Prince Albert Pulp Co. Ltd. et al. v. The Foundation Company of Canada, Ltd.

Prince Albert Pulp Co. Ltd. et al. v. The Foundation Company of Canada, Ltd.

The final certificate did not bar P & W Pulpmills from asserting that Foundation incurred excessive costs or was negligent; the trial judge’s factual estimate of $200,000 set‑off was supported by the record and should stand; Foundation proved that a just debt was improperly withheld and equity required compensation by interest, which the Court fixed at rates equivalent to Foundation’s bank borrowing rates for the period from Nov 1, 1968 to the date of this Court’s judgment, under the Court’s power to fix interest as part of judgment (s.52 Supreme Court Act).

Citation
[1977] 1 SCR 200
Parties
Defendant/appellant: Prince Albert Pulp Company Ltd.; Defendant/appellant: Parsons & Whittemore Pulpmills Inc.; Plaintiff/respondent: The Foundation Company of Canada, Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
25 February 1976
Procedural Posture
Contract Action (cost‑plus Construction Contract) / Appeal and Cross‑appeal to the Supreme Court of Canada From Court of Appeal for Saskatchewan (cross‑appeal Allowed in Part)
Outcome
Cross‑appeal allowed in part
Legal Topics
Cost‑plus Contract, Final Certificate of Completion, Assessment of Damages by Estimate, Award of Interest for Wrongful Withholding, Interpretation of Interest Act, Judgment Interest Under Supreme Court Act
Source Language
English
Contract Interest Mechanics' Lien Civil Procedure Cost‑plus Contract Final Certificate of Completion Assessment of Damages by Estimate Award of Interest for Wrongful Withholding +2 more

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Parties

Prince Albert Pulp Company Ltd.

Defendant/appellant

Parsons & Whittemore Pulpmills Inc.

Defendant/appellant

The Foundation Company of Canada, Limited

Plaintiff/respondent

Procedural Posture

Contract Action (cost‑plus Construction Contract) / Appeal and Cross‑appeal to the Supreme Court of Canada From Court of Appeal for Saskatchewan (cross‑appeal Allowed in Part)

Legal Issues

  1. 1 Whether a final certificate of completion/preliminary acceptance precludes a contractor/owner from claiming that contract costs were excessive or that damage was sustained requiring set‑off
  2. 2 Whether Foundation was entitled to interest at its bank borrowing rate for amounts wrongfully withheld rather than statutory/fixed contract rate
  3. 3 Whether the trial judge’s award of $200,000 on the counterclaim should be disturbed

Ratio Decidendi

The final certificate did not bar P & W Pulpmills from asserting that Foundation incurred excessive costs or was negligent; the trial judge’s factual estimate of $200,000 set‑off was supported by the record and should stand; Foundation proved that a just debt was improperly withheld and equity required compensation by interest, which the Court fixed at rates equivalent to Foundation’s bank borrowing rates for the period from Nov 1, 1968 to the date of this Court’s judgment, under the Court’s power to fix interest as part of judgment (s.52 Supreme Court Act).

Court Disposition

Cross‑appeal allowed in part

Orders

  • Trial judgment for respondent in amount of $1,997,749.61, subject to the $200,000 set‑off previously allowed, is affirmed in respect of liability and set‑off
  • Vary Court of Appeal judgment: interest on the judgment to be calculated at rates equivalent to the respondent Foundation’s bank borrowing rates for the period from November 1, 1968 to the date of this Court’s judgment, with interest accruing from this Court's judgment thereafter under s.52 Supreme Court Act