all

testified about specific drawings that were put before them in Court and gave their view or opinion

as to whether or not those drawings indicated changes in the work.

[297] In Toronto-Dominion Bank v. Cambridge Leasing Ltd., 2006 NBQB 134 (CanLII), this

Court considered whether documents prepared by a non-expert giving a view at the value of lost

business were expert or non-opinion evidence.

[298] The Court stated the following regarding the disputed documents:

[4] The defendants submit that they are lay opinion evidence and refer to the

leading case of R. v. Graat 1982 CanLII 33 (SCC), [1982] 2 S.C.R. 819 where

Dickson, J., as he then was, discussed the admissibility of the opinion evidence of

two police officers who were not qualified as experts as to whether or not the

accused was impaired. Dickson, J. after reviewing the law in various jurisdictions

stated at paragraph 52:

I accept the following passage from Cross as a good

statement of the law as to the cases in which non-expert

opinion is admissible.

When, in the words of an American judge, “the facts from

which a witness received an impression were too evanescent

in their nature to be recollected, or too complicated to be

separately and distinctly narrated”, a witness may state his

opinion or impression. He was better equipped than the jury

to form it, and it is impossible for him to convey an adequate

idea of the premises on which he acted to the jury:

“Unless opinions, estimates and inferences which men in

their daily lives reach without conscious ratiocination as a

result of what they have perceived with their physical senses

were treated in the law of evidence as if they were mere

statements of fact, witnesses would find themselves unable

to communicate to the judge an accurate impression of the

events they were seeking to describe.”

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[5] The defendants also rely on the following statement from The Law of

Evidence in Canada by Sopinka, Lederman and Bryant, 2d ed.

(Butterworths, Toronto) where the authors considered the effect of R. v.

Graat, supra. at paragraph 12.11, they stated:

Courts now have greater freedom to receive lay witnesses’

opinions if: (1) the witness has personal knowledge; (2) the

witness is in a better position than the trier of fact to form

the opinion; (3) the witness has the necessary experiential

capacity to make the conclusion; and (4) the opinion is a

compendious mode of speaking and the witness could not as

accurately, adequately and with reasonable facility describe

the facts she or he is testifying about … As the testimony

shades towards a legal conclusion, resistance to

admissibility develops.

[6] The defendant further submits that since in R. v. Graat, supra., the

Court specifically included certain questions of value as areas on which lay

opinion is admissible, the pro forma statements are admissible in that

category of lay opinion evidence and they refer to two American decisions

in support of that submission.

[7] I see a distinction between the evidence offered in this case and that

dealt with and discussed by the Court in R. v. Graat, supra. That distinction

is highlighted in my view by the first requirement set out in the quote from

The Law of Evidence in Canada, supra., i.e. “the witness has personal

knowledge.” Mr. Skaling offers evidence to project the financial

performance of Nautica from 2002 forward. This is not opinion evidence

based on his personal knowledge but rather opinion evidence based on a

combination of Nautica’s past performance and assumptions about matters

such as sales volume, U.S. exchange rates, collection of receivables and the

like which are, by their nature, beyond his personal knowledge. They deal

with future events and future results and are clearly, in my view, evidence

that should be tendered through an expert.

[299] While the evidence of the witnesses regarding certain drawings was opinion evidence, I also

accept that these witnesses had personal knowledge of the drawings, as they were involved with

reviewing those drawings at the time of the events that were the subject of litigation. Mr. Glassford

was also testifying about take-off sheets that he had prepared at the time based on certain drawings.

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[300] I accept that Mr. McIntyre reviewed all the electrical documents transmitted to Comstock in

the course of his work on the project, however, I have concerns with the reliability of his evidence

about drawings that were not put to him in Court. AMEC counsel argues that Comstock could

have cross-examined Mr. McIntyre about the drawings he said he had reviewed outside of court,

but chose not to. I question how he could have been cross-examined on documents that were not

before him in court and which may or may not have been the same documents that were listed in

Mr. Dean’s report. Therefore, while I accept his evidence about the drawings put before him in

court, I give little weight to his evidence about how many of the 1,328 electrical drawings

contained changes.

[301] I conclude that some IFC drawings and drawing revisions did not create significant changes

to the work. However, it is apparent that there were significant changes arising from IFC drawings

and revisions. Comstock requested and received change orders in relation to RCA 11 ($911,000)

and from subsequently issued IFC drawings and drawing revisions. For example Change Order 9

in the amount of $654,000 arose mainly from IFC drawings.

[302] Later in the project, Change Order 23 in the amount of $102,000 issued for changes arising

from IFC drawings.

[303] According to the table in Comstock’s correspondence dated July 6, 2010 as of May, 2010

approved and pending changes arising from drawing revisions totalled $2,424,896. Comstock also

received instructions from AMEC to make “design changes” to the work without an IFC or revised

IFC drawing. In the same table included in the July 6, 2010 correspondence Comstock indicated

there were $1,040,982.93 in “added scope/mods” as of May 2010 and $1,177,705.65 in pending

“added scope/mods”.

[304] Mr. Fogarasi used Comstock’s valuation of approved and pending change orders in the

amount of $2,424,896 arising from drawing revisions to support his opinion that the increase in

project value arsing from changes was 6.7%, and was within the reasonable expected range for

typical construction projects of this type and within Comstock’s reasonable contemplation (page

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24 HKA report). However this does not appear to take into account design modifications and

changes arising from instructions from AMEC nor does it take into account the changes in CP-78.

[305] Approved change orders for CP-15 totalled $4.5 million at termination which represents a

12.5% increase in contract value. Mr. Dean is of the opinion that “pending” changes were $1.8

million for a foreseeable increase in the value of the contract to 17.4% percent at termination. If

the $8.9 million in changes on CP-78 are taken into account, this represents an over 30% increase

in the value of the contract arising from change orders.

[306] However not all of the change orders on the project related to design changes issued by

AMEC. Mr. Dean did not break out from the total value of approved and pending change orders

for CP-15 those that arose from design changes or drawing revisions as opposed to non-design

related change orders (such as Change Order 7, for $120,000, related to payment for fuel for

temporary heat; change order 8 for $350,000 related to covering the cost of Comstock completing

installation of the steel work in place of Ocean Steel, change order 21 for $58,120 to cover lost

time due to a washroom closure on December 9, 2009; and change orders 32 and 36 totaling

approximately $87,000 related to payment to Comstock for providing commissioning assistance

to the crane representatives).

[307] Not all of the $8.9 million in change order amounts in CP-78, the completion contract, arose

from design changes either, as Mr. Dean acknowledged on cross-examination. For example,

commissioning work was part of the changes.

[308] I conclude the volume of approved changes on the compaction plant project was higher than

6.7% cited by Mr. Fogarasi. However, Comstock has not established what the actual increase in

volume arising from design changes was, Mr. Dean did not provide an opinion as to what a

reasonable volume of design changes would have been on this contract, and Comstock did not

present evidence as to what volume of design changes it expected on the contract when it prepared

its tender.

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[309] The express terms of the contract provided that many revisions to IFC drawings could issue

and changes could be made “at any time” during the progress of the work. The contract

contemplated in G.C. 47 that changes could be made late into the project that could affect the

contract completion date. I therefore cannot conclude that the contract was breached by the

issuance of a high volume of drawing revisions and changes in and of itself.

[310] However it is also apparent that late design and engineering changes, not caused by

Comstock, would have pushed the work past May 31, 2010 regardless of whether Comstock was

otherwise delayed.

[311] For example, on March 25, 2010, Mark Ashley, AMEC’s project engineer for the Picadilly

Project, asked Mr. Thornton of AMEC to review again what was left for area 320 after a number

of drawings were posted to the project website. On cross-examination, Mr. Ashley agreed it was a

fair statement to say he was expressing some frustration with the fact that drawings for area 320

were still being released.

[312] In an email dated May 28, 2010, three days before Comstock’s contractual completion date,

Brad Thompson wrote to Mr. Ashley expressing frustration that AMEC had forgotten to show a

“bunch of gas venting for pressurization units in the compaction plant which could be as much as

$200,000”. Mr. Ashley acknowledged on cross-examination this was an AMEC mistake, and it

was fair to say that this issue could not be resolved before a May 31, 2010 completion date.

[313] As noted earlier, AMEC design and engineering issues meant changes to the cooling tower

pumps and to force feeder frames had to be carried out late in the project. Comstock was directed

to carry out the work approximately two weeks before the May 31, 2010 completion date in the

contract.

[314] The evidence indicates that Mr. Bailey was expressing concern about the state of engineering

on the project in May 2010.

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[315] As stated by the Supreme Court of Canada in Penvidic v. International Nickel Co. of Canada

Ltd. [1976] 1 S.C.R. 257 at paragraph 16:

If in the contract one finds the time limited within which the builder is to do the

work, that means, not only that he is to do it within that time, but it means also

that he is to have the time within which to do it.

[316] Therefore, concomitant with the ability to issue changes to the work was an obligation on

PCS and AMEC to provide Comstock the time to carry out those changes. I will consider whether

the contract was breached in this respect when I consider whether the contract was breached by a

failure to grant Comstock an extension of time.

b) Claims in negligence

[317] In terms of allegations of negligent misrepresentation, Comstock alleges at paragraph 21 of

the Claim:

Comstock Inc., in making its tender submission, relied upon the project documents

and other representations and warranties made by the defendants.

In respect of the project documents,

(a)

(b)

the express and/or implied terms of the Project Documents;

further or in the alternative, the representations made by the Defendants at

the time of Comstock’s tender submission for the Project and prior to the letter of

intent dated August 12, 2009;

(c)

further or in the alternative, the collateral warranties and conditions made

by the Defendants as part of the Project Documents and in respect of other collateral

warranties arising out of discussions, correspondence and other communications;

(d)

further or in the alternative, the representations made in the Project

Documents and through discussions with the Defendants,

all served to induced Comstock into submitting its lump sum bid and entering into

the Contract.

[318] At paragraph 21.1 Comstock states:

These express or implied terms, representations, conditions and/or collateral

warranties included:

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(a)

$36,279,170.35 (HST excluded);

(b) time was material and of the essence of the Project and the Contract;

the price for the scope work to be performed by Comstock was

(c ) the design, engineering, plans and specifications outlining Comstock’s scope

of work and those portions of the Project Documents, including IFC drawings, that

impacted Comstock’s scope of work;

i. were complete and represented a fixed scope of work:

ii. were not intended to evolve with the development and

construction of the Project (i.e. ‘design as you go’):

iii. disclosed all known or planned impediments;

iv. Were constructible, meaning the design, plans and specifications

were:

(1) capable of actual construction within:

a. the timelines and completion dates provided in the

project documents;

b. the requirements of statutory codes, regulations

and standards;

c. within the spaces provided without interference

with other components, and

(2) designed in the most effective manner for construction

both as to time and as to cost

v. were compliant with all applicable codes and standards;

vi. represented a final constructible design that did not require further

material or substantial modifications, revisions, the issuance of revised

drawings, redesigns, alterations, additions or deletions;

vii. represented a design that was fully coordinated in all aspects;

viii. were not in the form of, or based, on schematic drawings or P & ID

(process and instrumentation drawings) (except for those few limited

drawings that were expressly identified as P& ID drawings) that;

(1) were not intended to be a final design for the project;

76

(2) merely show the arrangement of process and utility

equipment, without all components;

ix. were accurate in respect of dimensions in scale, locations, elevations and

arrangements;

(d) if revisions in the project documents, including IFC drawings, were needed, they

would be made in a timely manner with respect to Comstock’s plan and scheduled

performance of its work and with a view to minimizing impacts on Comstock;

Does the contract exclude liability for tortious actions?

[319] The defendants argue that the contract was a complete code with respect to the parties’

obligations to each other and excluded them from any liability in tort.

[320] As stated by the New Brunswick Court of Appeal in New Brunswick Power Corporation v.

Westinghouse Canada. Inc. and Asea Brown Boveri Inc., 2008 NBCA 70 (CanLII):

[31] On several occasions, the Supreme Court has confirmed the general rule

emerging from its decision in Central Trust Co. v. Rafuse,, [1986] 2 S.C.R. 147,

[1986] S.C.J. No. 52 (QL). The rule is as follows: where a given wrong prima

facie supports an action in contract and tort, one may sue in either or both, subject

to any limit the parties themselves have placed on that right by their contract. In

other words, it is always open to the parties to limit or waive the duties which the

common law would impose on them for negligence. It is also established that

simply because the parties dealt expressly with a particular matter in the contract

(e.g. design defects) the right to sue in tort is not automatically lost. Thus, the

question is whether the contract also excludes liability for negligence (see

generally BG Checo International Ltd. v. British Columbia Hydro and Power

Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, [1993] S.C.J. No. 1 (QL)

and Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., 1997

CanLII 307 (SCC), [1997] 3 S.C.R. 1210, [1997] S.C.J. No. 111 (QL)).

[321] In BG Checo, referred to above the Supreme Court of Canada stated:

We conclude that actions in contract and tort may be concurrently pursued unless

the parties by a valid contractual provision indicate that they intended

otherwise. This excludes, of course, cases where the contractual limitation is

invalid, as by fraud, mistake or unconscionability. Similarly, a contractual

limitation may not apply where the tort is independent of the contract in the sense

of falling outside the scope of the contract, as the example given in Elder, Dempster

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& Co. v. Paterson, Zochonis & Co., [1924] A.C. 522 (H.L.), of the captain of a

vessel falling asleep and starting a fire in relation to a claim for cargo damage.

Relevant provisions of the Contract

[322] Article 1 of the Agreement for Contract states:

1.

This Agreement together with the following documents:

Letter of Intent

Service Provider Undertaking Agreement

Correspondence

1.1.

Contractor Offer

Introduction

Construction Execution Plan

Schedule A – Schedule of Unit Rates

WCB Experience Rate Statement and Letters

Certificate of Insurance

1.2

General Conditions

General Conditions of Contract

Additional Special Conditions

1.3

1.4

Scope of Work

Drawing List (RCA 10)

As per Drawing List.

1.5

1.7

Specification List (RCA 10)

As per Drawing List.

Exhibits

Exhibit 1 - Construction Management Plan (CMP)

Exhibit 2 - Quality Assurance/Quality Control

Exhibit 3 - Administration Forms

Exhibit 4 - AMEC/PCS Safety, Health & Environmental Library CD

And the Contract Drawings listed in the Drawing List, together with the

Construction Schedule and the Construction Drawings form the Contract and shall

together be referred to hereinafter as the Contract or Contract documents.

2. The contract documents shall constitute the entire agreement between the parties

for the work to be performed, and shall supersede and cancel all previous

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agreements between the parties in regard to the work whether oral or in writing

whether expressed or implied.

3. The contract may only be amended as provided in the contract documents.

[323] General Condition 2.1.2, referred to as the “non-reliance” clause states:

CONTRACTOR represents and warrants to OWNER that CONTRACTOR has

not relied in entering into the Contract upon any representations, statements or

information not contained in the Contract, whether written or oral, express or

implied, made or given by or on behalf of OWNER.

[324] General Condition 3.1.3 states:

The executed contract constitutes the entire Agreement between the parties and

supersedes all prior discussions, negotiations, representations and Agreements,

whether written or oral, express or implied.

[325] A reading of the above provisions of the contract does not indicate that the parties intended

to exclude all liability in tort. However, G.C. 2.1.2 and 3.1.3 may apply to exclude liability for

negligent misrepresentation.

Was AMEC negligent in carrying out the design of the compaction plant and in carrying out its

duty to manage the Project?

[326] In its Closing Submissions at paragraph 852 Comstock states:

Negligence is established where one party owes another a duty of care and should

have met a particular standard of care in order to fulfil that duty, but breaches the

duty of care by failing to fulfil the standard of care, and the breach causes damage

or loss to the other party which is not so remote as to preclude liability. All the

elements of negligence are established here. In particular:

(a) AMEC owed a duty of care to Comstock: the law will imply

a duty of care when a party relies on information from a professional

possessed of special skill and the professional knew, or ought to

have known, that reliance was being placed on its skill and

judgment. A professional’s duty of care can extend beyond his or

her own client where there is sufficient “proximity” between the

two.

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(b) Risk of harm: as set out above, it was impossible for Comstock

to complete its work on the Project on time, on budget or at all unless

AMEC provided competent design, procurement and co-ordination.

(c ) Breach of standard of care: with respect to professional

negligence, the appropriate standard of care is that of a reasonably

competent professional in similar circumstances. AMEC’s conduct,

as described above, fell below the “standard of a competent

engineering firm”.

(d) Resulting loss: Comstock suffered damages as a result of

AMEC’s negligence. It is entitled to be put in the position it would

be in if AMEC’s negligence had not occurred.

[327] AMEC submits that this claim of general negligence on the part of AMEC was not properly

pled in Comstock’s Statement of Claim.

[328] Comstock makes no “stand-alone” claim of negligence against AMEC. The issue of the

standard of care is raised in the pleadings as a statement of material facts in support of Comstock’s

breach of contract claim at paragraph 24:

PCS and/or AMEC failed to provide Comstock as part of the Project Documents,

with clear, logical, coordinated, unambiguous, complete design, engineering

drawings, including IFC Drawings, plans and specifications for Comstock’s scope

of work as part of the project documents, and further or in the alternative, providing

design and engineering that was not to a standard of a competent engineering firm

or engineers undertaking similar work.

[329] As I have found above, Comstock did not establish that AMEC breached its standard of care.

Was there negligent misrepresentation?

Effect of entire agreement and non-reliance clauses

[330] PCS and AMEC argue that there can be no liability for negligent misrepresentations as a

result of General Condition 2.1.2 and 3.1.3 set out above.

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[331] Comstock submits that misrepresentations were made in the tender documents by AMEC

and subsequently incorporated into the contract, and therefore the non-reliance clause and entire

agreement clause do not protect PCS or AMEC.

[332] I accept that the tender documents, including the drawings and specifications upon which

Comstock based its bid, were incorporated into the contract as per Article 1 of the agreement. In

Edgeworth Construction Ltd. v. N. D. Lea & Associates Ltd., [1993 ] 3 S.C.R 206 the Supreme

Court of Canada stated:

It is true that the engineers’ work was incorporated in the tender package and

thereafter in the contract. This establishes that the representations in the design

became the representations of the province.

[333] The Supreme Court of Canada went on to state:

The contract, by clause 42, stipulated that any representations in the tender

documents were "furnished merely for the general information of bidders and

[were] not in anywise warranted or guaranteed by or on behalf of the Minister...”

This arguably absolved the province from any liability for the plans. The

exemption extends, on its express words, only to warranties "by or on behalf of the

Minister". It does not purport to protect the engineers against liability for their

representations.

[334] AMEC references section 4.3 of the Instructions to Tenderer for CP-15 as excluding claims

for negligent misrepresentation against it.

[335] Section 4.3 states:

All representations in the Tender Documents are furnished merely for the general

information of Tenderer and are not in any way warranted or guaranteed by or on

behalf of OWNER or ENGINEER or OWNER’s or ENGINEER’s subconsultants

or their respective employees or any of them.

[336] Comstock argues that the exclusion clause in the tender documents was limited to the tender

process itself, and was not intended to apply to any misrepresentations in the contract documents.

It points to section 9.16 and 9.18 of the Instructions to Tenderer as reinforcing the intention to limit

81

liability associated with the tender process as opposed to liability to the successful bidder once a

contract was entered into.

[337] Section 9.16 states:

The tenderer shall be responsible for all costs relating to the preparation of their

tender submission and participation in the tendering process. Owner and engineer

shall not under any circumstances be liable in contract, tort or any other cause of

action or theory of loss to any unsuccessful tenderer for loss or damage suffered or

incurred by the unsuccessful tenderer as a result of the rejection of its tender or for

any expense incurred by any tenderer during the preparation and submission of the

tender and any subsequent tender pre-award proceedings.

[338] 9.18 states:

Tenderer by submitting a tender acknowledges owner’s right under this section 9.0

and absolutely waives any right of action against owner and engineer for the

owner’s failure to accept tenderer’s tender whether such right of action arises in

contract, negligence, bad faith or any other cause of action or theory of law.

[339] Comstock also submits that the Instructions to Tenderer specifically highlight a distinction

between the tender documents and the contract documents at article 23.1:

Information from Successful Tenderer’s completed Form of Tender and Schedule

A, and all revisions to the Tender Documents of which notification has been

received and recorded in the Tender and items discussed and agreed and duly

recorded prior to an award being made, will be extracted and embodied in relevant

sections of the Contract Document when the Contract is prepared for execution,

pursuant to Article 1 Paragraph 2 of the Agreement.

[340] Article 1 of the Agreement does not specify that the Instructions to Tenderers form part of

the contract document. I therefore do not find that the parties intended to incorporate the exclusion

of liability in the tender documents into the contract document.

[341] I find PCS and Comstock intended to incorporate into the contract the scope of work, the

Drawing List and Specification List for RCA 10, among other documents as stated at article 1.

Comstock submitted its revised lump-sum bid based on RCA 10.

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[342] I conclude that if there was a misrepresentation contained in the tender documents,

subsequently incorporated into the contract, the entire agreement and non-reliance clause do not

protect PCS from liability for the misrepresentations.

[343] In terms of whether AMEC would be protected from liability for negligent misrepresentation

by the contractual entire agreement and non-reliance clause, AMEC submitted the exclusion clause

at section 4.3 of the Invitation to Tender would extend the benefit of protection from liability for

misrepresentation in the tender documents to AMEC as AMEC was specifically named in that

clause. I have already addressed the argument regarding the applicability of section 4.3 of the

Invitation to Tender in my finding that it does not operate to exclude liability for

misrepresentations in the contract.

[344] I do not find that AMEC has established that the intention of the parties manifested in the

contract must be taken to limit AMEC’s duty of care owed in tort, as per Edgeworth, supra.

Therefore, AMEC would not be protected from liability for negligent misrepresentations to

Comstock in the tender documents, if negligent misrepresentation is established.

Requirements for a finding of negligent misrepresentation

[345] In Queen v Cognos Inc., 1993 CanLII 146 (SCC), [1993] 1 SCR 87 the Supreme Court of

Canada set out the requirements for a finding of negligent misrepresentation:

(1) there must be a duty of care based on a "special relationship" between the

representor and the representee;

(2) the representation in question must be untrue, inaccurate, or misleading;

(3) the representor must have acted negligently in making the misrepresentation;

(4) the representee must have relied, in a reasonable manner, on the negligent

misrepresentation; and

(5) the reliance must have been detrimental to the representee in the sense that

damages resulted.

Was there a duty of care?

[346] As owner and contracting party, and as the consultant on the tender and contract and engineer

responsible for the design of the project, PCS and AMEC respectively knew that prospective bidders

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including Comstock would rely on the information provided in the tender documents in pricing their

bids.

[347] PCS and AMEC knew that Comstock and other bidders did not have information related to the

contract requirements from any other source.

[348] I find PCS and AMEC were in a sufficient relationship of proximity to owe Comstock a duty of

care to ensure accurate information was provided at the tender stage.

Was there an untrue, inaccurate or misleading representation?

[349] At paragraphs 856(b) of the Closing Submissions Comstock writes that PCS and AMEC

made numerous actionable misrepresentations:

(i) PCS/AMEC represented that the Project design was complete and accurate that

a lump sum bid was possible and that the drawings provided at the time of the tender

represented the scope of the work for the Project. In fact, the design was not

complete and, as a result, Comstock was faced with constant changes that

significantly increased the cost of completing the work;

ii) the work that Comstock agreed to perform could be completed by the date set

out in the Contract, namely May 30, 2010;…

Did AMEC/PCS misrepresent that the work could be completed by May 30, 2010?

[350] The invitation to tender dated May 30, 2009 from Mr. Roul to all tenderers included

the following dates:

Tender closing time:

Work to be awarded:

Work to be completed:

June 19th, 2009 (1:00 ACT)

July 31st, 2009

May 14th, 2010

[351] The tender closing time was subsequently extended by two weeks to July 3, 2009 when

RCA 10 was issued.

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[352] As noted section 4.3 of the Instructions to Tenderers stated:

All representations in the Tender Documents are furnished merely for the general

information of Tenderer and are not in any way warranted or guaranteed by or on

behalf of OWNER or ENGINEER or OWNER’s or ENGINEER’s subconsultants

or the respective employees or any of them…

[353] Comstock affirmed a number of things at paragraph 3 of its tender submission dated July 3,

2009, including that it had visited the site during the tender period and examined the conditions

affecting the work. It also affirmed it had studied the contract drawings and other tender documents

listed at 3.2 of the tender submission.

[354] Based on Comstock’s review of the tender documents it offered to start work on the site on

or before August 30, 2009, and to achieve a substantial performance of the work on or before April

15, 2010 and to achieve final completion of the work on or before May 30, 2010.

[355] When Comstock’s bid was accepted, the May 30, 2010 date became the contractual

completion date. It was amended to May 31, 2010 upon acceptance of the baseline schedule by

AMEC in late September, 2009.

[356] The May 14, 2010 completion date in the Invitation to Tender was not a representation the

work could be completed by May 14, 2010. Comstock was aware the date in the tender documents

was not warranted or guaranteed. I also do not find the May 30, 2010 completion date was a

representation by AMEC that the work could be completed by that date. It was proposed by

Comstock at the outset of the project in its bid submission.

Did AMEC/PCS misrepresent that the project design was complete and accurate, that a lump sum

bid was possible and that the drawings provided at the time of tender represented the scope of

work for the project?

[357] Comstock argues that soliciting bids on a lump sum basis and issuing IFC drawings as part

of the tender documents were representations that Comstock relied upon making its bid

submission.

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[358] In Golden Hill Ventures v Kerness Mines Inc., supra, the B.C. Supreme Court stated:

[472] It is fundamental to a unit price construction contract that sufficient

investigation and engineering analysis of the project be completed prior to the

issuance of tender documents to ensure that the scope of the work described is

sufficiently defined, is capable of being built and is based on sufficient investigation

and engineering such that bidders are able to prepare reasonable unit prices based

on an examination of the documents. As stated by Brenner, J., as he then was, in

Foundation Co. of Canada, supra:

...it must be borne in mind that this was a complex refit project, that

all parties understood this at the outset and that a certain number of

drawing revisions were to be expected as work

proceeded. However, that being said, the owner still had an

obligation to ensure that the state of design was sufficiently finalized

prior to tender on this lump sum project so that the progress of the

contractors work would not be unreasonably impacted. ... A

contractor on a lump sum project is entitled to expect that the project

design has been substantially completed at the time of tender.

(at pp. 51 and 59).

