$1.25M claim filed against GNWT following barge cancellation

Misrepresentation, ‘egregious’ negligence alleged by construction firm

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A Nunavut-based construction company impacted by last year’s barge cancellation has filed a $1.25 million claim against the Government of the Northwest Territories and its transportation service, citing damages as a result of negligence on behalf of the government.

The GNWT and its Marine Transportation Services is facing a $1.2 million lawsuit over its cancelled barge service to the Kitikmeot last year. photo courtesy of Marine Transportation Services

CHOU Consulting and Development Inc., a residential and commercial property developer, contracted the GNWT-owned Marine Transportation Service (MTS) in April 2018 to shipbuilding materials from Hay River to Cambridge Bay. The materials – estimated to be worth $690,000 – were to be used primarily for the construction of a four-plex condominium in the community, according to a statement of claim filed in federal court on Aug. 23.

After the construction company delivered the cargo to the loading port in Hay River before a July 1, 2018 deadline, the firm was told the shipment would be delayed. The company was assured the cargo would arrive by October 2018, according to the statement of claim.

In early October of last year, the GNWT cancelled the barge service, blaming thick ice and bad fuel that had to be returned, which Infrastructure Minister Wally Schumann called “unprecedented.” The service cancellation left the NWT community of Paulatuk, along with Cambridge Bay and Kugluktuk in Nunavut, without critical supplies, including diesel fuel, hunting essentials, construction materials and vehicles.

Businesses awaiting cargo were left in the lurch, while residents expressed frustration, anger and confusion.

When the GNWT promised CHOU Consulting and Development Inc. the cargo would be delivered by October 2018, according to the statement of claim, the government knew, or ought to have known, that its promise couldn’t be kept.

“The Minister and other defendants were aware that MTS had fully committed its marine resources to deliver cargo relating to contracts concluded with other commercial parties, including a major contract with the Government of Alaska, such that it would be impossible to deliver the cargo at the time promised,” the statement of claim alleges.

Following the initial delay, it’s alleged the GNWT, either deliberately or by negligence, made statements they knew or ought to have known were untrue when it repeatedly told the company its vessels weren’t being diverted to deliver other cargo, and that delay in the delivery was due to ice and weather conditions it “knew vessels had otherwise been engaged and were therefore not available to deliver the shipment.”

Following the scrapped cargo delivery to those communities, the GNWT airlifted priority supplies and goods to the affected communities. The rest of the cargo was stored in Inuvik, and was to be shipped during this year’s barge season.

While CHOU received some of its cargo by air during the winter, the bulk of the supplies were left in Inuvik, where it sustained damaged due to negligence on the government’s part, the claim alleges.

A failure to properly store and handle the supplies led to significant moisture damage and contamination, according to court documents. The construction company says improper storage also resulted in some supplies freezing, while the mishandling of a forklift caused extensive damage to machinery.

“They took no steps, or took inappropriate or insufficient steps, to mitigate the damage … despite being able to do so,” the claim states.

The government’s failure to deliver the cargo “when it was able to do so,” coupled with the damage sustained to the supplies, amounted to a breach of contract, states CHOU.

The company says the GNWT and its marine transportation service made reassurances about the cargo’s timely delivery they knew or should have known were “false, callous egregious and high handed,” court documents show.

The company is seeking $750,000 in general damages for breach of contract, negligent misrepresentation and negligence, along with $250,000 in special damages. Punitive damages — civil penalties meant to curb or correct conduct from large institutions and governments — to the tune of $250,000 are also being sought by CHOU Consulting and Development Inc.

The GNWT has 30 days from the time the claim was filed to respond to the allegations.