Penvidic Contracting Co v International Nickel Co of Canada (1975) 53 DLR (3d) 748 Can Sup Ct. - view case report in pdf format

Keywords

Construction law - assessment/quantum of damages - change in method of working - delay and disruption/interruption - proof and evidence of damage - whether cost records required - whether repricing/revaluation of work on basis of expert evidence acceptable method of assessment - best estimate rule applied

Facts/background

In this case a railroad contractor had undertaken to carry out track laying and surface ballasting to a 47.5 mile long railroad in Manitoba. The employer was in breach of its implied obligation ‘to facilitate the work’ in a number of respects including failure to provide the necessary rail link to an existing railway for plant access. This factor alone resulted in revision to the whole method of construction whereby the contractor was required to commence work at a half way point and work in two directions. In the first instance, the contractor revalued the work claiming an additional 25c per ton on the contractual rate for top ballasting in compensation. This was based upon the difference between the contractual rate per ton of ballast and the rate which he would have demanded had he foreseen the adverse conditions caused by the failure to provide the rail link. At trial the contractor, due to having insufficient cost data, claimed damages for breach of the implied term assessed on the same basis as the revaluation of the work. The claim for damages was successful and in the Supreme Court of Canada Spence J said (at p755) that:

"In an ordinary case, the plaintiff in an action for damages for such breaches of contract would prove the additional costs which it incurred. As Wilson J points out in his reasons for judgement, despite the length of the trial, "...the evidence was not as helpful as one would have expected and more records giving more particulars of when and where different types of work were being done would have been very useful." Under these circumstances, the plaintiff chose to put its claim for this extra ballasting on the basis of a claim for an additional sum per ton. That is the fashion in which it had attempted to have the respondent agree to pay extra compensation. That such an attempt ended in failure does not prevent the award of damages using the same measure as had been used in the vain attempt to obtain extra compensation.

The learned trial judge expressly accepted the evidence of ...an independent witness giving evidence for the plaintiff, who was asked this question:

Q: And as a person who has advised in bidding on these jobs, what do you think of the figure of 60c a ton for laying ballast by the method that he was, in the main, obliged to use?

A: Reasonable"

The Issue of Law and decision

On the issue as to whether the trial judge was correct to allow an assessment of damages on the basis of a ‘revaluation’ of work Spence J referred to a number of authorities including Wood v Grand Valley R Co (1913) 16 DLR 361. In that case Davies J had said as follows in applying the underlying principle (6.8) laid down in Chaplin v Hicks (6.10):

"It was clearly impossible under the facts of that case to estimate with anything approaching mathematical accuracy the damages sustained by the plaintiffs, but it seems to me to be clearly laid down there by the learned Judges that such an impossibility cannot "relieve the wrongdoer of the necessity of paying damages for his breach of contract" and that on the other hand the tribunal to estimate them whether jury or Judge must under such circumstances do "the best it can" and its conclusion will not be set aside even if "the amount of the verdict is a matter of guess work."" (Emphasis added by Spence J).

Spence J then said (at p757) that:

"I can see no objection whatsoever to the learned trial Judge using the method suggested by the plaintiff of assessing the damages in the form of additional compensation per ton rather than attempting to reach it by ascertaining items of expense from records which, by the very nature of the contract, had to be fragmentary and probably mere estimations."

Note up
(To update, type Penvidic in search box at worldlii)

  1. Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002bcsc1460 (Supreme Court of British Columbia) - paragraph 931 - Chaplin v Hicks/Penvidic/best estimate rule applied - proposed criticism of Penvidic rejected (paragraph 937)

  2. Lakatoi Universal Pty Ltd v L.A. Walker; Ensile Pty Ltd v Walker Consolidated Investments [2000] NSWSC 113 (Supreme Court of New South Wales) - paragraph 1391 to... - lost opportunity - Chaplin v Hicks/Penvidic/Fink v Fink/best estimate rule applied

  3. Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142 - (Supreme Court of Canada) - Chaplin v Hicks/Penvidic/best estimate rule applied

  4. Attorney General v Shimizu Corporation [1996] HKCFI 499 - (Hong Kong Court of First Instance) - Chaplin v Hicks/Penvidic/best estimate rule applied

  5. Redpath Industries Ltd. v. Cisco ( The ) ( C.A. ), [1994] 3 F.C. 279 - Canada - Federal Court - Penvidic applied

  6. Miller Dredging Ltd. v. The "Dorothy Mackenzie" (1994), 98 B.C.L.R. (2d) 71 (B.C.C.A.) - referred to in Golden Hill at paragraph 930.

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Extracts from Supreme Court of Canada judgments