[473]

I also find that there is an implied representation in construction

contracts that the project which is out for tender is buildable. In J. P. Metal Masters

Inc. v. David Mitchell Co. (1997), 34 C.L.R. (2d) 251 (B.C.S.C.) affirmed (1998),

1998 CanLII 3778 (BC CA), 49 B.C.L.R. (3d) 88 (B.C.C.A.), Smith, J. stated:

Even in the absence of finding an express representation that a structural engineer

reviewed the drawings before they were put out for bid, I accept the submission

that Mitchell Co. and J.P. Metal did rely on the implied representation that the

design drawings were buildable for the purpose for which they were tendered. It is

improbable that any contractor or sub-contractor would bid on a job if they thought

that they design could not be built as represented. (at para. 61)

[474]

Of similar effect are the comments of Southin, J.A. in JJM

Construction Ltd., supra:

1. That an owner owes a duty to a builder to take reasonable care

in the preparation of bid documents. The bidder is entitled to an

accurate and full description of the nature of the work and its factual

components. Failure by the owner to disclose that which it knows

may be a breach of that duty.

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2. The owner and the engineer both impliedly, if not expressly,

warrant in the case of the former and represent in the case of the

latter that the proposed works are “buildable”.

So far as the owner is concerned, these propositions are subject to whatever

disclaimer clauses are in the contract. (at paras. 16-17).

[359] I accept that Comstock was entitled to rely on the tender documents as accurately

representing that sufficient engineering had been done so that the compaction plant was

“buildable”. However, Comstock takes things a step further and argues that the issuance of IFC

drawings was a representation as to the state of the design of the compaction plant. Comstock

states in its Reply brief at paragraphs 51 to 52:

The misrepresentation is established by the evidence, and that evidence is largely

undisputed.

Specifically, the contract incorporates RCA 10 by reference. RCA 10 says hundreds

of drawings Issued for Construction. Pursuant to the specific terms of the Contract,

issuing each IFC drawing was a representation that the drawing was suitable for its

purpose. Counsel to AMEC asserted an argument that “suitable” only means “you

can read it and…you can note if there is a change”. This interpretation, which is not

supported by any fact or opinion evidence, ignores the clear meaning of the words

issued for construction.

As Mr. Bailey conceded, most of the drawings on RCA 9 were issued for

construction. Taken as a whole, therefore, RCA 9 is a representation that the design

work on the Project was largely complete.

[360] I note that “Issued for Construction” is defined in the General Conditions at G.C. 1.1.27 as:

..the particular issue of a Construction Document so identified; a representation by

the originator that the Construction Document is suitable for the purpose.

[361] “Construction Drawings” are defined at G.C. 1.1.9 as:

…the drawings, detail sheets, sketches and maps issued by ENGINEER for the

actual performance of the Work, including all revisions thereto pursuant to G.C.

4.1. These drawings will be marked by ENGINEER “Issued for Construction.”

[362] “Contract Drawings” are defined at G.C. 1.1.11 as:

..the drawings, if any, listed in the Construction Documents, and executed with the

Contract but does not include the Construction Drawings.

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[363] G.C. 1.1.10 states:

“Contract” or “Construction Documents” mean the undertaking between OWNER

and CONTRACTOR to perform their respective duties, responsibilities and

obligations as defined in the Agreement and all documents referenced in the

Agreement and identified as being incorporated in the Contract, and all Changes or

revisions made in accordance with the provisions hereof, or where it is not so

defined shall mean the agreement between OWNER and CONTRACTOR.

[364] G.C. 3.5.1 states:

The Contract Drawings and other Construction Documents executed with the

Contract shall not be used for the construction of the Work.

[365] GC 4.1.1 states:

The Work shall be performed in accordance with the latest revision to the

Construction Drawings, Specifications and other information issued to

CONTRACTOR at the Site.

[366] G.C. 4.1.2 states:

The drawings ENGINEER furnishes to CONTRACTOR for the actual performance

of the Work are the Construction Drawings. These drawings will be marked by

ENGINEER “Issued for Construction”.

[367] I do not agree that the issuance of IFC drawings as the basis for tenders was a representation

that the design was “largely complete”. In my view, IFC drawings were not a representation as

to the state of the design of the compaction plant but rather a representation that the drawings were

suitable for the purpose intended, which was the construction of the compaction plant.

[368] As I have found earlier, a large volume of IFC drawing revisions and changes were issued

throughout the project, and late into the project’s time frame. However, I am not able to conclude

based on the evidence before the Court that the compaction plant was not buildable based on the

engineering design carried out by AMEC or that the IFC drawings were deficient or unable to be

used in the construction of the compaction plant.

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[369] Even if soliciting of lump sum bids and the issuance of IFC drawings as the basis for tenders was

a representation that the design was “largely complete”, Comstock has to establish that the

representation was false – i.e. untrue, inaccurate or misleading.

[370] Comstock points to the volume of changes to the work that occurred after the project

commenced including changes carried out by the completion contractor. It claims that internal

AMEC and PCS concerns about late engineering changes support a finding that the engineering

was not complete.

[371] I accept that AMEC and/or PCS generated a large volume of changes both on CP-15 and

CP-78, and AMEC was slow in completing the P&IDs. As well, AMEC omitted some fairly

significant things in the drawings. These issues were causing AMEC senior management and PCS

frustration and concern.

[372] At the end of the day, however, the compaction plant was built and I cannot find that the

design changed substantially from what was contemplated at the time of tender. No expert

evidence was called to support such a finding. Mr. Dean’s opinion that was that the volume and

timing of changes was unreasonable, not that the work depicted in the tender documents was not

what actually end up being constructed.

[373] I do not find Comstock has established negligent misrepresentation by AMEC in relation to

IFC drawings and design changes.

Was there reasonable reliance?

[374] Even if the act of soliciting a fixed price bid and issuing IFC drawings as part of the tender

package were representations as to the state of the design, the general conditions including those

in G.C. 4 and G.C. 47 were included as part of the tender information package and were not revised

before the contract was signed. In summary they stated:

 Construction Drawings could be revised from time to time during the course of the Work

and some of the construction drawings could be revised many times (G.C. 4.3);

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 Construction Drawings could be issued with certain areas of a drawing marked HOLD

where the ENGINEER was waiting for information for Vendors, or where a portion of the

design was incomplete for some part of the work that CONTRACTOR was not required to

do at that time (G.C. 4.4);

 Changes to the Work could be made by PCS or AMEC at any time during the progress of

the work (G.C. 47.1.1.)

 Changes could be made during the actual construction of parts of the Work affected by

changes, and these Changes would be conveyed either by a written order or revised

Construction Drawings (G.C. 47.1.2.)

[375] As well, the contract contemplated delay arising to the work arising from changes made by

the Owner or Engineer and set out a process for Comstock to be compensated through an

adjustment to the contract sum and/or to the construction schedule and the completion date for the

work, in the event of such delay (G.C. 47).

[376] I do not accept it was reasonable for Comstock to rely on the fact that a lump sum bid was

solicited and IFC drawings were issued and formed part of the tender package, as a representation

that the project design was complete or largely complete and that there would not be significant

changes to the drawings and the work for the project in light of the wording of the general

conditions.

Was any reliance detrimental to Comstock in the sense that damages resulted?

[377] Comstock provided the Court with little evidence about how it determined the amount of its

bid during the tender phase. Mr. McLellan was the only witness for Comstock who spoke about

the tender process, and he was not directly involved in developing the estimates that formed the

basis of the bid.

[378] Comstock’s bid was substantially lower than the other bids. The other three lump sum bids

were $43,841,202.00; $45,912,278.00; and $48,374,166.00. Comstock’s bid also was the only bid

of the four that was not substantially higher than its cost reimbursable bid.

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[379] Comstock’s bid contained the lowest estimate of manhours – 227,400. The estimated

manhours in the other bids were 260,190; 297,406 and 325,946.

[380] As well, unlike the other bidders, Comstock’s lump sum bid was not significantly different

than its initial cost reimbursable bid. PCS submits that Comstock’s lump sum bid appears not to

have accounted for contingencies.

[381] The Court has no evidence of what AMEC’s estimate of manhours for CP-15 was.

According to Exhibit 31.1, which is the Contract Requisition form and Contract Approval form

for CP-15, the budget for CP-15 as of August, 2009 was $27,312,845.00. Mr. Bailey testified that

was based on a pre-feasibility study done for the Picadilly expansion project as a whole, and it told

him not enough money was allocated for CP-15.

[382] Exhibit 31.1 also indicates that AMEC informed PCS it anticipated a 5 to 10% growth in

value of the contract award based on several revised drawings that would be given to Comstock

after award. This was not conveyed to bidders. Even if the scope grew by 10% that would have

increased AMEC’s budget to approximately $30,000,000.

[383] I accept that AMEC reviewed Comstock’s bid and did not determine there were any serious

issues or under-estimates in the bid.

[384] However, Comstock did make at least one significant error in its bid submission as Mr. Dean

indicates. Comstock classified non-working foremen as direct labour costs rather than indirect

labour as was required by local union agreements. He writes at footnote 20, page 27 of his report:

It appears that Comstock was unaware of this union requirement and these

nonworking foremen costs caused a significant non-compensable loss totaling

$2,391,798 shown at Z/26.

[385] PCS submits that Comstock made further errors in the bid by using “NECA 1” labour rates

for the electrical workers (rather than NECA 3 rates which are normally used for more complex

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construction projects) and Southwest Ontario labour productivity rates rather than local rates in

estimating its labour costs for the mechanical labourers. Comstock’s evidence that it used these

rates based on information received from AMEC about the labour forces in the local area was not

contradicted by the defendants. I am not convinced that Comstock’s decision as to what labour

productivity rates to use was a bid error.

[386] Mr. Dean agreed on cross-examination that Comstock’s overhead and profit was estimated

at about $2.9 million. Deducting the approximately $2.4 million non-compensable loss resulting

from the error regarding non-working foremen only leaves a margin of $500,000. Mr. Dean agreed

a contractor would not normally bid on a project with a margin that small.

[387] In my view, Comstock took a deliberate risk in bidding low to obtain the contract, and its

error with respect to the classification of non-working foremen reduced its already low profit

margin. Even if there was a negligent misrepresentation that Comstock reasonably relied upon, I

found that Comstock left itself very little room for contingencies such as delays arising from

changes to the drawings. There is no evidence before the Court as to what volume of changes

Comstock expected to be faced when it prepared its tender.

[388] I do not find Comstock has established that its reliance on any representation by PCS or

AMEC caused it loss.

3) Is there liability for failure to provide copies of IFC documents by September 14, 2009?

[389] Comstock submits that its early work was delayed because PCS failed to provide it with four

sets of IFC drawings by September 14, 2009.

[390] The general conditions provide:

GC 3.5.2: OWNER shall provide CONTRACTOR, without charge, copies of

Drawings and Specifications necessary to secure required permits and licenses and

for record drawings. OWNER will also provide “Issued for Construction” drawings

and Specifications for the performance of the Work in the quantities stated in G.C.

4.1. Additional copies shall be furnished by OWNER for cost of reproduction and

applicable taxes, plus 10%, payable by CONTRACTOR to OWNER.

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GC 4.1.3: Two copies of each Construction Drawing will be issued to

CONTRACTOR at the Site, and up to two additional copies upon request of

CONTRACTOR.

[391] The general conditions are silent as to when copies were to be provided.

[392] AMEC did not provide Comstock with two copies of the IFC drawings at the site, when they

were issued. It is also not disputed that Comstock requested two extra sets of IFC drawings.

[393] Mr. McLellan raised the issue in correspondence with Mr. Roul dated October 2, 2009. He

wrote:

As per our Tuesday meeting, we requested 4 copies of the updated drawings. We

are now over a month behind in drawings. There have been over 1000 drawings,

specifications, lists and vendor drawings issued since the RCA 11. We are working

on costing the changes but we have no drawings to give to the field. This will

become a very serious issue down the road.

We again request the updated drawings be provided immediately with the

transmittal or we have an immediate change order to provide these drawings

ourselves.

We will have a cost to print all drawings up to date this afternoon.

We require an immediate answer.

I want to hire more tradespeople but cannot until we have drawings.

[394] Mr. Roul responded the same day that he was working to resolve the issue and asked Mr.

McLellan to provide him with the quote to have drawings reproduced.

[395] Mr. McLellan testified that Comstock arranged for copies to be made after obtaining change

orders from AMEC to cover the cost. Change Order 1 for $9,138.00 to cover the cost of drawing

reproduction is dated September 2, 2009 and was signed off on by AMEC on September 10, 2009,

although Mr. McLellan only signed it on January 20, 2010. On cross-examination Mr. McLellan

agreed that Comstock printed the copies of the RCA 11 drawings well in advance of January 2010.

[396] Change Order 4 in the amount of $6,780.00 to cover the cost of Comstock acquiring the

services of an outside vendor to reproduce all revised drawings and required specifications is dated

October 8, 2009 and was signed by AMEC/PCS on October 8 and 9, 2010 and by Mr. McLellan

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on October 14 or 19, 2009. Mr. McLellan agreed that Comstock had the copies by the end of

October 2009.

[397] I find that although Comstock made the copies of the drawings and was reimbursed, they

were still “provided” to Comstock at PCS’ cost as contemplated in the General Conditions.

[398] Comstock argues that the accepted baseline schedule required PCS/AMEC to provide the

copies by September 14, 2009. However, the baseline schedule was submitted on September 25,

2009. September 14 had already passed. Mr. McLellan testified, “IFC drawings received”

reflected that IFC drawings were received September 14, 2009. I do not agree it meant copies were

to be received by September 14, 2009.

[399] As noted above, the general conditions do not set out a timeframe for copies to be provided.

I find it was an implied term of the contract that the copies be provided in a reasonable timeframe.

[400] Comstock had copies of the drawings by the end of October 2009. I find the copies were

provided in a reasonable timeframe. Comstock did not submit any claim for delay arising from

this issue before termination.

[401] Even if there was a breach of the contract in respect of these copies, Comstock has not

demonstrated what, if any, actual delay resulted from not having had the copies sooner.

4) Is there liability for cladding/heat issues?

[402] Comstock was responsible to provide temporary heat to the compaction plant building.

Comstock included the following qualification in its clarification and exceptions document:

Comstock Canada Ltd. includes necessary freeze protection providing Building

Skin is substantially complete by November 1, 2009. We will provide heaters

and will utilize one or both N.G. Lines that service the building. Fuel

consumption costs by owner.

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[403] Comstock intended to provide temporary heat by using the natural gas lines that were to be

installed in the plant. However, AMEC made changes to the natural gas line system. Following

this Comstock requested a change order to cover the cost of propane to temporarily heat the plant.

[404] Mr. McLellan testified that in December 2009 it was getting colder and no change order had

been approved for the cost of heating. Comstock went out to get temporary heaters, but by this

time none were available to purchase.

[405] Cladding and roofing was not completed by November 1, 2009. In Comstock’s Closing

Submissions it states at paragraph 303:

… Comstock relied on PCS and AMEC to ensure the building was enclosed on

time. However, this did not occur and Comstock’s workers were forced to work

without walls or heat into the winter months. This caused significant delays and

additional costs.

[406] Comstock got heat going in the building at some point in January 2010, as per the weekly

coordination meeting minutes and AMEC’s January 2010 monthly progress report.

[407] I accept that the building was not fully enclosed until January 2010, and that some snow and

ice got into the building which had to be cleaned out on a few occasions. I also accept that it was

cold in the building especially in early 2010.

[408] However, the evidence of Mr. McLellan, the Contractor Daily Reports, the weekly meeting

minutes, and the foremen’s’ daily log entries referred to by Mr. Dean in Exhibit 10R, “Weather-

Impact Log Report Detail” do not support a finding that there were significant impacts on the work

as a result of these issues.

[409] Mr. Fogarasi agreed that working in cold conditions could result in a loss of productivity.

However, there is no expert evidence that allows the court to ascertain what actual impact this may

have had on Comstock’s productivity. Comstock provided no analysis to show how the schedule

was actually impacted by these issues.

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[410] Clearly, Comstock would not have been liable to PCS for damage from freezing, in light of

the clarification and exception included in the contract. However, I do not find the contract was

breached by the failure to enclose the building fully by November 1, 2009.

[411] Even if there was a breach of contract, I do not find Comstock has established that the issues

regarding cladding and heat caused delay to the schedule.

5) Is there liability for Crane issues?

[412] As was set out in the Execution Plan, Comstock intended to use the 10-ton and 25-ton

overhead cranes owned by PCS to hoist materials to high elevations during construction. Due to

problems that occurred during commissioning these cranes were handed over to Comstock later

than anticipated.

[413] The cranes were “rough set” in the compaction plant by September 17, 2009. Comstock was

responsible for installing the cranes and commissioning them before they were turned over for use

during construction.

[414] Comstock states in its brief that the 10-ton crane was handed over 128 days later than it was

promised, and the 25-ton crane was turned over 71 days later than it should have been. These “days

late” appear to be calculated based on the dates Comstock included in its tender construction

schedule, which contemplated Comstock beginning its work on the cranes August 27, 2009 and

completing the work September 22, 2009.

[415] However, the tender schedule was replaced by the baseline schedule. At page 6 of 13 of the

baseline schedule, mechanical equipment placement is shown as commencing October 13, 2009

and concluding October 28, 2009 for the 10-ton crane, and commencing October 22, 2009 and

concluding November 6, 2009 for the 25-ton crane.

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[416] Mr. McLellan testified Comstock needed access to elevation 216 to run temporary power to

the 10-ton crane and to elevation 130 to run temporary power to the 25-ton crane. He stated that

Comstock did not get access to the required elevations until October 24, 2009.

[417] However, a review of the baseline schedule indicates Comstock anticipated having access

to elevation 216 by September 11, 2009 and to elevation 130 by October 22, 2009. Comstock’s

July 11, 2010 schedule update indicates those dates were met.

[418] Upon accessing the required elevations, Comstock undertook the work it needed to do to run

temporary power to the cranes. Comstock requested AMEC arrange to have a representative from

the crane vendor on-site the week of November 9, 2009 for commissioning of the cranes.

[419] The commissioning did not occur as scheduled. The on-site vendor representative noted

grounding work for the rails had not been done by Comstock. Mr. McLellan acknowledged that

Comstock had missed the grounding.

[420] Comstock completed the grounding work. However, when commissioning began on or about

November 19, 2009, the vendor representative discovered that the variable frequency drives (VFD)

for the 10-ton crane was defective. A new VFD drive had to be supplied.

25-ton Crane turned over December 1, 2009

[421] After commissioning was completed, the 25-ton crane was turned over to Comstock on

December 1, 2009.

10-ton crane turned over January 28, 2010

[422] It took until late January 2010 for the required VFD drive to arrive. Commissioning was

completed and the 10-ton crane was finally turned over to Comstock on or about January 28, 2010.

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Problems with the cranes after turnover

[423] After turnover both cranes broke down frequently until approximately March 2010, due

primarily to issues with the crane reel.

When should the cranes have been available to Comstock?

[424] Mr. McLellan stated in the crane claim correspondence dated January 29, 2010:

Comstock had some responsibilities to complete various activities on the cranes in

order to make them fit for service. The Comstock work, including grounding, was

completed by Comstock during the week of November 16, 2009. Comstock

understands that its responsibility for the crane installation ended on November 20,

2009 and that the cranes should have been available for construction use on

Monday, November 23, 2009.

(underlining added)

[425] Mr. Fogarasi’s concludes at page 57 of his report:

Comstock’s responsibility for crane installation ended on November 20, 2009.

Allowing 2 working days for commissioning of the cranes, the cranes should have

been available for Comstock’s use on November 25, 2009. Therefore PCS/AMEC

is not responsible for any issues or delays related to the non-availability of the

cranes prior to November 25, 2009.

[426] I accept that two working days was reasonable to expect for the commissioning. Therefore,

I find the cranes should have been available to Comstock by November 25, 2009.

Responsibility for lack of availability of cranes after turnover

[427] The defendants argue that the cranes were never intended to be used as often as Comstock

used them. However, PCS and AMEC knew Comstock and other contractors intended to use the

cranes for construction of the compaction plant. No limits were placed on how often Comstock

could use them. The only clarification AMEC sought from Comstock was an acknowledgment that

other contractors would also be using them. I therefore reject the argument that there can be no

liability for crane issues because they were not intended to be used for construction.

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[428] After the cranes were turned over to Comstock, according to GC 37.3.5, Comstock was liable

to indemnify PCS for all loss and damage to the cranes caused by Comstock.

[429] As stated by Mr. Fogarasi at page 60 of his report:

... Therefore in order to have any entitlement for related impact costs, Comstock would first

have to show the breakdowns were not caused by Comstock.

25-ton crane

[430] Comstock damaged the 25-ton crane early in January 2010. Repairs appear to have been

done January 11 and 12, 2010 which would have resulted in down time to Comstock’s account.

[431] An incident on April 15, 2010 when the crane handrail struck the scissor lift handrail also

resulted in the site being shut down.

[432] Mr. McLellan testified about another near miss, although it is unclear when it occurred. He

said a PCS contractor was working in the area of the crane where they could not be seen and they

stuck their head up in between the crane rails and the cladding. The site was shut down for a day

or two.

[433] In June 2010 an incident occurred when workers overrode the crane’s safety mechanism.

This also resulted in downtime to Comstock’s account. Mr. McLellan estimated it at one day.

[434] These incidents would account for approximately six days of downtime for the 25-ton

crane to Comstock’s account. However, the 25-ton crane was down more than that. Based on

the entries in the daily logs and contractors’ reports, it appears it was down on 23 days.

[435] PCS and AMEC argue that Comstock has not proven this downtime was not Comstock’s

responsibility and suggest Comstock did not properly lubricate the 25-ton crane. This is based on

the comments made by crane inspector Mr. Webb in late January 2010 that the gears needed

lubrication and the May 28, 2010 Crane Inspection Report which indicated the inspector had

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“lubricated all available points, visually inspected all mechanical components tested on electrical

components”.

[436] In my view, the fact that the crane inspector lubricated available points does not mean the

crane was damaged because it had not been lubricated. As well, Mr. Webb also indicated in his

comments on the inspection report he did not believe there was any problem as a result of the

“nicks” on the crane.

[437] The Crane Inspection Report for the 25-ton crane also stated that the monorail interlocks

were bent due to trolley running into them. It is unclear when this damage occurred. I do not find

the defendants have established this contributed to the crane being down after January 25, 2010.

[438 ] Mr. Breed agreed that vendor-related deficiencies in the crane reel was an issue for the

10-ton crane. In my view, the evidence indicates both cranes had issues with their crane reel,

although it was a greater problem for the 10-ton crane than the 25-ton crane.

[439] Several of the entries in the foreman’s daily logs note the crane reel issue as the reason for

the 25-ton crane being down.

[440] With the exception of the six days of downtime to Comstock’s account downtime, I find

that issues with the 25-ton crane after it was turned over to Comstock are the responsibility of

PCS.

10-ton crane

[441] There is ample evidence in the daily logs and daily reports that the 10-ton crane was down

often in February 2010 because of the problem with the crane reel. This was a vendor issue.

There is no evidence the problems in May 2010 were caused by Comstock, and in my view they

also were vendor issues.

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[442] AMEC and PCS argue that Comstock caused damage to the 10-ton crane by operating it

outside the parameters that were agreed to between Comstock and AMEC based on the vendor’s

recommendations in mid-February 2010. It was not until February 22, 2010 that AMEC sent

out a directive regarding operational parameters. In any event, Comstock did not cause the

problems with the crane reel, as AMEC was well aware. The vendor deficiency in the crane reel

was the problem.

[443] I do not find Comstock is responsible for damage to or the downtime in relation to the 10-

ton crane.

[444] The contract contemplated that PCS would make available to Comstock working cranes for

its use in the construction of the compaction plant. While the issues related to the cranes after

commissioning arose from vendor deficiencies, PCS was responsible to procure the cranes,

through AMEC as its agent. I find that PCS breached the contract by failing to provide the cranes

as contemplated in the contract.

Did Comstock make reasonable efforts to mitigate crane issues?

[445] G.C. 23.9 provided:

Notwithstanding any of the provisions in this G.C. 23.0, it is a condition of relief

that CONTRACTOR exercises all reasonable efforts to avoid or minimize the

adverse effects of any delay, and cost therefrom, and no request in regard to delay

shall be allowed if CONTRACTOR after encountering a possible delay, is able to

adjust labour and equipment resources either by moving them to other parts of the

Work or if unable to adjust resources is able to adjust labour and equipment

resources either by moving them to other parts of the Work or if unable to adjust

the resources is able to reduce the resources in relation to the delay, or otherwise,

and in the opinion of the ENGINEER fails to do so.

[446] Mr. Allison testified that Comstock rented a large crane and used it to lift materials up to

elevation 205, through an opening that had not yet been closed up, and then the materials were

manhandled out of the basket to the fabrication stations. However because the rented crane was

located outside the building it was not as efficient as using the 10-ton crane inside the building.

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[447] Mr. Allison’s evidence was not challenged.

[448] The defendants argue that Comstock provided no explanation why it did not use an air

tugger it had on site. Mr. Breed testified that the air tugger was in the plant for 6 to 8 months.

According to Mr. Breed, an air tugger is faster than a chain hoist and can be faster than an

overhead crane.

[449] Although Comstock was cross-examined in detail on what steps it took to mitigate the

crane delays Mr. McLellan and Mr. Allison were asked no questions about an air tugger.

Comstock submits that counsel for AMEC should have asked Mr. McLellan or Mr. Allison about

the air tugger before attempting to impeach Comstock’s evidence on its mitigation efforts through

Mr. Breed’s evidence.

[450] I agree that Comstock was aware the defendants were raising mitigation as an issue. However it

was not apparent that Comstock should have called evidence about its apparent non-use of an air tugger.

This is not mentioned anywhere in the pleadings, and it does not appear in any of the read-in evidence

from discovery.

[451] On cross-examination Mr. Breed was asked if he ever raised with Comstock using the air tugger.

He said he may have, but he did not recall the discussion. There is no reference in the contemporaneous

documents and correspondence back and forth about the crane issues that Comstock could have used an

air tugger.

[452] In the circumstances I put no weight on the evidence that Comstock had an air tugger.

[453] The defendants also argue that there were other hoist wells in the building that Comstock could

have used. It is possible Comstock could have used other hoist wells but I fail to see how this would

have mitigated delays resulting from inability to use the cranes. The same issues with load limits and

lack of speed would apply. Further, Mr. Breed acknowledged in his evidence on cross-examination that

he witnessed the steps Comstock was taking using hoists to get equipment to the various levels of the

building, and what they were doing was satisfactory from his perspective.

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[454] Mr. Neis testified that if Comstock did not have the high-speed crane to pick up material and

deliver it to higher elevations, then Comstock should have been working on the first, second and

third floors and the ground floor where the MCC room was located.

[455] However, on cross-examination he acknowledged he did not know if Comstock could have

worked in the MCC room earlier in the project. He also agreed that if equipment was not in place,

Comstock could not have worked on the MCC room and that would push work further back and

result in a later completion date.

[456] AMEC and PCS have not established to my satisfaction that Comstock failed to take

reasonable steps to mitigate any delays arising from the crane issues.

Conclusion on breach of contract in relation to Crane issues

[457] The contract contemplated Comstock would be using the cranes for construction purposes

at section 8, Scope of Work. This was also referenced in Comstock’s Execution Plan, and in the

Clarifications and Exceptions document submitted with Comstock’s tender submission and

follow-up correspondence with AMEC.

