A Supreme Court judge has ordered Nalcor to pay a financing company $892,000 related to a cancelled contract for clearing land for transmission lines.
In October 2013 Nalcor cancelled its contract with Great Western Forestry to clear the right of way for power lines between Muskrat Falls and Churchill Falls.
The company was behind schedule and wasn't going to complete the work on time, so Nalcor hired Johnsons Construction to complete the work, for more money.
Nalcor was worried that delays would jeopardize the now almost $12-billion project.
"Nalcor did not have a juristic reason to refuse to pay TCE." - Justice Deborah Paquette
While it was doing the clearing work, Great Western was using money from TCE Capital Corporation to pay its contractors and employees.
At the centre of the court case was the last invoice that Great Western submitted to Nalcor for clearing work done before the contract was cancelled.
Great Western had an arrangement where it would get money in advance from TCE, and then Nalcor would pay the invoices directly to TCE.
'This argument is unpersuasive'
Nalcor initially told TCE it would pay the last invoice, but then it refused to do so.
The corporation argued that because Great Western breached the terms of the contract, it was keeping the money to cover the extra cost of hiring a new contractor to finish the work.
But Justice Deborah Paquette disagreed.
"This argument is unpersuasive," she wrote in a decision released Monday.
"Nalcor did not have a juristic reason to refuse to pay TCE."
Not only will Nalcor have to pay the invoice, it will now have to pay interest on the money and cover TCE's legal costs.
"The company is reviewing yesterday's decision and will provide further information once this review is complete," Karen O'Neill, a spokesperson for Nalcor, told CBC News in an email.