Mill claims it had deal with firm to design, install pollution control systemNorthern Pulp is suing a company it alleges walked away from a contract to design and install an air pollution control system, a move the Pictou County mill claims caused the cost of the work to substantially increase.In a statement of claim filed last week in Nova Scotia Supreme Court in Halifax, Northern Pulp says it entered into an agreement on March 3, 2014, with Clyde Bergemann Canada Ltd. for the design, delivery, purchase and installation of a new recovery boiler electrostatic precipitator.
The mill alleges it wasn’t until the following July that Clyde Bergemann sought bids for the project’s on-site assembly and not until Aug. 18, 2014, that it accepted a bid from Lorneville Mechanical Contractors Ltd. of Saint John, N.B.
The claim notes the mill expressed concerns about the delays because the project had an agreed-to startup date of May 12, 2015, significant because the mill’s industrial approval from the province called for it to be operational by May 30.
“At all material times, Clyde Bergemann was fully aware of the schedule for the project,” said the claim.
“Northern Pulp reminded Clyde Bergemann on numerous occasions of the importance of keeping the project on schedule.”
The delays meant the subcontractor lost the ability to work through the summer months, the claim said. It alleges that twice in October 2014 the company tried to renegotiate the contract, saying it could be completed on time if the mill agreed to pay more.
Several more times in the following months, according to the statement, the company told the mill it could get the job done on time “but at significant additional cost.”
In a letter to the company on Feb. 9, the mill characterized Clyde Bergemann’s “interesting approach” thusly: “agree to price, sign a contract, delay the job and demand additional payment to complete the job.”
The company allegedly went on to tell Northern Pulp it needed more money due to its inability to secure competitive bids for some work and extreme weather conditions. The mill continued to maintain that it expected the work to be completed as per the original terms.
By the middle of February, with the province’s deadline looming, the company started using the term “force majeure” in its correspondence and the mill advised that it would treat any delays as a “wilful breach” of the contract.
At the end of that month, the company allegedly said it was terminating contracts and walking away.
By mid-March, “Northern Pulp was forced to directly procure the services of Clyde Bergemann’s former subcontractor, LMC, in order to complete the installation of the precipitator, but at costs substantially in excess of the price payable under the (original) contract and significantly later than the deadline in the (original) contract.”
(The precipitator was expected to cost $22 million.)
In its statement of claim, Northern Pulp says the onus was on Clyde Bergemann to bring itself within the force majeure clause in the contract, and the company failed to do so. “There was no event that made it impossible for Clyde Bergemann to carry out its contractual obligations under the installation and service contract.”
The mill alleges Clyde Bergemann’s actions “constitute wilful misconduct, gross negligence and wrongdoing.”
“Northern Pulp incurred substantial costs in an effort to compensate for delays in the construction schedule, including increased costs associated with running two shifts of approximately 200 workers around the clock at the Pictou mill.”
The mill is claiming damages for breach of contract, indirect and consequential damages and losses, including loss of profit, revenue, use and production, punitive damages, prejudgment interest and costs of the action. The allegations have not been proved in court. Clyde Bergemann has yet to file a notice of defence.