[458] The cranes were not available to Comstock as contemplated in the baseline schedule. The

delay between November 25, 2009 and December 1, 2009 for the 25-ton and January 28, 2010 for

the 10-ton crane is the responsibility of PCS.

[459] I accept that the breach of contract arising from the unavailability of the cranes caused loss

to Comstock through inefficiencies that impacted various trades. I accept that this contributed to

Comstock’s productivity issues by interfering with Comstock’s planned progression of the work,

in particular the mechanical work. I find this caused delay to the work.

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6) Is there liability for late access to areas of the compaction plant?

[460] Comstock submits that its bid was conditional on it being granted access to the site so it

could perform its work. It says the contract was breached because it was not provided with the

required access.

[461] Comstock relies on the “implied term of every construction contract that the contractor will

be granted access to the site in order to complete its work” as per Heitzman and Goldsmith on

Canadian Building Contracts (5^thed.) at 4-45. It also relies on the statement of the Supreme Court

of Canada in Penvidic v. International Nickel Co. of Canada Ltd. [1976] 1 S.C.R. 257 at paragraph

16:

If in the contract one finds the time limited within which the builder is to do the

work, that means, not only that he is to do it within that time, but it means also

that he is to have the time within which to do it.

[462] Pursuant to section 6.1.8 of the Instructions to Tenderer, issued for CP-15 on May 30, 2009,

each bidder was required to submit a construction schedule setting out the manner and sequence

in which it proposed to perform the work. AMEC provided to tenderers a list of milestone dates

indicating when certain areas of the compaction plant would be ready for turnover to the contractor

for CP-15. There are two version in the tender documents. The version entitled “Milestone dates

revision” is at page 78 of the contract.

[463] In Mr. Dean’s report at pages 63 to 71, he compares the milestone dates shown in the version

at page 78 of the contract to the actual dates of availability of certain areas of the compaction plant,

as shown in Comstock’s final schedule update of July 11, 2010 (Ex 15.275). His analysis indicates

that not all of the dates on the milestone date revision were met.

[464] PCS argues that it was made clear in the tender documents that other contractors would be in

the building and that the dates of area availability provided were estimates only and were subject

to change. It states at page 68 of its Reply brief:

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The evidence in Comstock’s case was that it was aware certain areas would not be

available until well after contract award and further AMEC requested that

Comstock prepare its schedule using the updated area availability dates. Comstock

was expected to plan its work based on the areas available from time to time. There

is no evidence that Comstock’s schedule’s critical path was affected by the turnover

dates of areas in the plant.

[465] I agree that the milestone dates in the tender documents were qualified and subject to change.

Section 11.4 of the Instructions to Tenderer makes this clear in stating that:

Included in the Tender Documents is a Schedule reflecting OWNER’s current

understanding of the commencement and duration of work by Other Contractors,

which may affect or be affected by the Work. This schedule is based upon

information currently available to OWNER and is for general information

purposes. It is Tenderer’s responsibility to determine the particular

circumstances, which may affect or be affected by the Work.

[466] AMEC sent Comstock further revised area accessibility dates after the contract was awarded

on August 12, 2009. These revised dates were based on the schedules of other contractors whose

work preceded Comstock’s.

[467] Comstock incorporated most of the revised area availability dates into the baseline schedule

that was accepted by AMEC in late September 2009. Not all of these dates were met.

[468] Comstock references a number of areas of the compaction plant it says were turned over

anywhere from one day to 42 days late. I accept that the schedules show that turn over of these

areas did not meet the baseline schedule dates. However, it appears the only late accessed area

Comstock raised with AMEC was the MCC room on EL 141, which was identified in Comstock’s

November 17, 2009 Notice of Delays.

[469] Mr. Allison testified that when Comstock first arrived on site the cement floor had not been

poured for the MCC room at elevation 141. He testified that according to the milestone data

revisions Comstock expected to have access to the MCC room by September 30, 2009. However,

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I note that according to the baseline schedule, in which Comstock had incorporated the revised,

later date for access to the MCC room at elevation 141, Comstock did not anticipate having access

to the MCC room until October 19, 2009.

[470] In any event the MCC room was not available by either date. Mr. Allison testified that in

this period, they (another contractor) were still prepping to pour concrete on the floor.

[471] Mr. Allison also testified that after the floor of the MCC room was installed, Comstock

needed an outside ramp to allow it to safely lift equipment into the MCC room. Another contractor

on site, Ocean Steel, was responsible to build the ramp. Mr. Allison testified about a photograph

that shows the ramp on the outside of the compaction building that he said was taken on the day

Comstock’s project manager was told the ramp was ready for Comstock to start installing the

MCC’s. The date on the photograph is November 28, 2009. Comstock submits that because the

floor was not completed when it was originally supposed to be and because the ramp was not

installed on time, equipment could not be moved into the MCC room in the timeframe planned.

[472] In the exchange of correspondence arsing from Comstock’s November 17, 2009 Notice of

Delays both Mr. McLellan and Mr. Breed indicate the MCC room should have been available

October 25, 2009 but was only available November 2, 2009. The correspondence also indicates

that Comstock noted to AMEC it was looking for the platform or ramp to be installed by another

contractor so it could safely install the MCCs. I accept the ramp was only installed November 28,

2009.

[473] There was an implied obligation on PCS to make available the areas where Comstock

planned to work in accordance with the accepted baseline schedule. I find this implied obligation

was breached by PCS/AMEC with respect to the MCC room at elevation 141 and that some delay

to the schedule resulted.

7) Is there liability for interferences from other contractors?

[474] Comstock argues that when Comstock was able to access areas of the plant, other contractors

who were behind in their work caused interference and impacted Comstock’s productivity.

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a) Allegation of breach of contract

[475] Comstock submits that the interferences from other contractors was a breach of the contract.

It relies on Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460 (CanLII), where the

Court stated:

[433] An owner who employs several contractors in connection with a particular

construction project is obliged to schedule the work such that one contractor does

not interfere with the work of another. Any interference on the part of anyone

acting either as an employee or agent of the owner constitutes a breach of

contract: Foundation Co. of Canada v. United Grain Growers Ltd. (1995), 25

C.L.R. (2d) 1 (B.C.S.C.) and (1997), 1997 CanLII 4064 (BC CA), 34 B.C.L.R.

(3d) 92 (B.C.C.A.) at p. 109; Penvidic Contracting Co. v. International Nickel

Co. of Canada (1975), 1975 CanLII 6 (SCC), 53 D.L.R. (3d) 748 (S.C.C.); and

Conmac Western Industries v. Budd Bros. Ltd. (1990), 41 C.L.R. 161

(Alta.Q.B.).

[434] The courts in Conmac and Penvidic, both adopted the following passage

from Hudson’s Building & Engineering Contracts, 10^thed. (London: Sweet &

Maxwell, 1970) at pp. 317-8:

The degree of possession or access which must be afforded by an

employer must obviously vary with the nature of the work (which

might, for instance, in an extreme case be for repairs or

reinstatement of existing premises while still occupied) or other

circumstances (as in subcontracts, when the work often must take

place alongside and subject to interference by other trades or the

main contractor’s own work). But in the case of a new project the

main contractor will normally be entitled to exclusive possession

of the entire site in the absence of express stipulation to the

contrary.

Since a sufficient degree of possession of the site is clearly a

necessary pre-condition of the contractor’s performance of his

obligations, there must be an implied term that the site will be

handed over to the contractor within a reasonable time of signing

the contract, (See, e.g. Roberts v. Bury Commissioners (1870) L.R.

5 C.P. 310 at pp. 320 and 325) and, in most case, it is submitted, a

sufficient degree of uninterrupted and exclusive possession to

permit the contractor to carry out his work unimpeded and in the

manner of his choice. This must particularly be so when a date for

completion is specified in the contract documents.

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[435] A clause notifying the contractor that other contractors may be on site and

that it is obligated to cooperate with them and to allow harmonious continuation

of the work is not sufficient notice that the contractor would not have

uninterrupted possession of the site: W.A. Stevenson Construction (Western)

Limited v. Metro Canada Limited (1987), 27 C.L.R. 113 (B.C.S.C.) at p. 132 and

Walter Cabott Construction Ltd. v. Canada (1975), 1975 CanLII 1054 (FCA),

69 D.L.R. (3d) 542 (F.C.A.) at pp. 551-3.

Were there interferences?

[476] The contemporaneous Foreman’s Daily Logs and Contractor’s Daily Reports as well as

weekly meeting minutes in the October and November 2009 period indicate that Comstock was

voicing concerns about interferences from the cladding contractor blocking doors and other

problems.

East side cladding

[477] Mr. McLellan indicated in the November 17, 2009 Notice of Delays with respect to “east

side” cladding work:

This cladding has affected access to the hoist well areas. The contractor is very

cooperative but there are still delays trying to get equipment into the plant.

We ask that AMEC coordinate the clearing of the three large doors on the

east side to allow flow of the equipment into the building.

[478] Mr. Breed responded:

The cladding on the east wall of the compaction plant has been a hurdle that has

been difficult to deal with at times but has coordinated with the other contractors to

keep access available for their crews. As the cladding contractor approaches

completion the interruptions to access through the doorways is becoming minimal.

[479] Mr. McLellan responded that he appreciated the coordination that AMEC had been

providing of other contractors on the east side. He stated: “We agree that there is still a lot of

interruption and confusion and we will continue to work with AMEC to get through this.”

[480] I conclude that interferences from cladders on the east side was addressed. I do not find this

caused Comstock delay.

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Ocean Steel

[481] Comstock submits that Ocean Steel, the structural steel contractor, caused such interference

with its work that AMEC and PCS granted it a change order to complete Ocean Steel’s remaining

scope of work (Change Order 8) This change order for $350,000 was issued December 21, 2009

and was signed off on by PCS on February 4, 2010.

[482] AMEC and PCS recognized that Ocean Steel was causing interference with Comstock’s

planned work. This was reflected in the change order itself. The description states:

This change order is issued to cover the cost to have Comstock provide the

resources required to complete the installation of Steel in various locations of the

Compaction Plant as per the attached 1108 – PCS Compaction Plant Field Work

Log.

…

This change order will afford us the Opportunity to have Ocean Steel workforce

removed from the Compaction Plant, it will also allow Comstock to plan their work

in a more efficient manner, allowing them access to areas on a more timely basis.

[483] Mr. McLellan’s evidence was that the interferences from Ocean Steel continued into January

and February, 2010 as Ocean Steel was still completing work in the building.

[484] In terms of evidence of delay resulting from actual interferences from Ocean Steel, Mr.

Dean’s summary of Comstock’s Foreman’s Daily Logs called “AMEC delay – Impact Log Report

detail” lists issues on 4 days in November, 2009. Fumes appear to have delayed work for 20 to 45

minutes on each occasion.

[485] Comstock also indicates that Ocean Steel barricaded or “red-taped” areas where Ocean Steel

was taking out steel floors. The Court’s review of the Foreman’s Daily Logs indicate four days in

October 2009 where these interferences were recorded.

[486] These foreman complaints do not appear to have been reported up the line, as there is no

reference to them in Contractor Daily Reports.

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[487] I accept that there were some interferences from Ocean Steel. However Comstock has not

established these interferences were significant.

[488] With respect to the claim of breach of contract, PCS argues that the true principle of law that

arises from Penvidic, supra, and other cases cited by Comstock is that in the absence of clear

qualifications in the contract, there is an implied term of the contract that the owner must deliver

exclusive possession of the work site to a contractor.

[489] PCS submits that it was clear in the tender documents, pre-contractual correspondence and

in the contract itself that Comstock would not have free and clear access to the work site and

Comstock was well aware of this.

[490] PCS points to section 28 of AMEC’s July 9, 2009 correspondence posing questions in

response to Comstock’s clarification and exception list. AMEC asked Comstock to clarify its

statement that “We require free and clear access for installation” and to confirm that the CP-15

lump sum tender price was based on the fact other contractors would be working in and around

the compaction plant building during the execution of the contract. Comstock wrote in response:

“We realize there may be other contractors that may be working on the site. We require good

communication and planning to avoid conflict in the areas.”

[491] As well, the Scope of Work document contained in the contract states the following under

the heading Special Conditions:

The Work forms a portion of the total PCS Picadilly Project and must be

coordinated with work being carried out by OTHERS as well as the OWNER’s

ongoing operations. CONTRACTOR shall make due allowance for interface with

any other CONTRACTORS and shall be responsible for scheduling its day to day

activities in conjunction with those CONTRACTORS working concurrently on

the Jobsite.

[492] General Condition 36 is entitled: “Contractor’s relationship with other contractors.” It states:

36.2: OWNER may carry on other work at or near the Site of the Work either by

itself or by Other CONTRACTORS, in the circumstance, CONTRACTOR shall,

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without additional charge or claim, arrange the Work so that the Work of Others

can be carried on with a minimum of delay or interruption.

36.3: CONTRACTOR shall connect properly to, and cooperate and coordinate

the Work with, the Work of Other CONTRACTORs.

36.4: CONTRACTOR shall cooperate with ENGINEER, OWNER, and Other

CONTRACTORs engaged in simultaneous development of adjacent facilities,

coordinate access to the Site and the location of the Work, removal or adjustment

of temporary fences, sheds and utility services; and, coordinate the Work of

Subcontractors with efficient and continuous supervision.

36.5: If CONTRACTOR fails to cooperate with or coordinate the Work with the

Work of Other CONTRACTORs, or to adhere to the Construction Schedule,

CONTRACTOR shall not make any claims founded on delays which have

resulted from the lack of cooperation or coordination, and he shall save OWNER

harmless from all claims made by other CONTRACTORs, which are founded on

delays caused by the lack of cooperation or coordination.

[493] As well, the evidence from the July 15, 2009 bid clarification meeting indicates Comstock

was made aware it would not have free and clear access to the site and would have to coordinate

its work with other contractors.

[494] Mr. McLellan acknowledged that daily contractor coordination meetings took place on site.

He did not attend them. He indicated that Comstock’s superintendents attended these meetings.

[495] Mr. McLellan also agreed on cross-examination that AMEC had told Comstock it would not

have 100% exclusive access to the areas.

[496] I find it was clear in the contract that other contractors could be working in the same areas

as Comstock and that Comstock would not have unfettered access to the site. I do not find

Comstock has established the contract was breached by interferences from other contractors.

Even if there was a breach of contract, Comstock has not established it caused delay to the

schedule.

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b) Allegation of negligent misrepresentation

[497] Comstock states at paragraph 21.1 of the Claim that there were representations in the project

documents that induced it into submitting its lump sum bid and entering into the contract,

including that:

(e ) Comstock would have free and clear access for the installation of its work;

(q) AMEC and PotashCorp would provide Comstock with uninterrupted and reasonable

access to the Project and work areas from the date of the commencement of work

[498] At paragraph 856(b) of Comstock’s Closing Submissions it writes;

PCS and AMEC each made numerous actionable misrepresentations, which are described

above:

…

(iii) PCS/AMEC would and could provide access to the site so that

Comstock could complete its work, and would provide this access in

accordance with the Contract Schedule. In fact, PCS/AMEC knew or ought

to have known that preceding construction was already behind schedule,

that Comstock would not be able to begin its work on time and that the

Contract Schedule would be negatively affected as a result.

[499] The required elements for a finding of negligent misrepresentation are set out in Queen v

Cognos, supra. I find as follows:

Was there a duty of care?

[500] As I found with respect to the alleged misrepresentation regarding the state of the design of

the project, PCS and AMEC were in a sufficient relationship of proximity to owe Comstock a duty

of care to ensure accurate information was provided at the tender stage, absent any considerations

to negative or limit the scope of the duty.

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Was there an untrue, inaccurate, or misleading representation?

[501] Comstock appears to take the position that there was a misrepresentation with respect to

availability of areas of the compaction plant as well as a misrepresentation that Comstock would

have free and clear access, to complete the work, i.e. the plant would be unfettered by other

contractors.

[502] AMEC provided earlier milestone dates with the tender documents than those that were

incorporated into the baseline schedule. The tender documents made it clear the milestone dates

provided by AMEC that it used to prepare the construction schedule submitted with the tender

were estimates only and were subject to change. On July 9, 2009, AMEC sent a list of questions

to Comstock in follow-up to Comstock’s clarification and exceptions document submitted with

the tender bid. AMEC wrote:

27. CONTRACTOR to clarify: “We expect a timely delivery of OWNER

supplied equipment, material and apparatus to suit our installation plan and that

will not impact our proposed schedule.” CONTRACTOR to reference ROS dates

provided with tender package.

[503] Comstock replied:

We have attempted to provide a schedule that reflects the delivery and area

availability. The schedule will be reviewed and modified to suit the actual

deliveries. At this time, we do not see an impact on our schedule.

[504] Comstock was aware that the dates in the tender schedule were subject to change. Comstock

had access to the compaction plant when it began the work and indicated that it was working in

areas of the plant that were not affected by late turn over in its November 17, 2009 correspondence

to AMEC. I do not find there was a misrepresentation in the tender documents regarding access

to areas of the plant.

[505] With respect to interferences from other contractors, as noted above, the scope of work in the

tender documents and the general conditions which were included as part of the tender documents made

it clear that PCS reserved the right to have other contractors working in the plant and also indicated that

Comstock had to coordinate its work with other contractors.

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[506] I do not find there was a misrepresentation made to Comstock it would have free and clear

access to perform the work.

Reasonable reliance

[507] Even there was a misrepresentation through the milestone dates supplied to Comstock, I

would not find it was reasonable for Comstock to rely on this, as it was made clear at the tender

phase that the dates were subject to change and that other contractors would be working in the

plant while Comstock was working.

8) Is there liability for delays in change order processing?

[508] Comstock alleges at paragraph 24 (g) that the contract was breached by PCS/AMEC “failing to

value, approve and pay for change orders in a timely manner.” Comstock claims that the delay in

processing change orders disrupted Comstock’s planned sequence of work, by shifting work that ought

to have been performed in the fall of 2009 into the winter and spring of 2010.

[509] As noted above, AMEC revisions to drawings and design changes resulted in a large volume

of change order requests by Comstock. The change order approval process put in place by AMEC

and PCS required AMEC (usually Mr. Breed) to sign off on Comstock’s price quotation and/or

request for extension of time. Following this, the change order was forwarded on to a number of

managers at AMEC for their review and signature.

[510] For most change orders, with the exception of those for smaller dollar amounts, the change

order then went for review and signature by a number of managers at PCS culminating with Mr.

Bailey before it was returned to Comstock for Mr. McLellan’s signature.

Comstock raised issues with respect to turnaround of change orders

[511] Starting in mid-January 2010 the weekly meeting minutes reflect that Comstock began

requesting quicker turnaround of change orders so as not to cause schedule delays. The minutes

also reflect that no change orders had delayed the work, to date.

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[512] Starting in February 2010 and continuing into March 2010 the minutes of the weekly

meetings indicate AMEC was telling Comstock that IFC drawings were authorization to proceed,

and approval was only required for out-of-scope work. The March 2010 minutes indicate that

further discussion of the issue was required. It does not appear the issue was resolved between

Comstock and AMEC.

[513] In or around late February 2010 Comstock began writing on its quotations for changes to the

work a general statement that any delay in responding to the changes may result in additional

charges for delays or rework, and upon approval of the change order Comstock would adjust the

schedule accordingly.

[514] By April 2010, the number of change orders in progress or under review had grown

substantially from prior minutes. Comstock is noted as indicating that late decisions may affect

the schedule as the project moved closer to the end date.

[515] Mr. McLellan testified that it was not possible as of April 20, 2010 to achieve a May 31,

2010 completion date with the amount of Requests for Quotations (RFQ’s) and change orders

under review or in progress. On May 10, 2010, Mr. McLellan sent Mr. Bowes a list of drawings

approval requests, requests for information and change orders for which Comstock was awaiting

answers.

[516] In his May 19, 2010 correspondence Mr. Guite referred to the length of delay associated

with four change orders (23, 26, 28, 34) which ranged from 24 to 55 days for approval and stated

that PCS was in breach of the contract in respect of approval of changes, in terms of delayed

approvals, turnaround time and timing of requested changes. Mr. Guite wrote that AMEC could

“treat the whole issue as a further notice of claim” that the damages incurred are ongoing.

[517] The June, 2010 minutes indicate a long list of Comstock quotations were still under review

by AMEC, and there remained several RFQs for which Comstock was to submit prices.

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[518] Mr. Roul’s evidence was that the time for processing change orders was in the range of four

to six weeks. The evidence indicates that in some cases the delay was longer and in other cases it

was shorter. The longer delays were primarily associated with change orders for larger amounts of

money where IFC drawings were involved.

[519] It does not appear to be disputed that the contract required changes to the work arising from

design modifications issued directly by AMEC, and not through drawing revisions, to be

authorized by a change order before Comstock could proceed with the work.

[520] The dispute was whether Comstock was not authorized to proceed with changes to the work

showing on IFC drawings without a change order or a field work order. AMEC responded that

Comstock could proceed immediately with such changes.

[521] Mr. McLellan testified about the July 15, 2009 bid clarification meeting where Mr. Roul

commented, as reflected in the minutes of that meeting, “NO EXTRA WORK WILL BE DONE

UNTIL A CHANGE ORDER HAS BEEN APPROVED”. Mr. McLellan indicates that Comstock

took this to mean that it could not proceed with any changes without a change order.

[522] However, I find there is ambiguity in Comstock’s claim. There is evidence Comstock did

proceed in some cases with change shown on IFC drawings before receiving a signed change order.

[523] Mr. Roul testified that Comstock was doing extra work without receiving a change order,

whether an IFC drawing was involved or not, and that was fine with him. He said Comstock was

indicating it needed change orders because it wanted to add them to the progress pay certificates

in order to get paid.

[524] Comstock acknowledges in its Pre-Trial Brief at paragraph 72 that it did proceed with some

changes to the work without a change order in order to keep the project moving forward. Comstock

summarizes Mr. McLellan’s evidence at trial at paragraph 604 of its Closing Submissions as

follows:

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Mr. McLellan testified that Comstock generally did not perform the changed work

because Comstock had been specifically instructed to do absolutely no work on

change orders…without a signed change order.

(underlining added)

[525] Mr. McLellan was taken through a number of Comstock quotations to AMEC for changes

(referred to by Comstock as CCLs) and was asked if work proceeded for any of those items prior

to getting a change order. He responded:

Only on tab 77. This – we needed to order – it was a bit of a long lead delivery item

for high voltage cable in the transformer room.

(Trial Transcript, page 269)

[526] Tab 77 refers to Exhibit 12.77, which is correspondence dated December 17, 2009 from Mr.

McLellan to Mr. Roul in relation to CCL 9042, Rev.1 Supply and Install of additional high voltage

cable. The quote was for $31,620 or ($31,670) and it was included in Change order #9, approved

on February 17, 2010.

[527] Mr. Dean indicates in his report that Comstock completed $384,333 worth of changed work

in relation to wiring diagrams transmitted April 15, 2010, without having received a change order

for the work.

[528] Either Comstock understood it was prohibited from proceeding with changes shown on IFC

drawings without a change order, or it understood that it could proceed, but risked not being

granted a change order and therefore not being paid for work it completed. The latter appears more

likely in my view.

[529] The General Conditions contain several provisions that relate to this issue. G.C. 47.9.1 states:

Any major or significant Change to the Scope of Work or Changes to the terms of

the Contract shall be authorized, documented, executed and incorporated into the

Construction Documents by direct issue of a Contract Change Order.

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[530] However, G.C. 47.2 gives a revised construction drawing (i.e. a revised IFC drawing) the

same “status” as a Contract Change Order or a written Field Work Order in terms of authorizing

Comstock to proceed with changes to the work. It states:

Contractor shall not make any change in the work or perform any work contractor

considers to be a change in the work or any work contractor considers gives rise to

the need for an adjustment to the contract price or construction schedule unless in

pursuance of a written Field work order, contract change order, or a revised

construction drawing from owner or engineer, and no claim of a change to the

construction schedule or the completion date or for an addition to the contract sum

will be considered or allowed unless so ordered.

(underlining added)

[531] This interpretation is supported by G.C. 5.1 and G.C. 5.2, which indicate that if AMEC

issued additional instructions supplemental to IFC drawings, Comstock was required to obtain a

change order before proceeding with the work.

[532] G.C. 5.1 states:

Engineer may furnish to contractor, during the progress of the work, additional

instructions to supplement the Construction Documents and Contract and

Construction Drawings and Specifications as engineer considers necessary or

desirable for the performance of the work… Contractor shall comply with all

additional instructions.

[533] G.C. 5.2 states:

If contractor considers that any additional instructions issued under G.C. 5.1

constitute a change in the work, CONTRACTOR shall give written notice thereof

to engineer before proceeding with the work and further substantiate the claim in

accordance with G.C. 47.3 and must comply with G.C. 47.4 failing which

contractor may not make or enforce any claim against owner in respect of the

additional instructions or any change in the work constituted thereby.

[534] As well, G.C. 4.4 provided that:

Some Construction Drawings may be issued with certain areas of a drawing marked

HOLD where the ENGINEER is waiting for information from Vendors, or where

a portion of the design is incomplete for some part of the Work that

CONTRACTOR is not required to do at that time; in the event CONTRACTOR

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shall proceed with parts of the Work not marked HOLD on the Construction

Drawings.

[535] I find that to the extent that Comstock was delayed because it waited to proceed with changes

shown on IFC drawings, this was Comstock’s responsibility and did not constitute a breach of

contract.

[536] However, Comstock did have to wait for a signed change order or a field work order to carry

out work on other design changes that did not involve IFC drawing revisions.

[537] Comstock cites as examples of this changes in the work for CCL 9022 (gallery connections)

and for CCL 9033 (lighting changes on all elevations) that were approved in Change Order 9. The

time from when Comstock’s price for the work was agreed to by AMEC and when the change

order was signed by PCS was in the range of eight weeks.

[538] Another example is Change Order 23, for the supply of pressure relief valves. Comstock

provided a quote of $13,373 on March 18, 2010 and indicated that the valves had a 15 to 16 week

delivery. Mr. McLellan requested the change order be expedited so the schedule would not be

delayed. Change Order 23 was signed by PCS on May 3, 2010.

[539] On cross-examination, Mr. Roul agreed that this request to expedite should have “gone on

the urgent pile” but most likely did not. He also agreed that by the time Comstock received a

change order for this work, it would have been impossible for the work to be done before May 31,

2010.

[540] Comstock also references Change Order 37 (supply RTD and temperature transmitters).

Comstock provided a quote for this on April 27, 2010. In the CIC correspondence attaching the

quote, Mr. McLellan states delivery is three to four weeks. The change order was submitted for

signing on May 4, 2010 and was signed by AMEC/PCS by May 22, 2010, although it appears it

was only sent to Mr. McLellan on June 2, 2010.

