$612K award to Giant Mine contractor overturned
Appeal court says judge misinterpreted the contract
A $612,940 award to a company that worked on the cleanup of Giant Mine near Yellowknife has been overturned.
In a written decision released Thursday, a panel of three Northwest Territories Court of Appeal judges said the judge who granted the award to McCaw North Drilling and Blasting Ltd. misinterpreted a clause in the contract for the cleanup.
The dispute dates back to more than four years ago when McCaw North Drilling and Blasting initiated a lawsuit against Clark Builders, the general contractor the federal government hired to oversee cleanup work on the abandoned gold mine. McCaw was awarded $677,097 late last year — $612,940 it was claiming in standby costs, plus another $64,157 for drilling work it was not paid for.
McCaw was hired to drill holes around underground chambers containing highly toxic arsenic trioxide dust.
The $612,940 overturned was for standby costs associated with leaving its equipment standing idle on the site for months while a standard operating procedure could be developed to decontaminate the site.
The appeal court panel found Justice Shannon Smallwood, in awarding McCaw the money, had over-emphasized a generic clause in the contract that required the general contractor, Clark Builders, to "take all necessary steps to address the risks to the health and safety of people" helping with the cleanup.
Smallwood said it was up to Public Works and Government Services Canada, Clark Builders and an engineering firm hired to work on the project to develop a standard method of decontaminating equipment used on the site, including McCaw's.
But the appeal court said everyone on the project knew arsenic contamination was an issue and noted McCaw's contract required it to "perform final decontamination of all equipment, tools and materials ... prior to removal from site."
The three appeal judges went on to write, "The real problem was not the absence of a demand to prepare (the standing operating procedure), but McCaw Drilling's mistaken belief that it was not obliged to do so under the contract."
As a result, the panel said, any costs associated with delays to producing a standard operating procedure for decontaminating equipment rest with McCaw.
The appeal panel upheld the initial decision to award McCaw $64,157 plus tax and interest for extra work it had to do because of deviations in rock conditions where it was drilling.