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Recent Cases Oct 30, 2019

Successful Judgment and Dismissal of a Claim Against Hydro-Québec and SEJB

On October 23, 2019, the Superior Court ruled against the joint-venture Janin Atlas Inc. and Bot Civil Inc. (“Janin-Bot”) to pay Hydro-Québec and Société d'énergie de la Baie-James (collectively, “SEBJ”) an amount of $2,979,447 plus interest at the legal rate, plus additional indemnity as of December 15, 2004, legal costs,including expert fees, thereby rejecting Janin-Bot’s claim against SEBJ, which totalled $33.4 million, and granting SEBJ’s counterclaim. BCF acted for SEBJ in this case, the facts dating back to 2002 to 2004.

The litigation regarded the work carried out by Janin-Bot to build the temporary Eastmain River bypass canal (the “Bypass”), a necessary structure to allow the Eastmain-1 hydroelectric power station to be built on dry land. The contractor bid for an amount of $26 million and alleges that, after completing the project, the cost for building the Bypass would have reached $62.5 million.

Janin-Bot claimed from SEBJ the amounts it allegedly incurred in excess of the costs for carrying out the work and attributed these cost overruns essentially to geological conditions that would have been different from those provided for in SEBJ’s tender documents and that it used in the structure’s design. Janin-Bot claimed that SEBJ had failed to fulfil its duty to provide relevant information. Janin-Bot also claimed the additional costs that would have been generated by the additional work and the delays that would have been incurred to carry out the work, for which Janin-Bot blames SEBJ. As for SEBJ, it felt that the geological conditions were not different from the ones forecasted, that it had not failed to provide relevant information and that only $3 million of the additional costs claimed would be attributable to SEBJ. Considering the $6 million SEBJ had already paid, under reservation, SEBJ requested a repayment of nearly $3 million.

The Superior Court, presided bythe Honourable Marie-Anne Paquette, rejected Janin-Bot’s claim in it’s entirety and granted SEBJ’s counterclaim.

The Superior Court, in a lengthy judgment, found that SEBJ had not breached its obligation to inform Janin-Bot. Instead, it considered that the contractor had shown “carelessness” in learning about the site’s geology and in taking into account the available information, including for instance, drilling reports. In this regard, the Court takes into account the fact that Janin-Bot failed to consider important geological information when bidding and that, in such circumstances, SEBJ’s failure to provide relevant information is difficult to invoke. The geological expert appointed by Janin-Bot admitted, at trial, that the information Janin-Bot neglected to consider in the call for tenders was essential, and that the contractor had the obligation to consult these drilling reports. The Superior Court also pointed out that Janin-Bot chose not to inform their drilling-blasting subcontractor of their own geological analysis, which in turn complained about the geological conditions different from those set out in the drilling reports and the challenges during the construction work that would have ensued. The subcontractor’s representative also learned, for the first time during thetrial, of some geology-related documents that Janin-Bot had in their possession, which showed the foreseeability of the geological conditions.

Finally, the Superior Court concluded that Janin-Bot had not respected the contract’s provisions allowing them to obtain a contractual price adjustment due to the geology. More specifically, the Court concluded that Janin-Bot failed to prove that there was a significant discrepancy between the geological conditions encountered during the construction and those announced in the tender documents. It thus dismissed the contractor’s claim based on the geological conditions encountered.

As for the analysis ofthe delays incurred at the construction site, the Superior Court identified several elements attributable to Janin-Bot that may have contributed to the delays, including: (i) deficiencies in monitoring the quality of the work; (ii) insufficient personnel and equipment mobilization at the beginning of the project to carry out certain work; (iii) delay in the implementation of the second night shift and lack of staff; and (iv) qualificationdeficiencies of Janin-Bot’s key personnel.

Thus, the Superior Court confirmed that the issues encountered by Janin-Bot during the construction phase were their responsibility and that SEBJ could not be held liable.

The Superior Court reiterated the the need for expert evidence to analyze the delays and merits of a claim. However, the evidence presented by Janin-Bot in this regard is insufficient or non-existent. The court also notes that the claim for compensation prepared by a contractor, according to the parties' own admission, does not prove its content. On the other hand, the Superior Court accepted the opinion of SEBJ’s experts that Janin-Bot’s claim is closer to the total cost method (which is prohibited in such claims), since many of the costs claimed by Janin-Bot are not real, are not related to the alleged causes of events, and this, in addition to beingovervalued and overestimated by means of lost productivity, maintenance costs or acceleration costs already included in the rates.

In the end, despite the loss alleged by the contractor, the Superior Court ruled in SEBJ’s favour and ordered Janin-Bot to pay the sum of $2,979,447, in addition to interest at the legal rate plus the additional compensation and legal costs, which include expert fees.

Essentially, this decision reiterates the well-known legal concept that the contractor called upon to bid for the execution of work has an obligation to inquire about the parameters of the work to be performed, an obligation being the corollary of the obligation to inform the client. The contractor’s failure to meet its obligations in this regard is significant and only the contractor will be to blame in such circumstances.

The Superior Court acknowledged that, while the work execution had its share of problems, the contractor could not simply blame all the delays and costs incurred on the client, without considering his own faults in the execution of the work.

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