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[541] No timeframe is set out in the contract for the “processing” of change orders once the claim

was submitted and AMEC determined it was valid. I find there was an implied term of the contract

that change orders be processed in a reasonable timeframe.

[542] What is reasonable must be considered in the context of the contract itself. As G.C. 19.1

indicated:

Time is of the essence of the Contract and remains so notwithstanding any

amendments to the Construction Schedule or the date of Final Completion.

Furthermore, time is of the essence for the completion of the whole of the Work

and for commencement and completion of those portions of the Work for which

commencement and completion dates are shown in the Construction Schedule.

[543] In my view, a period of one month or more to approve change orders for a contract that was

supposed to be completed in less than ten months is unreasonable.

[544] I note the defendants allege Comstock bears responsibility for delay in processing change

orders because it overinflated its initial pricing for changes to the work, which led to time being

expended for AMEC and Comstock to come to an agreeable price.

[545] I acknowledge that some change orders, for example Change Order 6 (RCA 11) and Change

Order 17 (changes to fire alarm system) involved discussions over several weeks that led to a lower

price than what Comstock quoted initially. However, this was not the norm. In the majority of

cases, Comstock’s initial quote was accepted by AMEC. I do not find that this was a significant

factor in the processing time for change orders.

[546] I find the contract was breached by the lack of timely processing of change orders that were

required for Comstock to proceed with work on “non-IFC drawing” design changes.

9) Late/defective equipment, materials, instruments

[547] Comstock alleges that PCS/AMEC breached the contract by failing to deliver certain

equipment, materials or instruments on time or at all. Comstock submits that this delayed the

project and made it impossible for the work to have been completed by May 31, 2010.

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Bucket elevators

[548] Comstock’s scope of work included installing a number of bucket elevators. Separate

activities were required for each, including boot installation, intermediate sections and head

section, alignment of elevator and guide installation, chain installation and bucket installation.

According to the baseline schedule, the work on each of these activities was staggered for each

elevator with boot installation for the first bucket elevator to commence October 6, 2009. Bucket

installation for the last bucket elevator was to be completed by May 21, 2010.

[549] Delivery of certain parts for the bucket elevators was delayed. Mr. McLellan testified that

delivery of the pull cord switches was delayed. He referred to weekly meeting minutes for April

16, 2010 that stated they would not be delivered until May 21, 2010, the date the last bucket

elevator was to be completed.

[550] On May 10, 2010 Mr. McLellan wrote to Mr. Bowes to indicate bucket elevator torque arm

brushings were being returned to the vendor.

[551] On May 15, 2010 Mr. McLellan wrote in correspondence accompanying the schedule

submission that Comstock was maintaining a July 15, 2010 completion date but could not give

firm dates until a number of issues were resolved, including getting bucket elevator components

back from manufacturer.

[552] At the weekly coordination meeting on May 18, 2010 it was noted that bucket elevator drives

were to be removed and returned to the vendor for repair. Mr. McLellan testified that five of the

drives were defective and had to be sent back to the vendor in Minnesota to be repaired.

[553] Mr. McLellan testified that by May 28, 2010 the buckets were installed, but the elevators

could not be completed without the drives. Mr. Breed agreed that the bucket elevators could not

be completed without the drives.

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[554] The June 15, 2010 weekly meeting minutes indicate that the bucket elevator drives were in

the AMEC warehouse. However, according to Comstock’s July 11, 2010 schedule, bucket

installation was not complete by that point and the work was showing as pushing out into mid-

September 2010.

[555] When the drives arrived back, Comstock was directed to lift them back into place (CCL

9160). Comstock requested a change order for this work and submitted a price for it on June 10,

2010. Comstock did not request an extension to the schedule, but noted on the quote that the new

schedule completion date was October 6, 2010. It wrote that on approval of the change order

Comstock would review the impact of this change on the schedule and notify AMEC of any

extension requested.

[556] Change Order 59 for the work of lifting the bucket elevators back in place issued in July

2010. However, it was not signed by Comstock and the work was not done by Comstock.

Chutes

[557] The baseline schedule indicated that chutes and grizzlies were to be completed by April 9,

2010.

[558] In March 2010, AMEC had to return two chutes to the manufacturer (Sunny Corner) because

they were missing feet on one side.

[559] The May 18, 2010 weekly meeting minutes indicate the chutes were to be returned to

Comstock within one week. Mr. Breed testified on cross-examination that at this point Comstock

was waiting for two or three chutes to come back.

[560] In a letter from Mr. McLellan to Mr. Bowes dated May 28, 2010, Mr. McLellan provided a

list of planned activities not completed. The list included the chute for drag conveyors on elevation

321 to elevation 309. Comstock indicated it was waiting for AMEC to advise on this.

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[561] On May 31, 2010, Mr. McLellan wrote to AMEC and indicated that a section of a chute

could not be located (CIC 4162). Mr. McLellan requested a one week extension to the schedule

after the part was delivered to install the remaining chutes.

[562] AMEC responded on June 4, 2010 that the section of the chute had been located at the

fabricator shop and would be delivered to site on or around June 14, 2010.

[563] Mr. McLellan testified that on termination day on July 21, 2010, Comstock was still looking

for some chutes that had to be sent out to be modified, and all pipe supports had not been received

although he had requested them several times.

[564] There were also issues with chute supports. Mr. McLellan sent CIC 4422 to AMEC on May

14, 2010 requesting additional pipe clamps for hanging chutes. On May 20, 2010 Mr. Breed wrote

back and stated that the chute supplier had ordered the supports and AMEC would advise of the

delivery as soon as it was available.

[565] Mr. McLellan testified that on termination, Comstock still had not received hanger brackets

for the chutes and most of the chutes were hanging on chain falls that were Comstock’s. Mr. Breed

sent an email to Sunny Corner Enterprises on July 21, 2010 asking Sunny Corner to expedite the

supports as Comstock was waiting for them. Mr. Breed agreed that permanent supports were

required to finish the chutes.

[566] Mr. Dean states in his report at page 118 that Comstock’s July 2010 schedule update showed

chutes and grizzlies being delayed until September 10, 2010.

VFD for MCC 66

[567] Comstock discovered damage to a variable frequency drive (“VFD”) for Motor Control

Centre 66 (“MCC 66”) when it unwrapped the MCC. Mr. Allison testified that Comstock

immediately notified AMEC of the problem. It appears this was sometime before January 17, 2010.

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[568] By CIC 3386 dated February 8, 2010, Mr. McIntyre advised Mr. Allison to have the damaged

VFD removed and returned to the warehouse so that AMEC could send it back to Allen Bradley

(the vendor) for repair. It took until April 9, 2010 for the damaged VFD to be returned to site.

According to the April 13, 2010 weekly meeting minutes, the VFD replacement was on site and

was being installed that day.

[569] Mr. Allison testified that Comstock had planned to complete the installation of the MCC and

the cable terminations by April 21, 2010 but this work was delayed because Comstock did not

have the VFD, and therefore could not bolt together the MCC and have an Allen Bradley

representative go through it before Comstock began their terminations (the process of bringing the

cables into the MCC centre/VFD and then terminating them on the terminal strips inside the MCC.)

[570] The February 26, 2010 schedule shows a start date of April 20, 2010 and a finish date of

April 21, 2010 for terminations. However on cross-examination, Mr. Allison conceded that the

entry in the February 26, 2010 schedule appeared incorrect, because it would have taken more than

one day to complete the terminations. He testified it usually took about eight days to complete

terminations.

[571] The July 11, 2010 schedule showed cable terminations on MCC 66 commencing April 26,

2010, and finishing August 17, 2010.

Hangers for screens

[572] Comstock also notes that certain hangers for screens arrived damaged. Comstock reported

this in September 2009. Mr. Breed responded in January 2010 that the vendor would replace the

damaged hangers. In his report Mr. Dean states that some of Comstock’s September 2009 work,

according to the baseline schedule, involved the screens and Comstock could not proceed until the

issue was corrected by AMEC’s vendor.

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Was the contract breached?

[573] There does not appear to be any dispute that PCS/AMEC were responsible for ensuring the

parts for the bucket elevators, the chutes and chute supports, the VFDs for the MCCs and hangers

were available in order for Comstock to complete the work.

[574] PCS suggests Comstock should have notified AMEC earlier of these issues. However, the

issues with the VFDs for the bucket elevators occurred when Comstock installed them and the

MCC VFD issue was discovered when it was unwrapped. I do not find Comstock could have

notified AMEC sooner of these issues.

[575] As stated at paragraph HCU – 43 of Halsbury’s Laws of Canada, Construction 2017 1st ed.

(Toronto: Lexis-Nexis Canada, 2017):

Where the owner is responsible for the supply of construction materials, there is an

implied obligation to supply those materials in the stipulated form and in sufficient

time to allow the contractor to meet the contract schedule.

[576] I find the contract was breached by the failure to supply equipment and materials, and this

led to delays to the planned work.

II.

Did Comstock cause/contribute to its own delay?

1) Early delays and labour losses

[577] Mr. Dean states that Comstock was responsible for some early delays and reduced labour

levels at page 136 of his report. He testified that Comstock was “not perfect” in getting started

with its mobilization. For example, it was delayed in obtaining certain materials (unistruts) when

it arrived in New Brunswick because they were not available when Comstock tried to order them.

[578] Mr. Dean did not quantify the early delay for which Comstock was responsible. He testified,

as stated at footnote 54 at pages 136 – 137 of his report, that this was not necessary since Comstock

had mitigated any delay for which it was responsible by running a night shift.

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[579] Mr. Dean also indicates in his report at page 145 that Comstock suffered significant non-

compensable pipefitter labour losses.

[580] Mr. McLellan acknowledged Comstock was having productivity problems with pipefitters

early on, starting in September 2009 although he described the issues as being “on occasion”. The

evidence is not clear what the extent of the problem was.

[581] Mr. Dean is of the opinion that any Comstock-responsible delays or non-compensable

labour losses were mitigated by Comstock. He writes at page 142 of his report:

The important observation to be made from the above data is that

Comstock’s shortfalls in labor and its non-compensable labor losses did not

cause the project to be delayed. Due to its voluntary night shift work (for

which there is no claim), Comstock worked a sufficient surplus of hours at

its own cost to avoid causing a delay to the Project. Comstock ultimately

overcame the entirety of its labor losses before the contractual completion

date.

[582] Mr. Dean did not quantify the amount of delay or labour losses that he said was mitigated.

He acknowledged on cross-examination he had not taken into account the fact that Comstock

intended to run a night shift as set out in the Execution Plan submitted with Comstock’s bid.

[583] When pressed further on how he knew Comstock had mitigated the delay for which it was

responsible without knowing what that delay actually was, Mr. Dean responded that his opinion

was based on Comstock’s correspondence in which it indicated it would continue to run the night

shift until the delay was mitigated.

[584] Comstock had estimated its peak workforce for contractor and subcontractor forces would

be 200 people. By the week ending February 26, 2010, after the night shift commenced, Comstock

had over 300 personnel on site and over 400 personnel at some points, until May 22, 2010.

[585] I accept that Comstock made efforts to mitigate the delay it was experiencing on the project

and it is likely the additional manhours and personnel mitigated some of it. However, without

knowing what actual amount of delay was being mitigated, and without having considered the fact

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Comstock had intended to run a night shift in any event, I cannot conclude that Mr. Dean had a

factual basis to determine that Comstock mitigated all productivity losses and delay for which it

was responsible.

2) Comstock’s productivity

[586] Comstock had problems with productivity levels. AMEC made several requests for

Comstock’s productivity reports, which were required by the contract, in the fall of 2009.

However, Comstock did not provide productivity reports to AMEC until March 30, 2010. Mr.

McLellan testified that AMEC could generate the reports itself off the Primavera schedules.

[587] Mr. McLellan prepared productivity reports for his own use. He testified these were not

100% accurate, and he did not wish to share them with AMEC. However Mr. McLellan reluctantly

provided AMEC with his report dated February 25, 2010. This report was broken down by

activities on the schedule and budgeted hours for each, percent complete, hours earned, hours

spent, productivity and variance. At the end of the report, Mr. McLellan indicated overall

productivity since the beginning of the work was 67%.

[588] The March 8, 2010 weekly meeting minutes reflect that productivity was at 63.3%.

[589] Mr. Thompson indicated in his March 23, 2010 correspondence to Mr. McLellan that

Comstock had reported overall progress of 2.17% for the four week period between February 12,

2010 and March 13, 2010 or an average of .543% progress per week. He stated that assuming that

the information was correct and the March 13, 2010 overall percent completion of 41.8% was

correct and approximately 58% of the work remained to be completed, the project had to earn

5.8% of the schedule every week until completion to meet the May 31, 2010 completion date.

[590] Mr. McLellan did not dispute the calculation. However, he testified that by this point in time

completion by May 31, 2010 “was long gone” because Comstock did not have the cranes on time

and still did not have reliable cranes. Comstock’s schedule had been showing a July 15, 2010

completion date since March 2010.

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[591] The situation appeared to improve in April 2010. The April 13, 2010 weekly coordination

meeting minutes indicate:

Comstock added 100 men last week. Didn’t get the desired % complete. Comstock

is reviewing the performance.

Comstock achieved 2.4% progress since last week by AMEC’s estimate based on

the submitted schedule. Needed 6% for past two weeks but got 5.4%. Overall

completion is 56.45%. Comstock is pushing ahead and reviewing every area. July

15th is still the goal.

[592] The May 11, 2010 weekly meeting minutes indicate the schedule was showing that 68.46%

of the project was complete and that Comstock’s productivity was 2.45% for the past week.

Comstock cancels the night shift

[593] At the May 18, 2010 weekly meeting Comstock confirmed that it was cancelling the night

shift as of Wednesday, May 19, 2010. At this point project to date manhours were 381,780, an

increase of 236,209 manhours. The schedule was showing 71.9% complete although AMEC was

disagreeing with some percentages showing on the schedule. Comstock was reporting that it had

achieved 3.47% over the past week.

[594] However, the May 25, 2010 meeting minutes indicate that Comstock had pulled the night

shift and was indicating a July 15, 2010 was not achievable.

[595] There is no reference in the evidence to productivity achieved in June, 2010. The minutes

from the June 1, June 8 and June 15, 2010 meetings indicate that the schedule was now showing a

construction completion date of October 6, 2010.

[596] PCS points out that AMEC’s certification for June 2010 in the amount of $656,894

represented 1 to 2% of the overall contract value at that point. Comstock argues that it performed

more work than what AMEC certified, but ultimately Comstock signed off on the certification.

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[597] It is apparent that Comstock’s productivity was low. While it appears productivity improved

in April 2010, it began sliding again starting in mid-May 2010.

What were the causes of low productivity?

a) Crane issues, interferences from other contractors, weather and heat issues

[598] Comstock attributes its lost productivity to a number of factors it says were caused by

PCS/AMEC breaches of the contract, including the crane issues, interferences from other

contractors, weather and heat issues in the compaction plant.

[599] I have already addressed these issues in this Decision. The issues with the availability of

the cranes is the only one that Comstock has established negatively impacted its productivity.

b) Extra time required to assemble certain equipment (the flake breakers, MCCS and lighting)

[600] Comstock also claims several pieces of equipment were delivered to the site in a way that

Comstock could not have anticipated when it put together its bid. Comstock says this caused its

workers to expend many additional hours over what was anticipated disassembling and/or

assembling and reassembling equipment and this impacted productivity and contributed to delay.

[601] In particular Comstock submits that the flake breakers, the MCCs and light fixtures required

significantly more handling than Comstock planned. While I accept that Comstock spent more

time on these items than it had planned and this had an impact on Comstock’s productivity, the

issue is whether PCS/AMEC bear responsibility.

Flake breakers

[602] Flake breakers were part of equipment to be procured by AMEC on behalf of PCS as per the

contract, section 8 (Technical Specification).

[603] When Comstock was preparing to hoist the flake breakers up to elevation 111, it ran into a

problem when it discovered the weight of the units exceeded the hoist rail capacity. As a result,

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Comstock had to disassemble and reassemble the flake breakers resulting in many extra hours of

labour it had not anticipated.

[604] Mr. McLellan testified he did not recall receiving vendor drawings for the flake breakers.

He said AMEC provided pictures of them. He said Comstock did not know the weight of the flake

breakers when they made their bid but used their “experience”. (Trial Transcript, page 209)

[605] The Vendor Information contained in the Scope of Work that was part of the Invitation to

Tender references the flake breakers. Mr. Breed testified that vendor drawings and a manual for

the flake breakers were available to bidders on the project website at the time of tender and showed

the weight of the flake breakers and their dimensions. I accept Mr. Breed’s evidence.

[606] Comstock argues there is no evidence the vendor drawings and manual demonstrated

that the flake breakers would have to be disassembled in order to be hoisted. However, as stated

by the New Brunswick Court of Appeal in Province of New Brunswick v. EBC Inc., 2007 NBCA

87 (CanLII):

[49] Thus, absent “specific arrangements to the contrary”, a contractor who

chooses to tender for a project assumes a risk, and, if the successful tenderer,

having assumed the risk, the contractor must bear all consequences if it

misjudged the cost of using its selected method of construction. As such, a

contractor has a choice of whether to bid for a project. If it chooses to bid, the

contractor should determine whether “the work can, in fact, be carried out in

accordance with the specifications,” and by the method it proposes to use to carry

out the work. It must do its own “due diligence” in that regard before deciding

either to tender, and if so, in preparing its bid. Therefore, the requisite analysis

to determine this case depends on whether the Contract contained “specific

arrangements to the contrary” that would void the contractor’s legal

responsibility, as prescribed by Auto Concrete.

[607] Comstock provided no evidence that there were “specific arrangements to the contrary”

that would void its legal responsibility for determining at the time of tender whether the work

could be carried out by the method it proposed, at the estimated cost.

[608] Comstock was responsible for determining if it could hoist the flake breakers as planned.

Mr. McLellan’s evidence was that Comstock did not know the weight of the flake breakers at

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the time of tender, and that, along with the size of the flake breakers was what prevented

Comstock from being able to lift them fully assembled as Comstock intended.

[609] I find that Comstock made an incorrect assumption that they could lift the flake breakers

fully assembled without verifying important details such as the weight of the flake breakers. I am

satisfied the information that would have allowed Comstock to verify these details was available

at the time of tender.

[610] I do not find there was any breach of contract on the part of PCS and/or AMEC in respect

of the flake breakers or that PCS/AMEC is responsible for the unanticipated productivity impacts

related to the flake breakers.

MCCs

[611] The MCCs were delivered in pieces that had to be assembled into sections. Comstock

submits it was required to perform significant extra work to assemble the individual section that it

did not anticipate when it made its bid.

[612] Mr. McLellan testified that normally MCCs arrive with several individual sections joined

together. These MCCs arrived in individual sections. (Trial Transcript, page 898)

[613] Mr. Dean writes at footnote 40 at page 69 of his report:

… Because AMEC procured this gear without it being preassembled at the factory

into three pre-joined sections (which is an industry standard), it caused Comstock

added labor and time to rig and material handle the MCCs from AMEC’s

warehouse to the MCC room, and then to assemble them. Comstock was not

provided vendor data by AMEC that would have disclosed the MCC sections were

all supplied “loose” and not pre-sectioned. By purchasing the MCC’s un-joined,

AMEC saved procurement costs and shifted a greater expense to Comstock. This

is true because factory labor is less expensive and more efficient than doing this

work at the jobsite.

[614] In his oral evidence Mr. Dean testified that “the equipment tag number” provided by AMEC

to Comstock indicated there would be four pieces of “gear” and that if there were four pieces,

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Comstock would be required to make three connections, as the number of connections is always

one less than the total number of pieces. Mr. Dean testified that:

Comstock anticipated that since there would be three sections joined together and

then one section loose, its bid would be based on only doing one connection. With

that line of thinking, taking everything down to the bottom through all of the pieces

of gear with the number of sections, there were 131 pieces of gear shipped.

Comstock’s bid contemplated it would be 33 connections. They actually had to do

110 sections. So roughly they had to do 70 percent additional labor.

[615] Mr. Dean went on to testify that he concluded Comstock spent about 8,530 additional hours

for a total claim amount of $505,829.

[616] On cross-examination, Mr. Dean acknowledged that his statement that Comstock was

unaware the MCCs would be unassembled was based on Comstock’s representation to him. He

testified he had not been able to locate vendor drawings in the file.

[617] Mr. McIntyre for AMEC was questioned on cross-examination about a drawing of MCC 51

dated October 28, 2009. Mr. McIntyre agreed that the drawing did not indicate how the MCC was

going to be shipped in terms of the form in which it was going to arrive on site, but he stated “nor

should it.”

[618] Comstock is claiming it incurred significant extra costs because it could not have foreseen

when it made its bid that the MCCs would be shipped as they were. Mr. Dean’s evidence is that

Comstock received equipment tags which suggested four pieces of equipment would be delivered

per MCC. However, a review of Mr. Dean’s work product in relation to this claim indicates these

equipment tags relate to what was actually delivered on site.

[619] Comstock made an assumption the MCCs would be pre-joined. That may have been based

on what is usual in the industry. However, as noted above, Comstock had the obligation when

preparing its bid to do due diligence to ensure it could carry out the work as it proposed to do. That

included examining the tender drawings carefully and reading the specifications and all other

tender documents.

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[620] The invitation to tender included in the instructions to tenderer section 4.2:

Tenderer shall ensure all Tender Documents set out in Section 4.1 above have been

received and, in particular, that all the Specifications and Drawings listed in the

Tender Documents have been received. Tenderer shall notify ENGINEER

immediately, in writing (by fax or email), of any missing documents.

[621] As per section 5 of part 8 of the contract (Technical Specification):

The Construction Drawings, Electrical Equipment List and Power and Control

Cable Schedule indicate all electrical equipment and cable that the CONTRACTOR

shall install as part of the work. Electrical Installation Specifications and Vendor

Equipment Erection and Detail Drawings as supplied, are to be used by the

CONTRACTOR in conjunction with the Construction Drawings to further define

the work.

[622] The MCCs are listed as electrical equipment and materials supplied by the owner covered

by Section 5.

[623] If Comstock was missing the specifications and/or vendor drawings for the MCCs,

Comstock had the obligation under section 4.2 of the Invitation to Tender to notify AMEC

immediately of any missing document. It did not do so, and has not provided the Court with any

evidence that it ever attempted to get this information.

[624] I find Comstock made an incorrect assumption about how much work would be required to

assemble the MCCs, and it has not established this was the result of any breach of the contract on

the part of PCS or AMEC.

Light fixtures

[625] PCS was obligated under the contract to provide light fixtures for the compaction plant. Part

8 of the contract (Technical Specification - Scope of Work) provides that the contractor “shall

assemble, install, test and pre-commission all owner supplied light fixtures…”

[626] Mr. Dean is of the opinion that this work was not part of Comstock’s scope of work. He

includes in the Direct Cost Charge claim the amount of $27,278 for 1,200 hours of added labour

to assemble AMEC supplied lights. In his work product for this item he writes:

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Comstock has advised it was not provided vendor drawings for AMEC-procured

light fixtures that would have indicated the light fixtures were unassembled. The

following pricing based on daily reports and other documents are for Comstock’s

added costs to assemble the light fixtures before they could be installed.

[627] In addition to the daily reports that reference time spent assembling the light fixtures, Mr.

Dean attaches an email from Mr. Allison setting out the work Comstock carried out with respect

to the lights and what appears to be a vendor document for N2MVF Series Compact Fluorescent

lights that was emailed to him by Mr. Allison on August 30, 2016.

[628] However Mr. Allison did not testify about the vendor manual. He testified that the light

fixtures were time-consuming because they came partially assembled and had to be disassembled,

put in the core assemblies, reassembled and then hung. He testified that there were approximately

600 light fixtures in the compaction plant and each would have taken two hours to complete.

[629] Mr. Allison’s evidence does not provide the Court with any information about what

Comstock’s expectations were at the time of tender, regarding whether the light fixtures would

arrive disassembled or not.

[630] Comstock has not established that PCS and/or AMEC bear responsibility for Comstock

spending additional hours above what was estimated for assembling the light fixtures.

c) Loss of productive time walking from trailers to site (washrooms/lunchroom)

[631] In his evidence, Mr. McLellan attributed a loss of 70 minutes a day of productive time due

to workers having to walk 10 to 15 minutes to get from the worker’s trailer

(washrooms/lunchroom) and the work site.

[632] Comstock had several tours of the site before the contract was finalized. The tender

documents indicated Comstock was required to become familiar with the site and the facilities and

the area of work.

[633] Comstock had indicated in the execution plan that it would install a construction elevator in

the plant if possible and would install temporary washrooms within the building.

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[634] Mr. McLellan testified that Comstock made a decision not to install a construction elevator

sometime after August 2009. After walking around the site Comstock decided there was no good

location to install a construction elevator.

[635] Mr. McLellan also testified Comstock could not install toilets at higher elevations until

January 2010 because they had no cranes. However, when cranes were available, the union rejected

the idea because it did not feel the toilets would be sanitary enough.

[636] I accept that Comstock was unable to install a construction elevator or temporary washrooms

at high elevations after January 2010. However, productivity losses resulting from these issues are

not PCS or AMEC’s responsibility. Comstock was aware of the site layout. In my view it should

have accounted for potential lost productivity in the event it could not install the

elevator/washrooms.

d)Reduced work week

[637] In December 2009, Comstock indicated to AMEC that due to conditions in the compaction

plant building (the building was not completely enclosed and temporary heat was not in place)

and poor lighting outside on pathways it would work 8-hour days rather than the contractually

required 10-hour days, five days a week.

[638] AMEC did not object to this change in hours. In correspondence dated January 5, 2010

AMEC stated that the change in work hours should not have an effect on the contract schedule,

but if AMEC determined that it was having an effect, it anticipated Comstock’s cooperation in

taking measures to alleviate impacts.

[639] Comstock worked this reduced schedule between December and February 2010. By

February 2010, Comstock was 10% behind schedule. There is no evidence however that AMEC

determined that Comstock’s reduced hours in this period required Comstock to accelerate the

schedule.

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[640] In June 2010 Comstock again reduced its work week to 40 hours for a period of a few weeks.

According to Mr. McLellan, its reason for doing so was because it was working a lot of overtime

and AMEC would not accept Comstock’s requests for a change order, which left Comstock

frustrated.

[641] As noted earlier, Comstock’s productivity was improving in April 2010, but it declined

again. I accept that Comstock’s reduced hours/work week in this latter period had an impact on its

productivity.

e) Manlifts

[642] At page 9 of Mr. Dean’s report he states that late availability of the cranes and the impact of

design changes, combined with being forced to rely solely on shared scaffolding rather than

manlifts, caused the project to become congested with scaffolding and materials, making vertical

and horizontal movement of manpower and materials much more difficult, inefficient and

expensive. He is of the opinion this caused labour inefficiencies that would not have been

reasonably foreseeable.

[643] The evidence of congestion due to scaffolding presented by Comstock consisted of Mr.

