Muskrat Falls contractor pursuing suit after being thrown off megaproject

Great Western Forestry disputes Nalcor Energy’s claim its work on the Muskrat Falls (Newfoundland & Labrador) project was not up to snuff.

The contractor — once tasked with clearing trees from a transmission line right of way between Muskrat Falls and Churchill Falls — is pressing a lawsuit against the provincial Crown corporation, claiming Nalcor was the one to breach their contract.

In a February 2014 court filing, the company claims Nalcor wrongly terminated the contract in November 2013, handing the work to Johnson’s Construction.

The clearing job has since been completed. Johnson’s was paid significantly more for the work.

To date, Great Western Forestry and Nalcor have filed competing claims relating to the initial, failed contract.

As reported last week, Nalcor has also more recently filed a statement of claim against Western Surety, the principal on the $16.6-million performance bond for the contract with Great Western Forestry, stating Western Surety did not step in as required.

“At all times material to this proceeding Great Western Forestry was and it continues to remain engaged in the business of harvesting and clearing timber, a business which it has carried on since 2002,” the contractor stated in its February 2014 statement of claim.

The company says its work on the Muskrat Falls project was impeded by forest fires that closed area roads, what it has referred to as a force majeure event, and improper Nalcor interference in how it went about its clearing work.

Apart from competing ideas as to what forested area should be tackled when, Great Western Forestry says Nalcor required direct supervision of equipment operators within 15 metres of power lines, as opposed to an expected 5 1/2 metres, resulting in delays.

Great Western Forestry claims it also bid the contract on a tender that did not include certain premiums for worker pay, later promised to workers by Nalcor, including a “Labrador premium” of $3.50 per hour and a “shift premium” of $3 per hour, for workers not on a day shift. The contractor asked to be paid more as a result, but that was rejected by Nalcor in September 2013, it claims.

The company says when Nalcor complained it was falling behind and issued notices of default on the contract on Oct. 7 and 25, 2013, it responded with recovery plans, as per agreed expectation in such a situation.

“At the time that Nalcor issued a Notice of Termination (in November 2013), Great Western Forestry had fully mobilized all necessary equipment and personnel to regain and reattain the contract schedule,” the company states.

The contractor says its agreement with Nalcor provided for a notice of termination to be disputed, indicating it was “ready, willing and able” to do the work, but says Nalcor would not entertain its appeals.

Great Western Forestry is claiming $11.6 million, plus added costs for demobilization of the contractor’s team, lost profit and damage to the company’s reputation.

For its part, Nalcor wants $20.6 million in damages relating to the change in contractors, claiming the contractor failed to perform.

All claims have yet to be proven in court.

The Telegram has contacted to Great Western Forestry after being told a leading representative for the company may speak to recent stories on the cancelled contract and, if so, could be in a position to respond later this week.


On Nalcor Energy-Great Western Forestry legal actions

March 11, 2013 — Nalcor contracts Great Western Forestry to clear 250-kilometre right of way for two, parallel transmission lines. Price: $29.7 million.

Nov. 15, 2013 — Contract terminated.

Feb. 10, 2014 — Great Western Forestry gives notice, making proposal to creditors, under the Bankruptcy and Insolvency Act.

Feb. 11, 2014 — Great Western Forestry files lawsuit against Nalcor with the Supreme Court of Newfoundland and Labrador. Nalcor countersues.

July 11, 2014 — The meeting of Great Western Forestry’s creditors. Nalcor is not allowed to vote as creditor it had hoped, challenges in court.

Jan. 21, 2015 — Court of Queen’s Bench in N.B. finds Nalcor dealt with appropriately, noting no guarantee Nalcor owed what it claims given ongoing dispute.

Jan. 23, 2015 — At Supreme Court of Newfoundland and Labrador, Nalcor files amended defence and counterclaim against Great Western Forestry’s suit.

March 26, 2015 — Nalcor files suit with the Supreme Court of Newfoundland and Labrador against Western Surety, principal on performance bond related to failed contract. Facts match with those in Great Western Forestry case, but highlight claim Western Surety did not step in as required.