Nfld. & Labrador

Marine Atlantic loses court appeal over dock dispute

Marine Atlantic won't be getting the $1.3 million it had hoped for from a construction company.

Court overturns $1.3M win for Crown corporation over Argentia wharf construction

Marine Atlantic won't be receiving payment from the contractor it hired to construct a wharf in Argentia, work that was never finished. (Tom Ayers/CBC)

Marine Atlantic won't be getting the $1.3 million out of a construction company it had hoped for, after losing a court dispute over the construction of a wharf in Argentia.

The Crown corporation, which operates ferries between Newfoundland and Nova Scotia, lost an appeal Monday.

The matter stems from a $2.8-million contract Marine Atlantic awarded to RJG Construction, a company headquarted in St. John's, in 2013.

Marine Atlantic insisted the work wasn't being done on time so it froze payments to the company. RJG terminated the contract because it wasn't getting paid and the companies sued each other.

A lower court ruled that Marine Atlantic was right to freeze the payments and awarded the company $1.3 million, plus court costs.

But on Monday the Court of Appeal of Newfoundland and Labrador disagreed.

"Marine Atlantic's contractual obligation to pay was a substantial and important one, and freezing payment amounted to denying RJG of the principal benefit arising from the contract," wrote Justice Francis O'Brien in the court decision.

"There was no contractual or common law justification for Marine Atlantic's action in freezing funds."

Marine Atlantic on hook for damage and costs

After losing the court case, Marine Atlantic will likely now be on the hook for not just damages, but RJG's legal costs as well.

That number still needs to be figured out.

The Court of Appeal has now sent the case back to the province's Supreme Court to hold hearings into what sort of damages RJC would be entitled to.

If it so chooses, Marine Atlantic can appeal Monday's decision to the Supreme Court of Canada.

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