McLellan’s testimony about photos he took while on site. He testified about photos taken February

24, 2010, March 24, 2010, April 25, 2010; and on an unknown date. These photos appear to show

congestion at various elevations due to scaffolding.

[644] However, Joe Riley, project manager for Lockerbie on CP-78, testified that when Lockerbie

initially bid on CP-15, he recognized that it would be a “tight build” in light of the available space

in the plant.

[645] Mr. Dean indicates at page 166 of his report that if AMEC/PCS had permitted it, Comstock

would have rented manlifts to utilize in lieu of using scaffolding as the sole means of accessing

overhead work in grated areas. He states that Comstock experienced impediments because

AMEC/PCS would not permit it or its subcontractors to use these manlifts on grating surfaces

throughout the project.

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[646] In November 2009, Comstock lifted a small scissor lift to the MCC room to install ductwork.

The scissor lift weighed 2800 pounds. AMEC said Comstock could not use it and had to take it

down.

[647] Mr. McLellan testified he had never seen a site where the contractor could not use a manlift

on concrete floors. However, it is apparent from the CIC exchange on this issue that AMEC

required certain information about the scissor lifts. It is not apparent that Comstock ever provided

the required information to AMEC.

[648] In March 2010, one of Comstock subcontractors wanted to use a manlift or manlifts on

grating floors. Mr. McLellan wrote to AMEC on March 3, 2010 and indicated that the grating

would be reinforced with three-quarter inch plywood or other reinforcement suggested by AMEC.

Mr. Breed wrote back on March 3, 2010 and said the structural steel engineer had indicated areas

with grating were not designed for this type of load or manlift and the manlift would not be

allowed on the grated areas.

[649] By correspondence dated April 27, 2010 Mr. McLellan forwarded an aerial work platform

model that the subcontractor was asking to use. Mr. Breed wrote back May 3, 2010 and stated that

the proposed aerial work platform and plywood base was not accepted by their engineers.

[650] Mr. Dean testified AMEC should have helped Comstock figure out how to use manlifts.

However, it was not a requirement of the contract that AMEC tell Comstock how it could use the

manlifts. Comstock has not established that AMEC’s refusal to allow manlifts over the grating

floors was unreasonable. It also has not established that the inability to do so caused unforeseeable

congestion arising from scaffolding.

f) Lack of scaffolders

[651] Mr. McLellan was asked on cross-examination if Comstock had an issue with a lack of

scaffolders. His evidence was that once in a while, there was a shortage of scaffolders, but

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Comstock had a scaffolder requisition plan and could get more scaffolders in when they needed

them.

[652] However, the Contractor Daily reports indicate that Comstock foreman/superintendents and

subcontractors were complaining about waiting for scaffolders on numerous occasions in April,

May and June 2010. In my view, Mr. McLellan downplayed the issues with scaffolders and a lack

of scaffolders contributed to productivity issues in the latter part of Comstock’s time on site.

[653] In my view, Comstock bears responsibility for productivity unless that contributed to delay.

3) Organization/management issues

[654] AMEC submits that Comstock did not proceed with the work in an organized manner and

did not have a floor by floor or level by level plan to carry out the work. AMEC bases this Mr.

Neis’ testimony that when he returned to site after the Notice of Default had gone out, he walked

the site to see if Comstock had made any changes. He stated that by that point not one system had

been completed.

[655] As well, Mr. Riley testified he went into the compaction plant after Comstock was terminated

at some point before August 11, 2010. He said he looked at the work from a high level and there

appeared to be a number of loose ends in different areas.

[656] Brent Wintermute, Lockerbie’s quality assurance person on CP-78, stated that when he went

in to the plant for cleanup, i.e. getting Comstock’s tools and equipment offsite, his first impression

was that there was a decent amount of work done but it was a building full of things started with

nothing complete.

[657] Mr. McLellan testified that Comstock did have a plan to carry out the work on a floor by

floor basis. He refers to Comstock’s Execution Plan.

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[658] AMEC accepted the baseline schedule which set out start and finish dates for all of the work

in the compaction plant. The contemporaneous documents do not indicate that AMEC was

expressing concern to Comstock that it had no plan for the work, or that it felt it should be

proceeding with the work on different basis than it was.

[659] I accept that Comstock had a plan to carry out the work. I find that the frequent changes

issued by AMEC impacted on the plan for the work. I do not conclude that a lack of organization

on the part of Comstock was a contributing factor to its delay.

[660] The defendants also argue that Comstock lacked properly qualified management/supervisors

and this contributed to Comstock’s productivity issues and delay.

[661] Some AMEC witnesses testified that they observed a lot of Comstock labourers “standing

around”. However, the contemporaneous records including correspondence and weekly meeting

minutes do not indicate AMEC ever identified this as a problem or raised it with Comstock.

[662] The evidence does not indicate AMEC had concerns or raised issues with Comstock about

supervision of the work or its management practices. I do not find that Comstock’s management

of the project was a contributing factor in the delay.

III.

Other early delays

[663] Mr. McLellan stated in his March 3, 2010 correspondence that the schedule was extending

through to mid-July 2010, and that the current schedule showed that the work in July 2010 would

be predominantly insulation. He indicated the dust collection duct was to arrive in November 2009

but deliveries in fact started mid-December 2009 with final delivery in mid-January 2010. He

states that this delayed the start of duct installation until mid-January which was in turn delaying

the start of insulation on the duct.

[664] He also stated that the fabrication of the HVAC was delayed by approximately one month

as there was confusion between AMEC and Comstock and/or its subcontractor over which revision

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of the specification was to be used. He indicated that Comstock corrected the drawings and

resubmitted them but engineering took over two weeks to get the drawings back approved.

Therefore, HVAC fabrication did not start until late November which delayed all HVAC.

[665] In his evidence, Mr. McLellan testified about this correspondence and said he was conveying

to AMEC that it had delayed Comstock with respect to the dust collection duct and had lost a

month because of the HVAC issue.

[666] However, Comstock did tender evidence to establish that the procurement of the duct

collection duct or that the HVAC delay were the responsibility of PCS/AMEC.

IV.

Was the contract breached by a failure to provide an extension of time?

[667] I have found that the contract was breached through late access to the MCC room, missing

and late delivered parts for the bucket elevators and chutes, the crane issues and delays in

processing some change orders. If Comstock was delayed through no fault of its own, it was

entitled to request an extension of time “for a revision to the Construction Schedule and for an

extension of time for completing the Work.” (G.C. 23.3)

[668] AMEC decided the validity of a claim for an extension to the schedule and for an extension

of time for completing the work. The contract also provided that the engineer would determine the

validity of any claim for an adjustment to the contract sum and/or change to the contract schedule

arising from a change in the work. G.C. 59.1 and 59.2 stated that AMEC was in the first instance

the interpreter of the construction documents and was empowered and under the contract make

directions decisions and determinations in respect of the work.

[669] At the same time, AMEC was under contract with PCS and provided engineering services

for the project. It had a duty that arose from its dual role on the contract to act “judicially” as

stated in Kamlee Construction Ltd. v. Oakville (Town) (1960), 26 D.L.R. (2d) 166 (S.C.C.) at page

180:

... The position of an engineer under such a contract as has been said by both the

trial judge and the Court of Appeal is that he is required to act "judicially" (see

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Hickman & Company v. Roberts et al., (1913) A.C. pp. 229 and 239), and I take

this to mean that the decisions which he makes must be dictated by his own best

judgment of the most efficient and effective way to carry out the contract, and that

he must not be influenced by extraneous considerations and particularly, that his

judgment must not be affected by the fact that he is being paid by the owner...

[676] As stated in and explained in Welcon (1976) Ltd. v. South River (Town) 2009 NLCA 59,

2009 CarswellNfld 269, 181 A.C.W.S. (3d) 922, 291 by the Newfoundland Court of Appeal:

[75] Goldsmith on Canadian Building Contracts, supra, contains a succinct

summary of an engineer's duty to a contractor in the usual construction contract

situation providing for the engineer determining certain issues as between the

parties. At pages 8-3 to 8-4 the authors write:

Although the architect or engineer is retained by the owner, and

generally acts as his agent, where, by the terms of the contract,

certain matters are left to him by the parties for his decision, he must

act impartially and is in a position analogous to that of an arbitrator.

Provided that in such circumstances he acts judicially, i.e., in

accordance with his own best judgment and without being

influenced by extraneous considerations, the contractor as well as

the owner will be bound by the engineer's decision. An error in

judgment or lack of skill will not disqualify the engineer. But the

contractor will not be bound by any decision if the engineer does not

adhere to the provisions of the contract and acts arbitrarily, or fails

to exercise his duties in good faith or to act impartially, or makes his

decision under the influence of the owner. If the contract provides

that the decision of the architect or engineer shall be subject to

arbitration, the party dissatisfied with the decision is entitled to have

the matter referred to arbitration. If, however, the contract provides

that such decision shall be final and conclusive, it is binding on the

parties, and, provided that it is otherwise unimpeachable, the courts

will not interfere with it.

Although an architect or engineer does not owe any contractual

duties to a contractor, he may in some circumstances place himself

in such a relationship to the contractor, or possibly to other damaged

persons, so as to be liable in tort either for negligence or fraud.

(Emphasis added.)

[670] To obtain an extension of time Comstock had to comply with the contractual provision

including those regarding notice. Moreover, pursuant to G.C. 23.8:

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No request will be allowed under G.C. 23.3 for an extension of the completion date

for the Work unless the event or circumstance on which the claim is based adversely

affects the critical path of the Construction Schedule for achieving Substantial

Performance.

[671] Mr. Fogarasi’s explanation of the concept of the “critical path of the construction schedule”

at page 27 of his report does not appear to be disputed:

The concept of the critical path in typical construction schedules is relatively

straightforward: it is the longest sequence of activities in the schedule which must

be completed on time for the project to finish on the due date. The activities forming

this sequence from the start of the project to the end are referred to as critical

activities. An activity on the critical path cannot be started until its predecessor

activity is complete and any slippage or delayed to critical activities will cause

delay to the project completion date. For example, if a critical activity is delayed

for 5 days, the entire project, and hence the completion date will also be delayed

for 5 days unless mitigation measures (e.g. acceleration of subsequent critical

activities) are taken to prevent such delay.)

The concept of “float” is related to the critical path. In simple terms, float represents

the amount of time a task or activity can be delayed before it has an impact on other

tasks. If a schedule has an end date which matches the contractual completion date,

then all the activities on the critical path, by definition, have zero float. Non-critical

activities, therefore, will have some amount of float which may permit them to be

delayed (by a period that does not exceed the amount of that float) without causing

delay to the project. For example, if non-critical activity has 15 days of float, such

activity can be delayed up to 15 days before becoming critical, and any delay which

exceeds the float will cause a delay to the project completion by period equal to

that amount.

[672] Mr. Fogarasi states at page 28 of his report:

... Not every delay causes a delay to the project completion. Delays impacting the

critical path of the project are expected to cause delay to the completion, and

therefore are called critical delays, while delays impacting non-critical activities do

not cause a critical delay, unless the delay period exceeded the float of such activity.

[673] The defendants submit that Comstock was not granted any extension to the contractual

completion date because it failed to submit reliable and accurate updated schedules in conformity

with the contract, failed to provide a reliable, certain completion date, and failed to demonstrate

how any alleged PCS/AMEC responsible delays affected the critical path.

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Comstock’s schedules

[674] Pursuant to G.C. 19.3.1 the schedule had to meet a number of requirements, including among

other things, that it be prepared in the Critical Path Method; show each activity duration in a level

of detail of two weeks or less, unless it is an ongoing task; be based on early start and early finish

logic for each activity/task; show the start, finish and Commissioning dates and duration for each

activity/task; show the float for each activity/task, include an estimate of the number of workers

required each week and have estimated manhours per task shown.

[675] AMEC’s acceptance of the baseline schedule submitted September 25, 2009 meant that

AMEC accepted it was in general compliance with the requirements of the Contract, although it

did not indicate AMEC approved the correctness or adequacy of the program shown in the

schedule (G.C. 19.2.1).

[676] Mr. Breed’s evidence on direct examination was that none of the schedule updates Comstock

submitted were accurate or reliable.

[677] I have reviewed the oral evidence and the contemporaneous documents including

correspondence and meeting minutes. I conclude that there were ongoing issues with the schedule,

raised by AMEC with Comstock. These included things such as missing information and incorrect

entries. In March 2010, Comstock included 30,000 hours for scaffolding and labour which should

not have been part of the schedule. According to Mr. McLellan, this was an error made by

Comstock, that had the effect of extending the construction completion date out to August, 2010.

[678] AMEC also identified some inconsistencies from one schedule to the next in terms of

percentages complete (for example Comstock’s percentages complete shown on the schedule

being lower than that which was shown in the schedule the week before).

[679] There are a few references in the contemporaneous documents to missing linkages and logic

ties. References by AMEC to concerns with the critical path of the construction schedule are

infrequent.

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[680] Mr. Dean testified that he had observed the schedules were progressing and getting better as

comments were received and were incorporated and in his view, the May, June and July 2010

schedules were “pretty good”. He did not agree that Comstock’s schedule was inadequate based

on AMEC’s comments in January, February and March 2010 about incorrect logic ties and missing

information. He testified it would not be unusual for some logic ties to be missing and that this

would not impact the time Comstock planned to spend on the activities in the schedule in any

event.

[681] However Mr. Dean acknowledged he had not reviewed the schedules against the

requirements of the contract and indicated he had not really paid a lot of attention to the schedules

after the baseline schedule and before the May, June and July 2010 schedules. When asked if he

used the concepts of predecessor and successor activities or external constraints when reviewing

the schedules he replied:

Not so much. I again was relying on the parties submittal and acceptance and I was

using the baseline as a measure of what was planned to compare to the as-built

schedules that I have also prepared.

[682] Mr. Fogarasi did not review Comstock’s schedules after May 2010 in any format before he

wrote his report, because he felt they were not relevant. Yet he made the following general

statement at page 34 of his report:

The problems with the frequency and quality of Comstock’s schedule submittals

continued in November 2009 and throughout the rest of the duration of the Project.

Comstock not only failed to submit the weekly and monthly reporting required by

the Contract, but the schedule updates it did submit contained so many errors and

inaccuracies that AMEC was unable to accept them.

[683] He testified at trial however that he did review the schedules after May 2010 in the native

format. It is not clear to the Court when he undertook the review but presumably it was after he

heard Mr. Dean’s evidence that in his view the May, June and July 2010 schedules were “pretty

good”.

[684] Mr. Fogarasi testified that this review confirmed his opinion in his report that there were

issues with the schedules, including that there were a number of external or manually inserted

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constraints, including the finishing date of May 31, 2010, the schedules were not detailed enough,

they did not have a sufficient number of activities and there were a large number of activities on

the schedules without predecessor activities and successor activities. In his opinion these things

impacted the integrity and reliability of the schedules.

[685] Mr. Fogarasi did not speak to any schedule in particular, but made general statements about

the schedules. I question Mr. Fogarasi’s opinion that all schedule updates Comstock submitted

contained so many errors and inaccuracies that AMEC was unable to accept them,

[686] On cross-examination, Mr. Breed conceded that some of the issues identified by AMEC at

the time did not have a significant impact on the completion date showing on the schedule.

[687] I accept that there were problems with Comstock’s schedules especially in the March 2010

period. However, in my view, the underlying reason the schedules were not accepted was not the

accuracy of the schedules themselves, but rather AMEC’s reluctance to accept a schedule showing

a later completion date than May 31, 2010 and therefore formalizing an extension of time.

Has Comstock established PCS/AMEC breaches caused critical delay?

[688] I accept that Comstock’s schedules were prepared in the critical path method. However,

when cross-examined about whether Comstock provided AMEC with proof or information to

support its claim that delays adversely affected the critical path, Mr. McLellan’s general response

was that “everything” became a critical path item, because of delays caused by AMEC and the

crane issues.

[689] Mr. Fogarasi’s evidence was that he did not see any communications which mentioned the

critical path or critical path activities in the correspondence by Comstock regarding delays or its

requests for extensions of time. The Court has not been made aware of any such correspondence.

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Late access to the MCC room

[690] Mr. Dean states at page 69 of his report that the schedule was delayed by 11 days as a result

of the delay in turning over the MCC room based on the baseline schedule.

[691] However, in his response to Mr. McLellan’s November 17, 2009 Notice of Delay, Mr. Breed

acknowledged the delay in turning over the MCC room (from October 25 to November 2, 2009)

but noted that Comstock had not begun working in the MCC room until November 16, 2009.

[692] The same day Mr. McLellan replied and indicated Comstock could not have begun installing

the MCCs before November 16, 2009 because it was carrying out other work (cable pull and pipe

rack install). He stated that Comstock wanted to begin installing the MCCs late this week (week

of November 23) or the next week and the platform at the door on the south side was required for

safe installation of the units.

[693] I cannot conclude Comstock would have started the work on the MCC room by October 25,

2009, had that date been met.

[694] I accept that Comstock could not bring the MCCs into the MCC room between November

16, 2009 and November 28, 2009 as it was waiting for the platform to be installed. However,

Comstock was able to work in other areas in the meantime. In Comstock’s November 17, 2009

correspondence Mr. McLellan writes:

Although we brought these potential areas of delay to your attention we continue

to work in other areas that are available so the overall schedule will not be affected.

However we request that AMEC continue to work with Comstock to get any and

all areas, that may affect the schedule, cleared up so we can all move forward

together.

[695] The next mention by Comstock after November 17, 2009 of any delay associated with the

MCC room in the contemporaneous documents is in Comstock’s April 16, 2010 correspondence.

Mr. Guite writes:

Comstock was delayed in starting the MCC room by AMEC subcontractor (Ocean

Steel) delay in constructing the ramps required for equipment handling. This delay

impacted all follow on electrical activities in this area.

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[696] Comstock provided written notice of delay or potential delay in relation to the MCC room.

However it did not provide a written quantification of the impact of this issue on the construction

schedule in any subsequent correspondence.

[697] I do not find Comstock has established that delay in accessing the MCC room caused critical

delay.

Chutes

[698] I accept the project could not be completed without the missing chutes and chute supports,

and that Comstock’s work with respect to the chutes was delayed.

[699] Comstock made a request for a schedule extension of one week in relation to

installing/reinstalling the chutes with a June 6, 2010 quote to reinstall the chutes. However, in a

revised quotation for the work dated June 16, 2010, Mr. McLellan noted that the new schedule

completion date was October 6, 2010 and that upon approval of the change order Comstock would

notify AMEC of any schedule extension. Comstock did not point to any schedule extension

requested for the chutes.

[700] Even if there was delay arising from the chutes, Comstock did not quantify the impact of it

on the schedule. Comstock was already delayed past May 31, 2010 when it was looking for the

chutes, and there is no evidence that Comstock had no other work to do while waiting for the

chutes. I therefore cannot determine what, if any, delay to the construction completion date was

associated with the chutes.

VFD for MCC 66

[701] Again while I accept there was delay in completing the MCC 66, arising from the VFD

having to be sent back to the manufacturer and replaced, Comstock has not established that this

delay caused critical delay to the construction schedule.

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Hangers for screens

[702] Comstock has not demonstrated that the schedule was impacted as a result of the damaged

hangers or that Comstock was delayed as a result of this issue.

Processing of change orders

[703] I have concluded that there was a breach of the contract in respect of the time it took to

approve change orders for design changes not arising from IFC drawings and I am of the view that

had Comstock continued on the project, the late issued changes to the work and slow turnaround

would likely have pushed the completion of the project out past the termination date.

[704] However, Comstock has not established what specific impact on the schedule is attributable

to the slow processing of change orders and the late issued changes or that this issue caused

Comstock’s delay between May 31, 2010 and July 21, 2010. Comstock was already significantly

delayed when it began requesting extensions of time in relation to drawing revisions and design

changes. By April 2010, the schedule was showing a completion date of July 15, 2010.

Late completion of the bucket elevators

[705] Mr. McLellan testified that the bucket elevators were “pushed onto the critical path” as a

result of the crane issues. In support of this he referenced the November 6, 2009 schedule that

showed the bucket elevators as “critical remaining work”. He said that the bucket elevators should

never have been on the critical path.

[706] Mr. Breed did not dispute that items showing in the schedule in red as “critical remaining

work” were activities that had to be completed within their time parameters, in order not to affect

the construction end date, although he testified that the November 6, 2009 schedule showed that

there had been no activity on bucket installation. He said this would indicate activities in the logic

sequence prior to that activity had some slippage that was making the bucket elevator activity

critical. He said one would have to look at the schedule in the native format to figure out what that

was.

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[707] Mr. Breed also testified that items showing as “critical remaining work” varied from

schedule to schedule depending on whether preceding work was being impacted by something.

[708] A review of the construction schedules that were entered into evidence show the bucket

elevators as “critical remaining work” at other points in time. I note that the baseline schedule

indicated completion of the bucket elevators was the last or one of the last activities on the

schedule, to be completed by May 28, 2010.

[709] I accept there is evidence that the bucket elevators were on the critical path of the

construction schedule.

Crane issues

[710] Comstock gave written notice of potential delay in relation to the Cranes in the November

17, 2009 “Notice of Delays”.

[711] In its letter dated January 29, 2010 to AMEC, Comstock is clearly presenting a claim

related to impact caused by the delay in availability of the 25-ton and 10-ton overhead cranes. At

the end of the correspondence, Mr. McLellan gave AMEC some quantification of the delay

(which changed in subsequent correspondence). He stated:

Although work has continued the delays in moving equipment and materials have

also affected the schedule. The schedule will be re-planned around the date when

the crane is ready for service but at this time the delay to mechanical completion

is at least two weeks.

[712] AMEC recognized in February 2010 that the crane issues had impacted Comstock. Mr. Roul

agreed that this was the case. By February 9, 2010 the schedule was one month behind. The cranes

were down for a large amount of time in February 2010.

[713] In his March 3, 2010 correspondence Mr. McLellan stated the schedule was being pushed

out by three weeks as the crane was not available to Comstock in December 2009 and January

2010, which delayed Comstock. He also stated that bucket installation (delay) was a direct result

of the crane not being available.

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[714] The construction schedule to which he was referring does not appear to have been attached

to his correspondence. However the March 5, 2010 schedule shows a July 15, 2010 construction

completion date and it indicates the bucket elevators would be finished June 24, 2010. This is

approximately a three week delay to the work on the bucket elevators as compared to the baseline

schedule.

[715] I find that completion of the bucket elevators was delayed past May 31, 2010 primarily as a

result of the lack of availability of the cranes. I therefore find that the crane issues caused or

contributed to critical delay.

Late issued change orders

[716] Commencing in April 2010 Comstock raised concerns with the volume of late issued design

changes and asked on several occasions for AMEC to provide a schedule of when design changes

were coming. In its April 28, 2010 correspondence, Comstock requested an extension for late and

changed IFC drawings.

[717] Starting in May 2010, Mr. McLellan requested extensions to the schedule for several changes

by writing in the requested amount of time on the approved change order. This was rejected by

AMEC as not complying with the contract provisions for requesting an extension to the schedule.

[718] Mr. McLellan did, however, request some extensions of time in its quotes for changes orders,

as per G.C. 47.6.1 beginning in May 2010. For the most part, AMEC denied Comstock’s requests

for extensions to the schedule arising from changes or indicated it would make a decision on these

requests when more information was received to support them. AMEC took the position Comstock

had not properly supported a request to extend the schedule or the contract completion date because

it had not provided a schedule showing the impact of the changes on the overall construction

completion date with the request as required by G.C. 47.6.1.

[719] However, AMEC recognized changes impacted the schedule when it granted extra time to

Comstock of 6 weeks for reinstallation of the cooling tower pumps and 12 weeks for work on the

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force feeder frames. AMEC indicated the extension related to the work on these activities only

and did not grant any extension to the contractual completion date.

[720] At the end of May 2010 Comstock submitted an updated schedule showing a construction

completion date of October 6, 2010. It indicated in the covering correspondence that Comstock

could not account for the volume and timing of changes and time it would take to approve changes

by AMEC and PCS in its scheduling updates.

[721] Comstock continued to request extensions of time for changes that were issued past May 31,

2010. No other extensions to the schedule were granted.

[722] I accept that Comstock did not submit revised detailed schedules reflecting the proposed

changes in the construction schedule as part of each of its claims for additional compensation and

an extension of time in relation to changes to the work. However, AMEC, not Comstock, created

a situation where the work would have extended beyond May 31, 2010 due to engineer changes or

errors, and not due to any actions by Comstock.

[723] I find that the critical path of the construction schedule was adversely impacted by delay

caused by the crane issues and late issued changes.

Apportionment of responsibility for delay

[724] In its April 28, 2010 claim, Comstock sought a 20 week extension to the schedule in relation

to delays arising from the crane issues. I do not find this credible based on the evidence and the

fact that Comstock indicated delay in the range of two to three weeks at the time.

[725] Comstock requested a 12 week extension for late and changed IFC drawings. However,

when Comstock began requesting extensions for changes to the work in April 2010 the schedule

had been showing a July 15, 2010 completion date for some time.

[726] The evidence is imperfect. However I cannot find that Comstock is solely responsible for

the delay past May 31, 2010. In my view, Comstock’s own productivity issues and early delays

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also contributed to Comstock’s overall delay. Nor can I find that PCS/AMEC bear responsibility

for all of the delay past May 21, 2010 in light of the crane issues and the late issued changes.

[727] I find on the balance of probabilities that PCS/AMEC responsible breaches of the contract

caused half of Comstock’s delay between May 31, 2010 and July 21, 2010, or 25.5 calendar days.

Finding on breach of contract for failing to grant extension of time

[728] PCS and AMEC take the position that without certainty from Comstock as to what the

completion date would be, no extension of time could be granted. However, the contract does not

state that the contractor had to provide a certain date of completion to obtain an extension of time.

PCS and AMEC had an obligation to provide Comstock the necessary time to complete the work.

[729] Even if AMEC did not accept Comstock had established the crane issues had caused critical

delay to the schedule, AMEC knew it was generating changes to the work that had the effect of

delaying the completion of the project past the contractually agreed upon time frame. It also knew

that late delivered materials and equipment was an issue.

[730] PCS argues that AMEC did grant schedule extensions for the late issued changes to the

force feeders and cooling tower pumps. However, AMEC made it clear these extensions were for

those items of work only and not to the overall construction completion date.

[731] Comstock argues that there was no provision under the contract for “partial extensions”.

[732] G.C. 23.3 states:

In addition to submitting the notice required under G.C. 23.2, if CONTRACTOR

believes that the alleged delay was occasioned through no fault of CONTRACTOR,

then CONTRACTOR may also submit written quantified request to ENGINEER

for a revision to the Construction Schedule And for an extension of time for

completing the Work. The request shall include complete details of alleged delay

and shall state the effect on the Construction Schedule And the completion date, if

any.

[733] G.C. 23.6.2 states:

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If ENGINEER accepts a request for a delay to the Work which will affect the

Construction Schedule or the completion date for the Work, ENGINEER shall have

the right to extend the completion date for the Work and direct CONTRACTOR to

submit a revised Construction Schedule within seven Days or alternatively to

require CONTRACTOR to complete the Work according to the Construction

Schedule pursuant to the provisions of G.C. 22.2.

[734] The “Work” was defined at G.C. 1.1.53 as:

…the total construction and related services required by the Construction

Documents and includes everything to be performed or supplied by

CONTRACTOR for the setting out, execution, completion and fulfillment of the

Work, including authorized Changes, to the satisfaction of OWNER, and shall be

interpreted to mean all or any part of the Work, as the context requires.

[735] I interpret the above to mean that AMEC had the right to extend the completion date for all

or any part of the Work. However, “as the context requires” would indicate that AMEC had to

consider the stage the project was at. It is unclear to the Court how AMEC could grant extensions

for these items of work only and not to the overall completion date when by mid-May 2010 the

issuance of these changes to the project clearly had an impact on the overall completion date.

[736] In the circumstances I find AMEC breached its duties under the contract by acting arbitrarily

and unfairly in not granting Comstock an extension to the overall contract completion date. As a

result, the contract was breached by the failure to grant an extension of time.

V.

Comstock’s claim it was dismissed without cause

1. Did PCS have grounds to terminate for default of the contract?

[737] PCS states at paragraph 94 of the Amended Statement of Defence filed January 8, 2019:

The Defendant in fact terminated Comstock for its failure to remedy the acts of

default identified by the Engineer. Comstock’s termination was pursuant to the

terms of the Contract and the Defendant pleads and relies on the following sections

of the General Provisions of the Contract: [46.5.1, 46.5.2 and 46.8.1]

[738] G.C. 46.5.1 states:

If, in the opinion of ENGINEER:

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a) CONTRACTOR fails or is failing to prosecute the Work

diligently in any particular manner; or

b) CONTRACTOR fails or is failing to provide sufficient skilled

and qualified labour and supervision; or

c) CONTRACTOR fails or is failing to provide sufficient Plant or

Materials or services;

d) CONTRACTOR fails or is failing to complete the Work by the

completion dates in the Progress Schedule; or

e) CONTRACTOR performs the Work in a negligent or inefficient

manner; or

f) CONTRACTOR fails to recommence the Work in a timely

fashion after a suspension; or

g) CONTRACTOR fails to comply in any respect with the

instructions of ENGINEER; or

h) CONTRACTOR consistently or flagrantly fails to comply either

with the legislated Occupational Health and Safety Act and

Regulations, the PCS Penobsquis General Safety Rules and

Procedures, in Exhibit 1, and procedures or standards as set forth

in the Project Safety Manual; or

i) CONTRACTOR fails to comply with relevant Federal,

(Provincial, Territorial), or Municipal environmental statutes

and regulations or with OWNER’s environmental protection

procedures; or

j) CONTRACTOR commits any other breach of the Contract, or

abandons the Work or any part thereof,

ENGINEER will notify CONTRACTOR that CONTRACTOR is in default of

CONTRACTOR’s contractual obligations and instruct CONTRACTOR to correct

the default in the 10 Working Days immediately following the receipt of the notice.

[739] G.C. 46.5.2 states:

If CONTRACTOR fails to correct the default in the 10 Working Days specified,

OWNER may, without prejudice to any other right or remedy OWNER may have,

suspend or terminate CONTRACTOR’s right to continue with the Work or

terminate the Contract.

[740] G.C. 46.8.1 states:

On termination by OWNER under any provision of this G.C. 46.0, OWNER will

pay to CONTRACTOR, insofar as CONTRACTOR has not been previously paid

for the Work by payments on account, the sum as shall, in the opinion of

ENGINEER, be sufficient to compensate CONTRACTOR for all portions of the

Work properly done, Materials supplied, and the use of CONTRACTOR’s

Materials and Plant pursuant to G.C. 46.7, but not for any bonuses, damages or loss

of anticipated profit on unexecuted portions of the Work, and OWNER will deduct

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therefrom the amount of any costs or damages as determined by ENGINEER

incurred by OWNER as a result of any default of CONTRACTOR.

[741] The Notice of Default that issued:

 tracked the wording of 46.5.1 (a); (b); and (c).

 tracked the wording of 46.5.1 (d) with a modification to reference the

construction schedule rather than the progress schedule.

 tracked the wording of 46.5.1(e) with the deletion of the word “negligently”.

 tracked the wording of 46.5.1(g) with the specification that Comstock’s failure

to comply with the instructions of the engineer related to the contractually

required format and details of the construction schedule [G.C. 19.3.1] and the

contents of the notices of claims [G.C. 47.6.1].

[742] The Notice of Default indicated that Comstock had until July 15, 2010 to rectify the defaults,

failing which PCS could suspend or terminate Comstock’s right to continue the work or terminate

the contract.

a) Allegation that Comstock had failed or was failing to prosecute the work diligently

[743] PCS submits the following demonstrate Comstock did not intend to prosecute the work in a

diligent manner:

 Comstock refused to perform the work without an approved change order;

 Comstock reduced its workforce;

 Comstock removed tools and equipment by the end of June 2010;

 Comstock refused to produce construction schedules to AMEC by the end of

June 2010; and

 Comstock submitted claims for additional payment that would almost double

the value of contract and requested PCS enter into a new and different form of

contract as a condition of completing the work.

[744] PCS says that Comstock repeatedly refused to perform work throughout the spring of 2010

without obtaining change orders for additional payment. The issue of whether a change order was

required or not for changes arising from IFC drawings was being discussed in February and March,

2010, as reflected in the minutes of the weekly coordination meetings. However, the March

minutes indicate that further discussion was required.

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[745] Mr. Breed testified he was part of many discussions with Comstock on this issue. However

his evidence was vague. He was not able to recall when these discussions took place or how many

there were. He did not state that he had advised Comstock it was in breach of the contract by

refusing to perform work.

[746] Mr. Fogarasi writes at page 25 of his report:

On numerous occasions Comstock refused to carry out changes without a written

change order, or communicated that the length of time to receive a change order

would cause delays. In our opinion any such refusals were a breach of the Contract

terms, specifically GC 47.1.1 and GC 47.2. Once the change in the work had been

authorized by one of the above listed means, Comstock had no justification to not

carry out the Change, in fact Comstock had an obligation to perform the Changes

in the Work as a condition of Contract (GC 47.1.1). Therefore, any delay resulting

from Comstock not immediately proceeding with the change once authorized, and

waiting for an executed CO, is the responsibility of Comstock.

[747] I do not find that there was anything in the contract that required Comstock to immediately

proceed with work showing on revised IFC drawings. The evidence does not indicate AMEC ever

advised Comstock it was failing to prosecute the work diligently as a result of waiting for a change

order before carrying out changes to the work.

[748] Although I have found that Comstock was not prevented from proceeding with changes to

the work on IFC drawings and revised IFC drawings before receiving a signed change order, I do

not find Comstock’s interpretation of the contract as requiring a change order amounted to a

“refusal” to perform work.

[749] Mr. McLellan did not dispute that at the June 29, 2010 weekly coordination meeting,

Comstock stated it was awaiting a change order to continue any work for the contract. However,

Comstock did not in fact refuse to continue to work. It continued to progress the work after June

29, 2010. AMEC eventually certified over $620,000 for payment for July 2010.

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Reduction in work hours

[750] Starting around December 11, 2009 Comstock began working a 40 hour week as opposed to

the 50 hour week in the contract. It returned to a 50 hour week by February 2, 2010. Mr. McLellan

said Comstock asked permission from AMEC to do so, because of issues with the building not

being closed in and poor parking lot lighting, and AMEC agreed.

[751] In correspondence from Mr. Bowes to Mr. McLellan, Mr. Bowes indicated that changes in

the work hours should not have an effect on the contract schedule but if AMEC determined there

was an effect, AMEC anticipated Comstock’s cooperation in taking measures to alleviate the

impact, as required by G.C. 22. I accept that this reduction in hours was done with AMEC’s

approval.

[752] Comstock started a night shift in early February 2010, around the time it went back to

working 50 hour weeks. At this point in time the minutes of the weekly meetings indicate

Comstock was behind schedule by 10% and was 38.5% complete overall.

[753] According to the May 18, 2010 weekly meeting minutes, Comstock gave notice it was

ending the night shift. Comstock also gave notice that it was going to start laying off workers

and it did lay off workers beginning the week ending May 15, 2010 .

[754] The weekly coordination meeting minutes indicate the following personnel numbers:

 Week ending May 15, 2010: 346 people on site;

 Week ending May 28, 2010: 269 personnel on site;

 Week ending June 8, 2010: 273 personnel on site;

 Week ending June 15, 2010: 265 personnel on site;

 Week ending June 29, 2010: 244 personnel on site;

 Week ending July 2, 2010: 156 personnel on site;

 Week ending July 9, 2010: 180 personnel on site; and

 Week ending July 16, 2010: 202 personnel on site.

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[755] While AMEC raised questions about these numbers, the evidence does not convince

me that they were significantly overstated or incorrect.

[756] The June 29, 2010 weekly meeting minutes indicate Comstock was working eight hour days,

five days per week and was looking at working 10 hour days, four days a week starting the next

week.

[757] Mr. McLellan testified that Comstock was working a lot of overtime and AMEC would not

accept their requests for a change order, which left them frustrated. He said Comstock worked a

40 hour week for a couple of weeks and then went back to the required 50 hour week. He denied

that Comstock stopped performing work.

[758] The defendants submit that Comstock should have maintained overtime shifts and night

shifts in order to complete the work. They allege that Comstock’s reduction of the number of

personnel on site gave PCS and AMEC reason to conclude that Comstock had failed or was failing

to progress the work diligently.

[759] Comstock argues the contract did not require Comstock to maintain a minimum number of

personnel on site. It also points out that at no point did AMEC direct Comstock to accelerate the

work to meet the May 31, 2010 deadline initially, even when it was clear in March 2010 that

schedule was indicating the work would not be completed by that date.

[760] Further, Comstock submits that by late June, when the schedule was showing an October 6,

2010 completion date, the Mackenzie report had been prepared and in that document the author

stated based on a discussion with Cheryl Collins at AMEC: “To be completed in 5 months,

Comstock would need an average of 173 men for the duration to meet the October deadline.”

Comstock’s personnel on-site were above 173 up until the week ending July 2, 2010 when it

dropped to 156. However by the week ending July 9, 2010 the personnel numbers were back up to

180.

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[761] Mr. Bailey testified in examination in chief about his conversation June 3, 2010 with Pete

Semmens. He stated he did not believe that Comstock had any intention of finishing under a fixed

price contract. However, Mr. Bailey acknowledged on cross-examination that it was possible

Comstock could have finished the work by October 6, 2010 as there was enough time from June

through the summer if they were 66% through the work, although he stated that the way Comstock

was “behaving” it was unlikely.

[762] I do not find Comstock had an obligation to continue to maintain its workforce levels above

what it had initially estimated would be required, in the absence of any directive from AMEC to

accelerate the work. AMEC and PCS have not established that there was urgency to finish the

work before October, 2010, which by AMEC’s own estimations appeared possible even with a

reduced work force.

[763] If there was a default resulting from a reduction in the workforce, I find it was rectified as

Comstock began increasing the number of personnel on site in the 10 days following the Notice.

[764] With respect to removal of tools, I accept Mr. McLellan’s evidence that as the number of

labourers was reduced on-site, excess tools and equipment not required were removed from the

site. I do not find this was a basis to conclude Comstock was in default of the contract.

Failure to submit updated construction schedules

[765] G.C. 19.3.5 required Comstock to update the construction schedule on a weekly basis.

AMEC required the weekly schedule update to be submitted 48 hours before the weekly

coordination meeting. Mr. Breed testified that Comstock generally strived to submit the weekly

schedule update before the meeting. However Comstock did not always submit it in the time frame

required and sometimes it was submitted after the weekly coordination meeting.

[766] Prior to the Notice of Default issuing, Comstock did not submit its schedule update for the

April 6, 2010, May 25, 2010 and June 29, 2010 meetings. The minutes of the June 29, 2010

meeting indicate Comstock was awaiting a change order to continue the work for the contract and

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that all manpower and schedule issues would be addressed in a corporate letter to be issued to

AMEC.

[767] In my view, Comstock’s failure to submit schedule updates on three occasions over the

course of a 10 month project was not grounds for AMEC to conclude the Comstock had defaulted

on the contract. AMEC did not put Comstock on notice in April or May 2010 that it felt it was

defaulting on the contract.

[768] However, Comstock did indicate in late June, 2010 it did not intend to submit an updated

schedule without a change order. In my view, this was a breach of Comstock’s obligation to submit

updated schedules, and it was related to whether Comstock was progressing the work diligently,

because AMEC was seeking an updated schedule to show when the work would be completed in

light of Comstock’s reductions in the work force.

[769] After the Notice of Default issued, Comstock did not submit a schedule for the week of July

2, 2010. However it did submit a schedule for the week of July 9, 2010 on July 12, 2010 showing

a completion date of October 29, 2010. The minutes of the weekly meetings indicate that a

schedule was submitted on July 19, 2010.

[770] I therefore find that Comstock rectified the failure to submit an updated schedule within the

time frame set out in the Notice of Default.

Comstock submitted claims for additional payment that would almost double the value of contract

and requesting PCS enter into a new and different form of contract as a condition of completing

the work.

[771] Clearly, AMEC and PCS did not accept Comstock’s claims for additional payment and were

of the view that they were overstated and exaggerated. I accept that the ongoing claims dispute

was impacting the project in the late June 2010 timeframe and led to Comstock’s statement that it

was not going to carry out more work on the contract until it received a change order.

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[772] However, the evidence indicates that although Comstock made these statements, it did not

in fact cease working on the project until its claims were met or it obtained a new and different

form of contract. Comstock continued to work up until termination on July 21, 2010.

[773] I also note that some of the responsibility for the delay in progressing the work lies with

PCS/AMEC.

[774] I do not find that Comstock defaulted on the contract for failure to prosecute the work

diligently.

b) Allegation that Comstock failed or was failing to provide sufficiently skilled and

qualified labour and supervision

[775] In support of this allegation, PCS references Comstock reducing the number of labourers on

site and informing AMEC at the weekly meeting in May 2010 of its intention to lay off people, as

well as Comstock working reduced work weeks.

[776] In my view these are not factors that would support a finding that Comstock failed to provide

sufficiently skilled and qualified labour and supervision. At discovery on October 31, 2012 Mr.

Roul was asked if AMEC ever wrote to Comstock to advise they were not providing sufficient

skilled and qualified labour to the project. AMEC did not. In Mr. Roul’s response, he stated

Comstock’s resources would have been skilled and qualified.

[777] The evidence also does not support a finding that there were issues with Comstock’s

supervision of the work, and there is no evidence to suggest that AMEC raised this with Comstock

at any time.

[778] I do not find that PCS or AMEC has established Comstock failed or was failing to provide

sufficiently skilled and qualified labour and supervision.

c) Allegation Comstock failed or was failing to provide sufficient Plant or Materials or

services

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[779] The defendants allege the following demonstrates Comstock failed to provide sufficient

plant, materials or services:

 Comstock reduced its work force.

 Comstock removed tools and equipment and trailers at the end of June 2010.

 Comstock did not install washrooms at high elevations or a construction

elevator as was stated in its execution plan.

 Comstock did not submit a schedule for shop drawings and documentation.

 Comstock failed to submit weekly or monthly reports and weekly schedule

updates.

Reduction in workforce/Removal of tools and equipment/Failure to submit weekly schedule

updates

[780] I have not found that these actions represented a breach of the requirement to progress the

work diligently. Similarly, I do not find they represented a default on the contract for failing to

provide sufficient plant, material or services.

Failing to provide construction elevator and temporary washrooms

[781] Mr. Fogarasi is of the opinion that it was a default of the contract for Comstock not to provide

a construction elevator as promised in the execution plan.

[782] However, the execution plan indicated that the contractor would plan on installing a

construction elevator, if possible. Mr. Fogarasi acknowledged he did not look at whether it was

possible or not.

[783] Mr. Fogarasi also indicated that it was a default on the part of Comstock not to provide

temporary washrooms at each elevation. However, he agreed on cross-examination he was not

aware what efforts were made to install washrooms and he did not ask why they were not installed.

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[784] Mr. Roul was asked at discovery if AMEC had provided any letter to Comstock to indicate

it was failing to provide sufficient materials as that term is defined under the contract. The response

to the question was that AMEC had not.

[785] I accept that it was not feasible to install the construction elevator or temporary washrooms

in the compaction plant. The evidence does not support a finding that this was a breach of the

Comstock’s obligation to provide sufficient plant, materials or services.

Failure to submit a schedule for shop drawings and documentation

[786] The evidence does not support a finding that Comstock was in default for not providing a

schedule for shop drawings and documentation. If there was an issue with the failure to provide a

shop drawing schedule with the construction schedule that was submitted September 25, 2009,

AMEC did not raise it at the time.

Weekly /monthly reports

[787] G.C. 20.3.2.1 required Comstock to submit weekly reports along with the updated schedule

and G.C. 20.3.3 required Comstock to submit a monthly report with this application for progress

payment.

[788] It appears that the first time any issue around these reports was raised with Comstock was

on May 17, 2010 when Mr. Bowes wrote to Mr. McLellan indicating that AMEC had concerns

with Comstock’s ability to complete contract work in a timely fashion, in particular Comstock’s

ability to meet the current indicated construction completion date of July 15, 2010.

[789] Mr. Bowes requested that Comstock forward a weekly report with the weekly construction

schedule, containing information as required in G.C. 20.3.2.1.

[790] Mr. McLellan responded on May 18, 2010:

We would be happy to bring in additional forces to comply with your request for

additional submissions. However to complete this we would require a change order

for the additional staff required. Upon the receipt of the change order we will

comply with your request.

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[791] On May 28, 2010, Mr. McLellan provided a partial response to the May 17, 2010 request

with a list of planned activities that were not completed and planned activities for the next week

dependent upon approval. He indicated in the correspondence that a number of items were reliant

on AMEC, for example Comstock was waiting on AMEC to advise about modifications and to

provide support material for certain chutes.

[792] On June 29, 2010, Mr. Bowes followed up on his May 17, 2010 request for the detailed

schedule information required under G.C. 20.3.2.1, indicating that the contract deliverables had

not yet been received. Mr. McLellan responded on June 29, 2010, reiterating the response he had

given at the end of May, that until Comstock received a change order, Comstock would be unable

to submit the requested information.

[793] Although I question why it took until May 2010 for AMEC to raise the requirement for

weekly reports with Comstock, I accept that Comstock was obligated to provide the information

in G.C. 20.3.2.1 and AMEC had directed it be provided on more than one occasion after May 17,

2010.

[794] I accept that this was a valid basis for AMEC to find that Comstock was not complying with

the contract.

d) Allegation Comstock had failed or was failing to complete the work by the completion

dates in the construction schedule

[795] I have found that PCS/AMEC contributed to Comstock’s delay past May 31, 2010 and that

the contract was breached by not granting an extension to the completion date.

[796] Even if the failure to grant an extension to the completion date of May 31, 2010 was not a

breach of contract, AMEC had granted Comstock an additional 6 weeks to complete the work on

the cooling tower pumps and 12 weeks to complete the work on the force feeders. It also was aware

that the bucket elevator parts were not available to complete the bucket elevators and it was aware

that chutes and chute supports were missing, all of which were required for Comstock to complete

the project.

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[797] Mr. Neis had recommended a one-month extension on June 23, 2010 although this was not

conveyed to Comstock in the letter signed by Mr. Vecchio June 26, 2010.

[798] I do not find that Comstock’s failure to meet the May 31, 2010 construction date or its failure

to obtain an extension to that date constituted a valid ground of default.

e) Allegation Comstock was performing the work in an inefficient manner

[799] I have already addressed the allegations by AMEC and PCS that Comstock did not proceed

with the work in an organized manner. I have found that Comstock had an execution plan, and it

submitted a baseline schedule which set out start and finish dates for the various activities of work,

which was accepted by AMEC. I also note the contemporaneous documents including

correspondence and meeting minutes do not indicate that concerns were raised with how Comstock

was carrying out the work.

[800] In terms of the evidence from Mr. Riley and Mr. Wintermute that there appeared to be a lot

of “loose ends” or work competed but not finished, in my view the frequent changes to the work

likely contributed to this.

[801] I do not find do not find that the defendants have established Comstock was performing the

work in an inefficient manner.

f) Allegation Comstock had failed or was failing to comply with the instructions of the

engineer with respect to the contractually required format and details of the construction

schedule [GC 19.3.1 ] and the contents of the notices of claims [GC 47.6.1]

Allegation of failure to comply with the instructions of the engineer with respect to the

contractually required format and details of the construction schedule (G.C. 19.3.1)

[802] AMEC raised errors and omissions in the schedules with Comstock. The evidence around

indicates that as issues were raised, Comstock made changes to the schedules and resubmitted

them. In April 2010, AMEC indicated that the format of the schedule was fine.

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[803] PCS cites as an example of a failure to comply with instructions from AMEC that on May

28, 2010 AMEC instructed Comstock to submit a schedule with a defined critical path, logic,

finish/start relationship and which reflected the current scope of work. PCS asks the Court to find

that these instructions were not followed based on the June 1, 2010 weekly meeting minutes.

[804] Those minutes state:

Updated schedule submitted – currently showing an end date of October 6

– Comstock stated they are trying to finish early – schedule currently under

review by AMEC.

[805] This does not indicate that AMEC was telling Comstock it had not complied with its

instructions.

[806] Comstock did not provide information related to the schedule as required in G.C. 20.3.2.1

after AMEC directed it be provided on more than one occasion after May 17, 2010.

[807] However, the Notice of Default did not specify this. It specified a failure to comply with the

contractually required format and details of G.C. 19.3.1. AMEC accepted the baseline schedule

at the end of September 2009 and did not indicate it failed to meet the requirements of G.C. 19.3.1.

Acceptance indicated the schedule generally complied with the requirements of the Contract.

Allegation of failure to comply with the instructions of the engineer with respect to contents of

the notices of claims [GC 47.6.1]

[808] PCS submits that by June 30, 2010 Comstock was claiming over $25 million in additional

compensation on the project but had failed to submit any notices of claim in accordance with the

terms of the contract. It refers to G.C. 47.6.1 which set out the process for making claims. PCS

states Comstock did not follow the process set out therein in its claims letters on April 16, 2010,

May 4, 2010, May 17, 2010, and June 10, 2010.

[809] PCS states that Comstock knew AMEC was requesting supporting documentation pursuant

to the contract. It submits that by the time Comstock received the June 30, 2010 Notice of Default,

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it had received notice from AMEC on multiple occasions that its claim submissions were not in

compliance with the contract.

[810] I agree there was voluminous correspondence back and forth between Comstock and AMEC

about Comstock’s claims, which were escalating. I also agree that AMEC told Comstock it had

not received sufficient information to make a determination of the claims.

[811] PCS refers to Mr. Vecchio’s May 13, 2010 correspondence and his June 26, 2010

“preliminary determination” as having given notice to Comstock that its claim submissions were

not compliant with the contract.

[812] In the May 13, 2010 correspondence Mr. Vecchio refers to G.C. 47.9.3 (AMEC will

determine the validity of any claim submitted when sufficient information and documentation has

been received) and states that what Comstock had submitted was insufficient to justify a $5.2

million extra cost to the contract. However, he concludes the letter by stating that AMEC’s May

7, 2010 letter was not a rejection of Comstock’s request. He goes on to outline the backup AMEC

required to facilitate a decision regarding the validity of Comstock’s claim.

[813] The June 26, 2010 correspondence from Mr. Vecchio to Mr. Semmens indicated that AMEC

had done a review of the claims put forth by Comstock with respect to the contract and although

much more information was provided than in the past, the information provided by Comstock on

June 10, 2010 was still insufficient to provide a final recommendation and was inadequate to fully

assess all the claims.

[814] The letter concludes by saying that AMEC would be in touch with details regarding the

additional information and supporting materials Comstock would need to provide in order for

AMEC to carry out the final review of the claims.

[815] AMEC did not provide details of the additional information and supporting materials

Comstock needed to provide before the Notice of Default or Notice of Termination issued.

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[816] I do not find that this correspondence can ground a finding that Comstock was in default of

the contract through non-compliance with the requirements of the engineer, with respect to

contents of the notices of claims.

[817] I do not find there was a breach of the contract through non-compliance with the

instructions of the engineer with respect to the contractually required format and details of the

construction schedule [GC 19.3.1 ] and the contents of the notices of claims [GC 47.6.1]

Conclusion on whether PCS had grounds to terminate for default

[818] Of the claimed defaults, I accept that Comstock did not fully comply with the instructions

of Mr. Bowes regarding providing the detailed information required in the weekly reports when

requested in May 2010.

2. Did PCS give Comstock clear Notice of Default?

[819] Comstock submits the Notice of Default was insufficient in any event to give it appropriate

notice of alleged defaults.

[820] PCS argues that it was sufficient. It relies on the New Brunswick Court of Appeal decision

in Moncton (City) v. Aprile Contracting Ltd. (1980), 29 NBR (2d) 631 as standing for the

proposition that a brief and simple Notice of Default constituted proper notice in circumstances

where there was no doubt the parties knew the particulars of the defaults.

[821] PCS also refers to Heitzman and Goldsmith on Canadian Building Contracts, 5^thed.

(Toronto:Carswell, 2018) at 7-8 to 7-9 as authority for the proposition that a determination is valid

notwithstanding imperfect compliance with Notice of Default provisions.

[822] However, in Heitzman and Goldsmith, supra, the authors refer to situations where the

relationship between the parties has totally broken down, a cure was in fact impossible, notice was

in fact given even though informally, and the giving of the notice was effectively waived because

the defaulting party knew full well the nature of the default. In my view what the authors in

Heitzman and Goldsmith, supra are referring to are situation similar to that in Aprile Contracting,

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supra. In that case, the contractor had ceased all work, and the notice to the contractor indicated

that if the contractor did not recommence the work, it would be taken out of the contractor’s hands.

[823] Comstock refers to the decision of the Ontario Superior Court of Justice in Kingdom

Construction Limited v Regional Municipality of Durham, 2018 ONSC 29 where the Court stated

that in order for a party to terminate for breach of contract:

…specifics of the particular breach complained of must be given in sufficient detail

so as to enable the party to understand the behaviour being impugned by the other

party. Notice need be clear and concise as its time period for termination has started

as of a given letter. Such clarity should leave no doubt in the mind the other party

of the possible and expected consequences of non-compliance.

[824] In this case, I accept that the Notice of Default made the consequences of non-compliance

clear. It indicated that if Comstock did not correct the alleged defaults by July 15, 2010 PCS could

suspend or terminate Comstock’s right to continue with the work or terminate the contract without

prejudice to any other right or remedy PCS might have.

[825] However, AMEC’s designated engineer Mr. Neis, wrote to Mr. Bailey after he returned to

site and saw the Notice of Default. He stated that the Notice of Default:

…alleges the Contractor is in Default without specifying any specifics. However,

to my knowledge the Contractor’s method(s) of construction have been consistent

throughout the entire contract period.

Notwithstanding that the Contractor’s performance has been pour (sic) and that the

Contractor is unlikely to complete the Works by the end of October (without a

substantial improvement in performance) more detail is required to terminate the

Contract for default by the Contractor.

[826] In his evidence Mr. Neis indicated he was critical of the Notice of Default because it was

important to give the contractor a description of what they needed to do to rectify the default.

[827] Mr. Bailey acknowledged he was aware of Mr. Neis’ recommendation that more specifics

were needed in the Notice of Default. When asked if PCS had disregarded the recommendation of

Mr. Neis by sending out the termination letter on July 21, 2010, he responded: “Obviously”.

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[828] With respect to the failure to provide the weekly reports, PCS and AMEC indicate that it

should have been apparent to Comstock that this was a ground of default. However, I do not accept

it was clear to Comstock or anyone reading the Notice of Default that the failure to provide the

weekly reports constituted a “failure to provide sufficient Plant, Material and services.” Nor was

it made clear what Comstock needed to do to rectify the alleged defaults.

[829] I therefore find the Notice of Default was insufficient to support termination for default.

3. Fundamental breach

[830] PCS argues that even if termination for default of the contract was not justified, it still had

the right at common law to terminate the contract for fundamental or repudiatory breach.

[831] Comstock argues that PCS did not plead fundamental breach in its Statement of Defence and

Counterclaim and therefore cannot rely on it at this point. It relies on Estate of Michael Burke and

1021256 Ontario Inc. v. Royal & Sun Alliance Insurance Company of Canada, 2011 NBCA 98

(CanLII), in which the New Brunswick Court of Appeal stated:

[56] The importance of adherence to the rules of pleading has been repeatedly

underscored by the courts of this Province. In Parlee v. McFarlane (1999), 1999

CanLII 9446 (NB CA), 210 N.B.R. (2d) 284, [1999] N.B.J. No. 88 (C.A.) (QL), the

Court cautioned against non-compliance with those rules:

It is commonplace that trial by ambush has no place in our modern

system of justice. The rules of pleading enunciated in Rule 27 of

the Rules of Court are designed to ensure that the relevant issues are

raised, and that no party is taken by surprise. The importance of

pleadings cannot be underemphasized. They define the issues not

only for the parties, but for the judge as well. Indeed, I cannot

fathom a situation where a trial judge could properly decide the case

before him or her on a basis not raised in the pleadings or at trial.

[para. 33]

[57] The reference in that passage to “issues […] not raised […] at trial” intended

to signal that a case could properly be decided on an un-pleaded basis where it and

the material facts had been spotlighted and brought home to the opposite party in

non-prejudicial fashion. Those rare situations allow this Court to sustain the

judgment at trial on the basis that the pleading was “deemed” amended. It goes

without saying that the Court in Parlee v. McFarlane did not encourage trial judges

to overlook non-compliance with the rules of pleading in circumstances where, as

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here, an un-pleaded or improperly pleaded defence would, if effect were given to

it, cause prejudice to the plaintiff that an adjournment or a suitable award of costs

would not sufficiently minimize.

[832] PCS did not plead that Comstock committed a “fundamental” breach of the contract in its

Amended Statement of Defence filed on January 8, 2019. It stated that Comstock was terminated

pursuant to the terms of the contract, specifically G.C. 46.5.1. At paragraph 110 of the

Counterclaim it pled that “Comstock has breached the contract”.

[833] PCS raised fundamental breach in its pre-trial brief (paragraphs 110 to 132) and raised it in

its opening statement before it began calling evidence. Comstock did not raise the issue of

pleadings at the beginning of trial or after PCS’ opening statement. Comstock has responded to

the claim in its Reply brief. I do not find Comstock would be prejudiced if the Court considers

PCS’ submission regarding fundamental breach.

[834] PCS cites Norwood Construction Ltd. v. Post 83 Co-operative Housing Association (1988),

30 CLR 231 at page 239 as standing for the proposition that the right to terminate at common law

for fundamental breach exists independent of a contractual right to terminate. In that case the

Court stated:

24 The first issue is whether Post 83 legally terminated the contract. The appellants

argue that it did not because the requirements of s. 5.2 of the contract, which dealt

with termination, were not met.

25 I agree with the appellants that the requirements of cl. 5.2 were not met. First,

there was no architect's certificate. Second, 5-days' notice to rectify the default was

not given.

26 However, I do not think it matters that the requirements of s. 5.2 were not met.

Post 83 had a right to terminate the contract for fundamental breach, a right which

stood quite independent of the rights of termination granted by s. 5 of the contract.

Sections 5.1 and 5.2 gave the owner the right to terminate the contract in

circumstances where it may not have been open to terminate it at common law.

They do not exclude the right to terminate at common law for fundamental breach,

but merely confer additional rights of termination.

27 Here, where the work had stopped completely and could not reasonably be

expected to be resumed, Post 83 was entitled to terminate the contract at common

law. The work stoppage amounted to a fundamental breach of the contract which

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entitled Post 83, at its election, to treat the contract as at an end. Thus the

termination was lawful, even though the provisions of s. 5.2 were not met.

[835] I accept that PCS’ common law right to terminate the contract with Comstock was not

displaced by the contractual provisions for termination.

[836] As stated in Mantar Holdings Ltd. v. 0858370 B.C. Ltd., 2013 BCSC 2003 (CanLII):

[37] As noted in the above authorities, a repudiation may be effected either by

way of clear notice that a party no longer intends to be bound by the terms of a

contract or by conduct that evidences a similar intention. In this latter regard,

repudiation is related to the concept of fundamental breach which was described by

the Court of Appeal in Williams v. Ron Will Management & Construction, 2009

BCCA 543, as follows at paras. 14-15:

[14] There was no dispute at trial or on appeal as to the proper legal

test to be applied in determining whether there has been a

fundamental breach of a contract. The trial judge recited passages

from this Court’s decision in Lau v. 1755 Holdings Ltd. (1996), 1996

CanLII 3358 (BC CA), 83 B.C.A.C. 198, which in turn referred to

the seminal decision in Hunter Engineering Co. v. Syncrude Canada

Ltd., 1989 CanLII 129 (SCC), [1989] 1 S.C.R. 426, in which Madam

Justice Wilson held:

[137] The formulation that I prefer is that given by

Lord Diplock in Photo Production Ltd. v. Securicor

Transport Ltd., [1980] A.C. 827 (H.L.), at p. 849. A

fundamental breach occurs "Where the event

resulting from the failure by one party to perform a

primary obligation has the effect of depriving the

other party of substantially the whole benefit which

it was the intention of the parties that he should

obtain from the contract" (emphasis added). This is a

restrictive definition and rightly so, I believe. As

Lord Diplock points out, the usual remedy for breach

of a "primary" contractual obligation (the thing

bargained for) is a concomitant "secondary"

obligation to pay damages. The other primary

obligations of both parties yet unperformed remain

in place. Fundamental breach represents an

exception to this rule for it gives to the innocent party

an additional remedy, an election to "put an end to all

primary obligations of both parties remaining

unperformed" (p. 849). It seems to me that this

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exceptional remedy should be available only in

circumstances where the foundation of the contract

has been undermined, where the very thing bargained

for has not been provided.

[15] The parties agree that the question of whether there has been a

fundamental breach is a question of mixed fact and law. However,

as alluded to by G.L. Fridman, Q.C., The Law of Contract in

Canada, 5th ed., Carswell, the question is heavily fact dependent.:

In every instance, it is a question of fact whether the

breach complained of by the innocent party amounts

to a fundamental breach. That question, in turn,

depends upon: the terms of the contract; the intended

benefit to the innocent party; the purpose of the

contract; the material consequences of the breach;

and, perhaps, though this has never been discussed in

the cases, the extent to which the loss incurred by the

innocent party can be remedied adequately by an

award of damages. One point is clear. Whether a

breach is fundamental does not appear to depend

upon any express terms of the contract. The

determination of a fundamental breach is a

teleological question not one that involves

construction of the contract in the narrow, literal

sense. The concept of fundamental breach seems to

transcend the normal issues of contractual

interpretation. It involves investigation of the

underlying nature and purpose of the contract into

which the parties have entered, and the respective

benefits designed to be obtained or ensured by the

agreement.

[837] In New Brunswick Power Corporation v. Westinghouse Canada. Inc. and Asea Brown

Boveri Inc., 2008 NBCA 70 (CanLII) the Court of Appeal also referenced Hunter Engineering Co.

v. Syncrude Canada Ltd., supra, in stating the test for fundamental breach.

[838] In summary, PCS argues that Comstock made unreasonable claims for extensions of time

and monetary compensation for delays, was unwilling to provide AMEC and PCS with a credible

or reliable schedule or a completion date for the project; made efforts to renegotiate the contract;

demanded payment before it was due and was hostile in its approach to the claims process.

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[839] PCS says that the cumulative effect of these actions was to deprive PCS of the commercial

benefit of the contract and remove any certainty that the project would be completed on predictable

terms or at all. It says this conduct amounted to a fundamental breach of the contract and was a

clear repudiation of the terms of the contract.

Comstock’s claims for compensation and extension of time

[840] PCS indicates that by termination on July 21, 2010 Comstock was claiming a 46 week

cumulative extension of time and $47 million in damages. PCS says these claims were inflated

and exaggerated and had the impact of frustrating the commercial purpose of the contract. It

indicates PCS reasonably concluded in the circumstances Comstock would not provide services

for a reasonable price as agreed by the contract.

[841] Comstock’s claims did escalate after Mr. Guite arrived on site in April 2010. However, PCS

was not obligated to pay any claims unless they were determined to be valid. Comstock’s

obligation to carry out the work continued regardless whether it made claims, and Comstock

continued to carry on with the work after claims had been submitted.

[842] I do not find that the act of asserting claims frustrated the commercial purpose of the contract

or indicated that Comstock was repudiating the contract.

No credible or reliable schedule or completion date

[843] I have addressed PCS and AMEC’s criticisms of the schedule earlier in this decision. I do

not accept that the issues with Comstock’s schedules indicated that Comstock was “unwilling” to

provide AMEC and PCS with the credible or reliable schedule for the project.

[844] PCS alleges Comstock had essentially abandoned any efforts to reliably provide PCS and

AMEC with a completion date. It references the correspondence dated July 12, 2010 from

Comstock to AMEC and says that in this correspondence Comstock was indicating it did not have

the ability to provide a schedule for multiple reasons.

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[845] However, I do not find this to be an accurate reflection of what Comstock submitted or said

in its correspondence of July 12, 2010. On that date Comstock submitted a schedule showing a

completion date of October 29, 2010. It stated in the accompanying correspondence that it was not

possible to prepare definitive or accurate schedules without fair, proper and reasonable

design/engineering data. Comstock had been requesting from AMEC for some time a schedule of

engineering changes with no response.

[846] Comstock also submitted a schedule on July 19, 2010, according to the minutes of the weekly

coordination meeting on July 20, 2010. The minutes reference that Comstock was currently

reviewing the schedule and changes would be made and the finishing schedule would be submitted.

[847] I do not find that Comstock abandoned any efforts to provide a completion date, and as I

have noted earlier, in my view the ongoing changes to the work impacted on Comstock’s ability

to provide a certain completion date.

Efforts to renegotiate the contract

[848] PCS submits that Comstock’s efforts to renegotiate the contract from a lump sum to a cost

plus contract evidenced an intention not to be bound by the contract. PCS refers to Mr. Bailey’s

evidence regarding his telephone conversations with Peter Semmens on May 5, 2010 and Mr.

Semmens’ statement in the first call that Comstock’s COO and CEO would not agree to continuing

the contract with change orders and a fixed price contract.

[849] However as Mr. Bailey testified, Mr. Semmens called back within ten minutes of the first

call and advised that he had talked to Comstock’s COO and they were okay to continue without

cost plus.

[850] The next day, Mr. Semmens sent an email to Mr. Bailey stating, “I will instruct our Project

Management to Work to the Contract terms and Conditions as per your request”.

[851] This was in response to Mr. Bailey’s email to Mr. Semmens where he stated:

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Confirming discussions today, PotashCorp will continue to work with Comstock

through this project on a Firm Price basis in accordance with the terms of the

contact.

[852] Mr. Bailey testified that he took Mr. Semmens at his word but was a bit on guard because of

the way Comstock was acting.

[853] PCS also refers to the May 6, 2010 correspondence from Mr. Guite to PCS and AMEC

presenting the two options. Comstock indicated the first option, to meet a July 15, 2010 substantial

completion date, would require a change order in the estimated amount of $5,206,477, which

would permit Comstock to continue with an accelerated schedule and to work weekends as needed.

Overtime portions of rates would be to the account the owner.

[854] The second option presented was for Comstock to revert to the standard work week identified

in the contract documents (i.e. it would cease the night shifts) with the estimated completion date

extending to November 26, 2010. Comstock indicated that it estimated additional unanticipated

costs associated with this option of $2,622,000.

[855] The letter concluded by stating that if AMEC rejected both options, Comstock would revert

to option 2 and PCS/AMEC now had notice of a further claim for costs (estimated at $2.6 million)

associated with that option.

[856] PCS refers to Mr. Fracchia’s evidence that he interpreted this correspondence as a threat.

However Comstock did not state in the correspondence it would not continue the work unless it

was paid $2.6 million. Comstock did continue working despite the first option not being accepted.

[857] PCS says that Comstock demanded it be paid for unproven and unearned money. It refers to

correspondence dated May 11, 2010. This correspondence does not reflect Comstock demanding

payment. Most of the correspondence is regarding scheduling a meeting between Comstock and

PCS, which ended up taking place May 21, 2010.

[858] In the correspondence Mr. Quinn writes:

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It is essential you release 70 percent of the funds associated with known changes

proceeding now.

[859] Mr. Bailey responded that the change orders that had been submitted to PCS had been

reviewed, signed and approved and that he was “absolutely going to stay with the contract”.

[860] Mr. Quinn responded: “I understand always did… My request was for funds to continue.

Your position is clear.”

[861] They go on to discuss timing for a meeting.

[862] PCS also refers to the May 21, 2010 meeting between Comstock and PCS, and states that

Comstock made it clear it would not continue with the status quo and wanted to convert to a time

and materials arrangement. The minutes of the May 21 meeting reflect that Comstock put this

forward as a recommendation. Mr. Fracchia agreed on cross-examination that Mr. Quinn had also

said at the meeting that Comstock had no intention to leave the job and were downsizing to match

engineering.

[863] Mr. Bailey’s evidence around the discussion at the May 21 meeting does not reflect that he

interpreted Comstock as having given PCS an ultimatum. He testified that Comstock’s option 1,

that a change order be issued for $5.2 million to meet a July 15, 2010 completion date, was off the

table because PCS did not really know where that would go, as Comstock’s estimated completion

dates changed. In light of the fact the market had changed and PCS was not in a hurry to complete

the plant and the May 31, 2010 date was not going to be made, the second option was for Comstock

to give AMEC supporting documents for its claims and tell PCS/AMEC what the completion date

was going to be. He agreed that a completion date in November 2010 was not the end of the world

for PCS. The third option was to end the pain and terminate the contract. Mr. Bailey agreed on

cross-examination he was referring to termination for convenience at that point.

177

[864] PCS also points to Peter Semmens proposing on June 3, 2010 that Comstock be paid on a

cost reimbursable basis plus an additional fee. This proposal was declined by Mr. Bailey who

reaffirmed to Mr. Semmens the project would continue as per terms of the contract.

[865] Additionally, PCS says Comstock “demanded payment” that was not due by submitting three

invoices to PCS on July 20, 2010 and further revised invoices on July 21, 2010. It says these

invoices were for unapproved claims and work that had never been included in Comstock’s

monthly payment applications and included amounts for future extended site costs not yet incurred.

[866] I note these invoices are marked “without prejudice”. In my view they were submitted as

part of Comstock’s claims, which PCS had no obligation to pay unless determined to be valid.

Aggressive/hostile approach

[867] PCS says the tone of Comstock’s claims correspondence and other dealings with PCS and

AMEC in the spring and summer of 2010 was aggressive and hostile, and choosing aggressive

pressure tactics support a clear conclusion that Comstock no longer intended to be bound by the

contract.

[868] It refers to Comstock “demanding” the contact names for PCS and AMEC’s insurance

company, CEO, CFO and shareholder representative for PCS; Mr. Bailey developing an

impression from Mr. Semmens’ call on May 3, 2010 that Comstock was “holding PCS hostage”

by leveraging changes; and Mr. Fracchia and Mr. Frehlich’s evidence that Peter Semmens and

Mr. Quinn were aggressive and somewhat confrontational at the meeting on May 21, 2010 between

PCS and Comstock, without AMEC present.

[869] I do not find that the action of pursuing claims aggressively frustrated the commercial

purpose of the contract or indicated that Comstock was repudiating the contract.

[870] Comstock was obligated to continue the work whether its claims were accepted or not. It did

continue the work up to termination. Although it had reduced the work force after ceasing to run

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the night shift, it was in the process of increasing its labour force in July 2010 when it was

terminated.

[871] I do not find there was a substantial failure of performance by Comstock or that PCS was

deprived of substantially the whole benefit the parties agreed PCS should obtain from the contract.

[872] I find that PCS breached the contract by terminating Comstock for default of the contract

without grounds and in the absence of a fundamental or repudiatory breach of the contract.

VI. Other breaches claimed by Comstock

1. Was there a breach of the duty of good faith in contractual performance?

[873] Comstock claims at paragraph 23(g) of the Claim that PCS and AMEC breached their

respective duties to act in good faith by having AMEC continue in its decision-making powers

while it was in a clear conflict of interest and in an appearance of bias.

[874] As AMEC submits, Comstock was aware of and agreed to AMEC’s role as the engineer and

construction manager on the project at the time of tender. The fact it was responsible for the

engineering on the project and was required to interpret the contract and adjudicate on Comstock’s

claims was not in itself a conflict of interest as expressed below:

Architects or engineers are not required to be entirely disinterested. They are

employed by the owner, either under contract or as salaried individuals. They have

frequently drawn the plans and prepared estimates of cost, and often have

recommended the contractor and approved the contract which they are

subsequently called upon to interpret. They may have made mistakes in their plans

which increase the cost. Should their decisions not please the owner, they run the

risk that the owner will terminate their employment as architects or engineers or

not re-employ them. None of these considerations will disqualify them as impartial

decision makers between the parties.

Beverley M. McLachlin, Wilfred J. Wallace & Arthur M. Grant, The Canadian Law

of Architecture and Engineering, 2^nded. (Toronto and Vancouver: Buttersworths,

1994)

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[875] However, Comstock alleges that AMEC did not act independently as PCS usurped AMEC’s

authority. It claims PCS and AMEC acted in concert to defeat Comstock’s claims for

compensation, and not for the purpose of fairly evaluating Comstock’s claims, but for the dominant

purpose of litigation. Comstock submits this was a breach of the duty of good faith in contractual

performance.

[876] In Comstock Canada v. Potash Corporation of Saskatchewan et al., 2015 NBQB 80

(CanLII), this Court stated the following:

…in the case of Bhasin v. Hrynew 2014 SCC 71 (CanLII), 2014 S.C.C. 71

(CanLII), the Court dealt with the requirement of good faith in contractual

performance. Cromwell, J. stated at paragraphs 60, 63, 65, 72, 73, 74 and 93:

[60]

Commercial parties reasonably expect a basic level

of honesty and good faith in contractual dealings. While they

remain at arm’s length and are not subject to the duties of a

fiduciary, a basic level of honest conduct is necessary to the

proper functioning of commerce. The growth of longer term,

relational contracts that depend on an element of trust and

cooperation clearly call for a basic element of honesty in

performance, but, even in transactional exchanges, misleading

or deceitful conduct will fly in the face of the expectations of the

parties: see Swan and Adamski, at s. 1.24.

…

[63]

The first step is to recognize that there is an

organizing principle of good faith that underlies and manifests

itself in various more specific doctrines governing contractual

performance. That organizing principle is simply that parties

generally must perform their contractual duties honestly and

reasonably and not capriciously or arbitrarily.

…

[65]

The organizing principle of good faith exemplifies the

notion that, in carrying out his or her own performance of the

contract, a contracting party should have appropriate regard to

the legitimate contractual interests of the contracting

partner. While “appropriate regard” for the other party’s

interests will vary depending on the context of the contractual

relationship, it does not require acting to serve those interests in

all cases. It merely requires that a party not seek to undermine

those interests in bad faith. This general principle has strong

conceptual differences from the much higher obligations of a

fiduciary. Unlike fiduciary duties, good faith performance does

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not engage duties of loyalty to the other contracting party or a

duty to put the interests of the other contracting party first.

…

[72] … The key question before the Court, therefore, is

whether we ought to create a new common law duty under the

broad umbrella of the organizing principle of good faith

performance of contracts.

[73]

In my view, we should. I would hold that there is a

general duty of honesty in contractual performance. This

means simply that parties must not lie or otherwise knowingly

mislead each other about matters directly linked to the

performance of the contract. This does not impose a duty of

loyalty or of disclosure or require a party to forego advantages

flowing from the contract; it is a simple requirement not to lie

or mislead the other party about one’s contractual

performance. Recognizing a duty of honest performance

flowing directly from the common law organizing principle of

good faith is a modest, incremental step. …

[74]

… I am at this point concerned only with a new duty

of honest performance and, as I see it, this should not be thought

of as an implied term, but a general doctrine of contract law that

imposes as a contractual duty a minimum standard of honest

contractual performance. It operates irrespective of the

intentions of the parties, and is to this extent analogous to

equitable doctrines which impose limits on the freedom of

contract, such as the doctrine of unconscionability.

…

[93]

A summary of the principles is in order:

(1) There is a general organizing principle of good faith

that underlies many facets of contract law.

(2) In general, the particular implications of the broad

principle for particular cases are determined by resorting to the

body of doctrine that has developed which gives effect to aspects

of that principle in particular types of situations and

relationships.

(3) It is appropriate to recognize a new common law duty

that applies to all contracts as a manifestation of the general

organizing principle of good faith: a duty of honest

performance, which requires the parties to be honest with each

other in relation to the performance of their contractual

obligations.

181

Do the “entire agreement” and “non-reliance” clauses in the contract preclude a finding that

the duty of good faith was breached?

[877] PCS argues that Article 1.7(2), G.C. 2.1.2 and G.C. 3.1.3 bar any liability under the contract

for breach of the duty of good faith. However as stated in Bhasin, supra:

[74]

There is a longstanding debate about whether the duty of good faith

arises as a term implied as a matter of fact or a term implied by law: see Mesa

Operating, at paras. 15-19. I do not have to resolve this debate fully, which, as I

reviewed earlier, casts a shadow of uncertainty over a good deal of the

jurisprudence. I am at this point concerned only with a new duty of honest

performance and, as I see it, this should not be thought of as an implied term, but a

general doctrine of contract law that imposes as a contractual duty a minimum

standard of honest contractual performance. It operates irrespective of the

intentions of the parties, and is to this extent analogous to equitable doctrines which

impose limits on the freedom of contract, such as the doctrine of unconscionability.

[75]

Viewed in this way, the entire agreement clause in cl. 11.2 of the

Agreement is not an impediment to the duty arising in this case. Because the duty

of honesty in contractual performance is a general doctrine of contract law that

applies to all contracts, like unconscionability, the parties are not free to exclude it:

see CivicLife.com, at para. 52.

[76]

It is true that the Anglo-Canadian common law of contract has been

reluctant to impose mandatory rules not based on the agreement of the parties,

because they are thought to interfere with freedom of contract: see Gateway Realty,

per Kelly J.; O’Byrne, “Good Faith in Contractual Performance: Recent

Developments”, at p. 95; Farnsworth, at pp. 677-78. As discussed above, however,

the duty of honest performance interferes very little with freedom of contract, since

parties will rarely expect that their contracts permit dishonest performance of their

obligations.

[77]

That said, I would not rule out any role for the agreement of the parties

in influencing the scope of honest performance in a particular context. The precise

content of honest performance will vary with context and the parties should be free

in some contexts to relax the requirements of the doctrine so long as they respect

its minimum core requirements. The approach I outline here is similar in principle

to that in § 1-302(b) of the U.C.C. (2012):

The obligations of good faith, diligence, reasonableness, and care . . . may not be

disclaimed by agreement. The parties, by agreement, may determine the standards

by which the performance of those obligations is to be measured if those standards

are not manifestly unreasonable.

182

[78]

Certainly, any modification of the duty of honest performance would

need to be in express terms. A generically worded entire agreement clause such as

cl. 11.2 of the Agreement does not indicate any intention of the parties to depart

from the basic tenets of honest performance: see GEC Marconi Systems Pty Ltd. v.

BHP Information Technology Pty Ltd., [2003] FCA 50 (AustLII), at para. 922, per

Finn J.; see also O’Byrne, “Good Faith in Contractual Performance: Recent

Developments”, at p. 96.

[878] In Bhasin clause 11.2 was an “entire agreement clause” stating that there were no

agreements, express, implied or statutory, other than those expressly set out in the contract.

[879] As noted earlier, G.C. 2.1.2 states:

CONTRACTOR represents and warrants to OWNER that CONTRACTOR has not

relied in entering into the Contract upon any representations, statements or

information not contained in the Contract, whether written or oral, express or

implied, made or given by or on behalf of OWNER.

[880] G.C.3.1.3 states:

The executed Contract constitutes the entire Agreement between the parties and

supersedes all prior discussions, negotiations, representations and Agreements,

whether written or oral, express or implied.

[881] Article 1.7(2) of the Agreement states:

The Contract Documents shall constitute the entire agreement between the parties

for the Work to be performed, and shall supersede and cancel all previous

agreements between the parties in regard to the Work whether oral or in writing,

whether expressed or implied.

[882] I do not find these clauses contain language that clearly indicates the parties intended to

depart from the basic tenets of honest performance. I therefore do not find they protect against a

finding of liability for breach of the duty of good faith.

Did PCS usurp AMEC’s authority and act in concert with AMEC to defeat Comstock’s claims?

[883] Comstock sums up its position at paragraph 641 of its Closing Submissions:

In summary, and as described in detail below, the claim evaluation and termination

process involved no legitimate or impartial analysis. It was a scheme orchestrated

183

by PCS, with the knowledge and support of AMEC, designed solely to further PCS’

financial interests and mitigate the Defendants’ litigation risk.

[884] Comstock argues the following demonstrates this:

 Mr. Bailey required AMEC to send draft correspondence regarding Comstock’s

claims to him for approval before it was sent out.

 PCS and AMEC claimed (at discovery in these proceedings in April 2012) common

interest privilege as of April 16, 2010.

 The report prepared by Mr. Mackenzie was not provided to Comstock, prior to

termination.

 Mr. Neis prepared several prior draft versions of his report and submitted his draft

report to Mr. Bailey, before he signed off on the version he submitted to Mr.

Vecchio, and his full recommendation/preliminary determination was not acted

upon by AMEC/PCS nor was his full report provided to Comstock.

 Mr. McElhinney played a role in the review of Comstock’s claims and in the

issuance of the Notice of Default.

Correspondence / Claim of common interest privilege

[885] Mr. Bailey admitted he reviewed all correspondence regarding the claims before it was sent

out by AMEC. The defendants say there was nothing wrong with this, or with PCS and AMEC’s

claim arising at discovery in April 2012 of common interest privilege. They argue that by April

2010, Comstock’s claims were targeted at both PCS and AMEC, and in its claim letter of April

16, 2010 Comstock suggested initiating arbitration proceedings and copied counsel in the

correspondence. The defendants submit it was logical for PCS and AMEC to coordinate their

responses to Comstock’s correspondence and to share information with each other regarding

Comstock’s claims.

[886] Comstock counters that an assertion of litigation privilege might be acceptable, however

common interest privilege is different from litigation privilege in that it allows parties “allied

against a common adversary” to share privileged documents without waiver ensuing, as stated in

Paul v. Riley, 2006 NBCA 84 at paragraph 30.

184

[887] I do not find it was breach of the duty good faith for AMEC to pass correspondence by Mr.

Bailey or for AMEC and PCS to share information regarding the claims in the spring of 2010.

Comstock was making significant claims and was suggesting litigation.

[888] As for the claim of common interest privilege, it was not raised by PCS and AMEC until

2012. I do not find that the fact it was raised then supports a finding that AMEC and PCS were

colluding against Comstock in the spring of 2010.

Mackenzie report

[889] Comstock submits this report prepared by Phil Mackenzie of AMEC in early June 2010

established that Comstock was entitled to $6.8 million in damages, and the failure to disclose it to

Comstock was breach of the duty of good faith.

[890] However, Mr. Mackenzie’s report did not make a finding that Comstock was entitled to the

compensation and the extension of time it was claiming. It does not address entitlement except to

say that if Comstock established PCS/AMEC was responsible for all issues, AMEC believed PCS’

maximum exposure could be $6.8 million.

The Neis Report

[891] Mr. Neis was delegated by Mr. Vecchio to carry out the engineer’s duties under the contract

including making a determination of Comstock’s claims. Comstock submits that Mr. Neis’

analysis was heavily influenced by PCS.

[892] Mr. McElhinney had arrived on site around the same time Mr. Neis did. Mr. Bailey sent Mr.

Neis an email June 11, 2010 in which he stated:

Please feel free to utilize Owen in your efforts and to provide a solid assessment of

the submittal from Comstock.

[893] Mr. Neis responded:

185

Following our meeting today with the CP-15 Contractor "Comstock" (AMEC-PCS-

Comstock); it is now my responsibility to review a submission of documents by

Comstock over the weekend and make a recommendation to yourself and Tony

Vecchio for a proposed path forward.

I intend to have an email sent to you for discussion on Monday morning if you are

available.

In addition to the proposal, I have had a brief meeting with Owen McElhinney. I

have no objection to Owen moving to AMEC's office to provide assistance in

helping me prepare a review of Comstock's claims in order for the Engineer to make

a Determination in accordance with the Contract.

[894] Mr. Neis denied that Mr. McElhinney helped him prepare any of his work. He testified his

work was prepared only by him in his office, under lock and key and was not reviewed by anyone

unless he wanted them to look at it. Mr. Neis testified he did not share Comstock’s information

with Mr. McElhinney.

[895] On cross-examination Mr. Neis did not deny that it was likely that he had some discussions

with Mr. McElhinney that had to do with Comstock’s claims.

[896] In his June 15, 2010 correspondence, Mr. Vecchio told Comstock:

..[I]t is my intention to issue an initial Determination for your disputed items no

later than Friday, June 18, 2010. Following receipt and review of the remainder of

your supporting documents and your demonstration of entitlement to compensation

under the Contract I will prepare a final Determination of the items in dispute.

[897] Mr. Vecchio delegated authority to undertake the initial determination to Mr. Neis. Mr. Neis

undertook a review of the claims. I accept he considered the information Comstock had submitted

at the June 11, 2010 meeting.

[898] Mr. Neis states at page 5 of his report at item 3, Contractual Entitlement:

The Contractor has recorded several causes for delay and impact to the Work. The

following is a contractual review of each of the Contractor’s claims. It should be

noted that the Contractor has not yet provided any documents to support any

entitlement to compensation under the Contract.

186

[899] Mr. Neis made an initial determination that the estimated value of Comstock’s claims was

$2.8 million (versus $28,552,459.20 requested by Comstock).

[900] At page 28, item 5, Quantum of Extension of Time, Mr. Neis stated:

The Contractor has not provided any supporting documents for the request of an

extension to the Completion Date of the Work required in the Agreement. In

particular the Contractor has not provided a Schedule showing a cause and effect

which impacts the critical path.

[901] Mr. Neis went on to consider the items in dispute and possible delays to which Comstock

may be entitled and concluded that he could only recommend a one-month extension of the

completion date at that time.

[902] At page 29 Mr. Neis concluded:

Based on the above review it is recommended that the Engineer’s Representative

make an initial global determination in favour of the Contractor following which a

detailed evaluation of each of the disputed claims be conducted. In order to make a

final determination the Contractor would have to substantiate the entitlement,

quantum of additional costs and quantum of additional time for each of the disputed

claims. There are also a number of outstanding Change Orders being processed

which may resolve some of the Contractor’s claimed items.

[903] Mr. Neis’ report included a draft cover letter to Comstock from Mr. Vecchio stating:

Based on the information provided by Comstock Canada Ltd to date and the

requirements of the Contract Documents I hereby make the following initial global

determination:

i. Comstock Canada Ltd. shall be granted three (3) payments of

$1,000,000.00 CAD each; comprising one payment at the end of

each month for June, July and August 2010, and

ii. Comstock Canada Ltd. shall be granted an extension of time such

that the new completion date shall be June 30th, 2010.

These payments shall be made on evidence that Comstock Canada Ltd remains

committed to completion of the Work at the earliest possible date.

187

A final determination shall be made for your claims once Comstock Canada Ltd

has submitted full and final supporting documentation for each of the claimed

items.

[904] Mr. Neis testified his review was only a recommendation and the ultimate authority was

with Mr. Vecchio. However, he agreed the delegation of authority gave him authority to assess

Comstock’s claims and make a determination. He indicated the delegation did not take away Mr.

Vecchio’s authority – it just gave him the same authority.

[905] Mr. Vecchio sent out the Engineer’s preliminary determination on June 26, 2010 stating that

it would recommend $2.8 million be paid on the condition Comstock provide support to

substantiate its claim. No extension of time was recommended by AMEC. Mr. Neis’ report was

not attached.

[906] Subsequently, Comstock requested from AMEC the basis of the Engineer’s determination,

AMEC sent Comstock a redacted version of Mr. Neis’ June 23 report on July 9, 2010. The redacted

version removes any reference to an extension of time.

[907] It is unclear why Mr. Neis’ recommendation/preliminary determination that Comstock be

granted $3 million in compensation and a one-month extension of time became $2.8 million and

no extension of time, or why AMEC subsequently deleted any reference to an extension of time in

the report of Mr. Neis. Mr. Vecchio did not testify.

[908] Comstock asks the Court to draw an adverse inference that Mr. Neis’ analysis was changed

by Mr. Bailey or Mr. McElhinney. However, I found Mr. Neis to be a credible witness. I am not

convinced that his analysis and conclusions were not his own or that they were changed by Mr.

McElhinney or Mr. Bailey. The fact that the report Mr. Neis signed on June 23, 2010 was saved

as “version 16” is not evidence that the prior versions were substantially different.

[909] Comstock also argues that the failure to disclose the Mackenzie Report or the full Neis report

and recommendation was a breach of the duty of good faith.

[910] The Supreme Court in Bhasin, supra indicated that:

188

[86]

The duty of honest performance that I propose should not be confused

with a duty of disclosure or of fiduciary loyalty. A party to a contract has no general

duty to subordinate his or her interest to that of the other party. However,

contracting parties must be able to rely on a minimum standard of honesty from

their contracting partner in relation to performing the contract as a reassurance that

if the contract does not work out, they will have a fair opportunity to protect their

interests. That said, a dealership agreement is not a contract of utmost good faith

(uberrimae fidei) such as an insurance contract, which among other things obliges

the parties to disclose material facts: Whiten. But a clear distinction can be drawn

between a failure to disclose a material fact, even a firm intention to end the

contractual arrangement, and active dishonesty.

[87]

This distinction explains the result reached by the court in United

Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985 (4th Cir. 1981). The

terminating party had decided in advance of the required notice period that it was

going to terminate the contract. The court held that no disclosure of this intention

was required other than what was stipulated in the notice requirement. The court

stated:

. . . there is very little to be said in favor of a rule of law that good

faith requires one possessing a right of termination to inform the

other party promptly of any decision to exercise the right. A tenant

under a month-to-month lease may decide in January to vacate the

premises at the end of September. It is hardly to be suggested that

good faith requires the tenant to inform the landlord of his decision

soon after January. Though the landlord may have found earlier

notice convenient, formal exercise of the right of termination in

August will do. [pp. 989-90]

United Roasters makes it clear that there is no unilateral duty to disclose

information relevant to termination. But the situation is quite different, as I see it,

when it comes to actively misleading or deceiving the other contracting party in

relation to performance of the contract.

[911] In my view, had AMEC made a finding of entitlement under the contract, withholding this

information from Comstock would be an act of active misleading or deception. However, neither

the Mackenzie report nor the Neis report made a determination that Comstock had established

entitlement to damages or an extension of time arising from delay, although Mr. Neis

recommended an initial determination in favour of Comstock.

189

[912] I do not find that the failure to provide these reports in their entirety to Comstock constituted

acts of dishonesty on the part of AMEC and PCS in relation to the claims, in breach of the duty of

good faith.

[913] Comstock also submits that PCS and AMEC refused to consider its change order requests

and requests for extension of time and constantly sought more information as means to avoid

addressing the claims.

[914] Comstock’s delay-related claims increased steadily from the $1.5 million claimed in January

2010 for the crane issues and the indication in that the project was extending out to July 15, 2010.

[915] By April 16, 2010 its preliminary estimate was a minimum of $8.5 million in damages and

a net project delay of three months. Shortly after this, on May 4, 2010, Comstock increased its

preliminary estimate for delay damages to $16 million and requested an extension to November

2010. By June 2010 Comstock claimed approximately $25 million in damages.

[916] AMEC recommended a qualified payment of $2.8 million. It took the position throughout

that it required more information to make a final determination of Comstock’s request for an

extension to the schedule and its claims for compensation. It was not was unreasonable for AMEC

to request further information to support the increasing claims. I have already determined the

contract was breached by the failure to grant an extension of time. However, I do not find there

was a breach of the duty of good faith in the evaluation of the claim for compensation.

Notice of Default

[917] The contract provided at G.C. 12.1 that:

The Work including the Change in the Work shall be performed in accordance with

the Construction Documents to the entire satisfaction and approval of

ENGINEER...

[918] Termination for default was available if in the opinion of AMEC, Comstock was in default

of any of the 10 areas of default set out at G.C. 46.5.1 a) to j).

190

[919] Comstock argues there is no evidence AMEC made a determination Comstock was in default

before Mr. Vecchio sent out the Notice of Default on June 30, 2010. It submits that the Court

should draw an adverse inference that Mr. McElhinney in fact drafted the Notice of Default.

Comstock says this was a breach of the duty of good faith.

[920] Exhibit 33.132 is an email chain dated June 30, 2010 with the subject line “Comstock draft

default notice”. Mr. McElhinney wrote to Mr. Bailey, Mr. Frehlich, Mr. Fracchia, Mr. Zed

(counsel for PCS ), Mr. Roul and Mr. Vecchio stating: “The attached draft default notice should

be sent today.”

[921] Mr. Weiland responded: “Both Peter Zed and I have reviewed and discussed and are ok with

the letter.”

[922] Mr. Vecchio then replies: “It will go out today then.”

[923] The attached document was not produced on the basis of litigation privilege.

[924] Mr. Roul testified that the morning of June 30, 2010, Mr. McElhinney left a document on

his desk and then came to see him and “gave him some pointers to look at for notice of default”.

He said he then went to the contract’s General Conditions where default was listed and “looked at

the wording to sort of coincide with what was written down”. Mr. Roul could not recall what

changes he had made to the document Mr. McElhinney had left with him.

[925] Mr. Roul said he sent this modified draft Notice of Default for review “within the team” and

sent it on to PCS for information.

[926] Mr. Roul testified that Mr. Vecchio and Mr. Bailey decided the Notice of Default should be

sent.

[927] Mr. Roul was referred to his evidence from examination for discovery on October 31, 2012.

At that time, when asked what input he had into the default letter, he responded he had no input.

He was also asked at discovery if he had been requested to review the default notice before it was

sent. His answer was no.

191

[928] Mr. Roul testified at trial that he seemed to remember something different now. He agreed

that if what happened as he remembered it now had actually happened at the time, there should be

a draft of the letter left on his desk in evidence. He agreed there is no such draft. He also agreed

that there is no record of a transmittal of his changes to the AMEC team.

[929] AMEC does not indicate in its Post-Trial Brief that Mr. Roul wrote the draft default notice.

However it does not indicate who did write it.

[930] Mr. Bailey’s evidence was that AMEC prepared the Notice of Default (trial transcript page

5046). However, on cross-examination, Mr. Bailey was asked if the Notice of Default that Mr.

McElhinney sent on to him was initially drafted by PCS, and not by AMEC. Mr. Bailey responded

that he did not know and maybe it was. He could not remember.

[931] I do not find Mr. Roul credible in his evidence that he rewrote a document left with him by

Mr. McElhinney to create the Notice of Default. There is no credible evidence that he or anyone

else at AMEC drafted the Notice of Default signed by Mr. Vecchio. I draw an adverse inference

that Mr. McElhinney drafted it.

[932] There is evidence that AMEC was concerned about the fact Comstock was decreasing its

personnel in the May-June timeframe. On June 26, 2010 Mr. Vecchio had stated in his

correspondence to Comstock that AMEC awaited an explanation from Comstock as to its current

de-staffing, among other things. As well Comstock did not submit a schedule for the June 29,

2010 weekly meeting and stated to AMEC that until it received a change order Comstock would

be unable to submit the requested information.

[933] However, there is a gap in the evidence that AMEC has not filled regarding the Notice of

Default. Comstock was entitled to an independent evaluation of its compliance with the contract.

I do not find that this occurred. In my view this was a breach of AMEC’s duty of good faith as

contract administrator and is another basis to set aside the Notice of Default.

2.

Did AMEC induce PCS to breach the contract?

[934] At paragraph 23 ( e) of the Claim, Comstock alleges:

192

further or in the alternative, Comstock states that AMEC undertook tortious

interference with Comstock’s contractual relations and economic interests with

PotashCorp by inducing breach of contract by PotashCorp.

[935] In summary, Comstock argues that AMEC induced PCS to breach the contract in two

respects:

i) By refusing to fairly evaluate Comstock’s claims for additional compensation

and additional time to complete the work, it induced PCS to breach the contractual

obligation to compensate Comstock for additional work and delays and changed

conditions, and

ii) By urging PCS to terminate Comstock for cause when it knew no breach had

occurred.

[936] The elements of the tort of inducing breach of contract were set out by the New Brunswick

Court of Appeal in Sar Petroleum et al. v. Peace Hills Trust Company 2010 NBCA 22 at paragraph

40:

On reflection and out of an abundance of caution, I have settled on eight elements:

(1) there must have been a valid and subsisting contract between the plaintiff and a

third party; (2) the third party must have breached its contract with the plaintiff; (3)

the defendant’s acts must have caused that breach; (4) the defendant must have been

aware of the contract; (5) the defendant must have known it was inducing a breach

of contract; (6) the defendant must have intended to procure a breach of contract in

the sense that the breach was a desired end in itself or a means to an end; (7) the

plaintiff must establish it suffered damage as a result of the breach; and (8) if these

elements are satisfied, the defendant is entitled to raise the defence of

“justification”.

(1) valid and subsisting contract between the plaintiff and a third party

[937] There is no dispute there was a valid and subsisting contract between Comstock and PCS

(the third party for the purpose of this analysis).

(2) the third party must have breached its contract with the plaintiff

193

[938] As noted above the breaches of contract claims to have been induced by AMEC were:

i) The obligation to compensate Comstock for additional work and delays and

changed conditions, and

ii) terminating Comstock for cause.

[939] I have found that PCS breached the contract with Comstock by failing to grant an extension

of time for delays not within Comstock’s control and by wrongfully terminating for default/cause.

(3) the defendant’s acts must have caused that breach

[940] The question with respect to this element, according to paragraph 44 of SAR Petroleum, is

whether the acts of AMEC brought about PCS’ breach of contract with Comstock.

[941] Comstock argues AMEC’s refusal to fairly evaluate Comstock’s claims for additional

compensation and additional time to complete the work caused the breach of the obligation to

compensate Comstock for additional work and delays and changed conditions.

[942] In this case, AMEC was responsible to evaluate the claims. I accept that its evaluation of the

claims was the basis for the failure to grant the extension of time for delay. Therefore, AMEC’s

act caused the breach of the obligation.

[943] With respect to termination, PCS made the decision to issue the Notice of Termination, not

AMEC. I do not find AMEC’s act caused the breach of contract related to the termination.

(4) the defendant must have been aware of the contract;

[944] AMEC was aware of the contract between Comstock and PCS.

(5) the defendant must have known it was inducing a breach of contract

194

[945] As stated in SAR Petroleum, supra, at paragraph 47:

The fifth essential element requires the plaintiff to establish that the defendant knew

it was inducing the third party to breach its contract with the plaintiff. As Lord

Hoffman pointed out in OBG v. Allan: “To be liable for inducing breach of contract,

you must know that you are inducing a breach of contract.” On the other hand, if

the defendant honestly believes that he or she is not acting in manner that causes a

breach of the plaintiff’s contract with the third party, liability is avoided…

[946] I accept that AMEC was aware that failure to provide a proper evaluation of Comstock’s

claims could result in a breach of the contract.

(6) the defendant must have intended to induce a breach of contract in the sense that the breach

was a desired end in itself or a means to an end;

[947] The Court of Appeal stated the following regarding intention at paragraphs 55 to 56 of the

decision in SAR Petroleum, supra:

[55]

In brief, if the breach of contract were neither an end in itself nor

a means to an end, one must conclude that it was unintended. Hence, if the

defendant did not act out of malice or obtain an economic advantage as a result of

the breach, it should follow that the requisite intention is absent and the tort action

must fail. Lord Hoffman cites one case which illustrates clearly the proper

application of the test for intention. The case is Millar v. Bassey, [1993] E.W.J. No.

5409 (QL), [1994] E.M.L.R. 44 (C.A.). No doubt Shirley Bassey’s breach of her

contract with the recording company had the foreseeable consequence that the

recording company would breach its contracts with the accompanying musicians.

In short, she knew or was deemed to have known of the contracts with the

accompanying musicians. But as Lord Hoffman observed, breaches of those

contracts was neither an end desired by Ms. Bassey nor a means of achieving that

end. More pointedly, Ms. Bassey did not seek to achieve a benefit or advantage that

would have otherwise accrued to the musicians but for her breach. She simply

decided to withdraw from her contract and suffer the legal fate of any contract

breaker: to pay damages.

[56]

Applying the above framework to the undisputed facts of the

present case, there can be no doubt that Peace Hills lacked the requisite intention to

induce a breach of the construction contract. First, SAR Petroleum properly

concedes that Peace Hills did not act out of malice. In other words, breach of the

construction contract was not an end in itself. This leads us to ask whether the

breach was a means to an end. But it is equally clear: no distinct economic benefit

or advantage accrued to Peace Hills because of the breach of the construction

195

contract between Eel River and SAR Petroleum. In other words, Peace Hills did not

gain an advantage over and above that to which it was entitled under its loan

agreement with Eel River. Most certainly, Peace Hills did not profit from the breach

in the way that Mr. Gye would have profited from Ms. Wagner’s breach of contract

with Mr. Lumley, but for the court injunction. Nothing that Peace Hills did qualifies

as improper or opportunistic conduct. Thus, the element of intention has not been

satisfied and the tort action must fail.

[948] Even if AMEC’s actions caused PCS to breach the contract and AMEC knew its actions

would cause breach of contract, the evidence does not support a finding that AMEC acted out of

malice or spite. In other words, inducing breach of contract was not an end in itself.

[949] Therefore, the court must next consider whether inducing breach of contract was a means to

an end. In other words, did AMEC act to obtain an economic advantage as a result of the breach?

[950] Comstock argues that AMEC had powerful commercial incentives to procure a breach by

PCS of its obligation to compensate Comstock for additional work/delays. It says by refusing to

properly adjudicate Comstock’s claims, AMEC minimized its own liability to PCS under the

contract between PCS and AMEC.

[951] I accept that the contract between PCS and AMEC provides for liability on the part of AMEC

for damages, losses, costs or expenses suffered by PCS arising from or caused by the wrongdoing,

negligence (including negligent errors or omissions) of the AMEC. However, if AMEC wrongfully

refused to properly adjudicate Comstock’s claims and this led to damages being awarded against

PCS for breach of contract, that did little to minimize AMEC’s liability to PCS, and it is more

likely it would have created liability to PCS.

[952] I fail to see how AMEC obtained any specific economic or commercial benefit from inducing

a breach of the contract between PCS and Comstock.

[953] I therefore do not find that AMEC induced PCS’ breach of the contract with Comstock.

196

3. Are AMEC and/or PCS liable to Comstock for unlawful interference with its economic

interests?

[954] Comstock alleges at paragraph 23 (e) of the Claim:

[F]urther or in the alternative, Comstock states that AMEC undertook tortious

interference with Comstock’s contractual relations and economic interests with

PotashCorp by inducing breach of contract by PotashCorp;

[955] Comstock also states at paragraph 71 of the Claim:

AMEC’s issuance of the Notice of Default and decision to only answer Comstock’s

requests for details on the date of the deadline in the Notice of Default, along with

other acts and omissions by AMEC constituted tortious interference with

Comstock’s economic interests and with the contractual relations between

PotashCorp and Comstock. At the time PotashCorp purported to terminate the

Contract, all of the conditions of the Project Documents had been satisfied or

waived and, to the extent that they had not been satisfied or waived, their non-

satisfaction was due to the acts and/or omissions of PotashCorp and/or AMEC.

[956] In Comstock’s Closing Submissions at paragraph 860 Comstock states that PCS unlawfully

usurped AMEC’s role as decision-maker under the contract, contrary to the terms of the contract

and in doing so, sought to enrich itself by unfairly reducing its liability to Comstock for valuable

work performed under the contract, and also to create pretext for termination of the contract for

cause so that it could rely on set-off.

[957] As stated in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 (CanLII), [2014]

1 SCR 177 at paragraph 23:

[23]

The unlawful means tort creates a type of “parasitic” liability in a

three-party situation: it allows a plaintiff to sue a defendant for economic loss

resulting from the defendant’s unlawful act against a third party. Liability to the

plaintiff is based on (or parasitic upon) the defendant’s unlawful act against the

third party. While the elements of the tort have been described in a number of ways,

its core captures the intentional infliction of economic injury on C (the plaintiff) by

A (the defendant)’s use of unlawful means against B (the third party): see H. Carty,

An Analysis of the Economic Torts (2001), at p. 103; J. W. Neyers, “Rights-based

justifications for the tort of unlawful interference with economic relations” (2008),

28 L.S. 215; G. H. L. Fridman, The Law of Torts in Canada (3rd ed. 2010), at pp.

773-75; P. H. Osborne, The Law of Torts (4th ed. 2011), at pp. 336-38; P. T. Burns

and J. Blom, Economic Interests in Canadian Tort Law (2009), at p. 186. There is

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no dispute here that this is an intentional tort; the focus of the dispute in this case is

on the unlawful means element.

[958] With respect to the unlawful means element, the Supreme Court stated at paragraph 76:

I conclude that in order for conduct to constitute “unlawful means” for this tort, the

conduct must give rise to a civil cause of action by the third party or would do so if

the third party had suffered loss as a result of that conduct.

[959] Comstock states that PCS acted unlawfully towards AMEC by usurping its role as decision-

maker under the contract. As PCS points out, this intentional tort was not pled against PCS. In

any event, I do not accept that there is a basis for finding PCS liable for unlawful interference

with economic relations. AMEC has not established it suffered a loss as a result of conduct by

PCS that would give rise to a civil cause of action on the part of AMEC against PCS.

[960] With respect to the claim that AMEC is liable to Comstock for unlawful interference with

economic relations, Comstock argues that AMEC acted unlawfully by breaching its obligation to

act as an impartial decision-maker under the contract and by issuing the Notice of Default without

conducting an analysis of whether any defaults existed. It says that this was a breach of AMEC’s

duties to PCS, and was actionable by PCS against AMEC.

[961] However, to find liability against AMEC under the unlawful means tort, the Court must

find that AMEC intentionally inflicted economic injury on Comstock by AMEC’s use of unlawful

means against PCS. Mere foreseeability of economic loss to Comstock is not enough. (See

paragraphs 95 to 97 of the decision of the Supreme Court of Canada in A.I. Enterprises, supra.)

[962] The evidence does not support a finding that AMEC committed an unlawful act against PCS

with the intention of causing Comstock economic injury.

[963] I do not find that AMEC is liable for wrongful or unlawful interference with Comstock’s

economic interests.

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B. DAMAGES

1. What damages is Comstock entitled to seek recovery of according to the contract?

[964] It is not disputed by the parties that in the absence of the right to terminate for default or

fundamental breach, Comstock’s recovery of damages is limited to damages recoverable had PCS

terminated the contract for convenience under G.C. 46.8.2. This is in accordance with the

“minimum performance principle” described by the Ontario Court of Appeal in Atos IT Solutions

v. Sapient Canada Inc., 2018 ONCA 374 (CanLII).

[965] PCS had the option of terminating for convenience, which would have limited the damages

recoverable by Comstock. The Court therefore must assess Comstock’s damages as if it was

terminated for convenience.

[966] GC 46.8.2 states:

In the event of termination under G.C. 46.2, in addition to compensation under G.C.

46.8.1, OWNER will pay CONTRACTOR an amount to be determined by

ENGINEER, which will fairly compensate CONTRACTOR in the circumstance

for the cost of removal of CONTRACTOR’s and Subcontractor’s Plant, tools and

Temporary Facilities from the Site to CONTRACTOR’s and Subcontractor’s

headquarters for the Work; and the cost of repatriation of CONTRACTOR’s and

Subcontractor’s staff and workers on the Site to CONTRACTOR’s and

Subcontractor’s headquarters for the Work.

[967] GC 46.8.1 states: