Priestly Demolition swings a lawsuit at Vale Canada

Plans to dismantle the now fully decommissioned Sudbury Superstack are in the works but there’s one company that won’t be bidding on the contract.

Priestly Demolition, one of Canada’s most high profile and longest standing demolition companies, is locked into a multimillion-dollar lawsuit against Vale Canada for a project it worked on in preparation for the stack takedown.

The dispute stems from the contract for the “demolition, abatement, removal and disposal” of the No. 1 Cottrell building at the Sudbury Copper Cliff awarded March 23, 2018. It housed a Cottrell system which collects dusts produced during the copper smelting process and was one of several adjacent to the furnace building and the superstack.

Work began in April that year but two years later in May 2020 Vale abruptly terminated the contract claiming Priestly repeatedly violated health and safety protocols on the project.

Priestly denied the allegation and claims Vale terminated the contract in “bad faith.”

Priestly continued to wind up until June 30. Meanwhile things escalated quickly and Vale was first off the mark, filing a lawsuit for breach of contract in July 2020 followed closely by Priestly which filed its own counter claim in August.

Priestly said it has been performing work for Vale for 20 years without issue and alleges during the course of the project Vale kept adding changes to the scope which “resulted in additional costs and delays.”

While Vale was aware their change orders, “express or implied” would result in extra costs, Priestly says, it hasn’t been paid the $2.413 million owed and is seeking payment through the court.

In addition, Priestly sought a further $6 million in damages for lost profits in connection with six demolition projects Vale was planning to let for tender, including the super stack.

Vale says the concrete is deteriorated and needs to come down since they don’t want to maintain a structure they no longer need, installing their $1-billion Clean AER (Atmospheric Emissions Reduction) Project in 2018.

That project is in the works with plans to break it down from the top chunk by chunk rather than with one big bang because of the toxins trapped in the liner which also has to be removed. It’s expected to take up to two years to complete and a tender has not been issued yet.

Priestly argued it’s among six projects that Vale is expected to tender in the future with an estimated value of $212.4 million.

Absent the lawsuit and conflict, Priestly argued it could have bid on them if not barred by Vale. It says it was successful on 14.64 per cent of Vale bids over 20 years and on average earned 20 per cent profit — projecting a lost profit of $6.21 million.

Priestly claims there were no deficiencies in its work, that the contract was wrongly terminated by Vale and in any event Vale breached its duty of good faith by holding Priestly to an unreasonably high safety standard not imposed on other contractors.

After an exchange of filings, claims and counterclaims, the parties went to court in fall 2020 with Ontario Superior Court Judge Breese Davies agreeing to grant Vale’s motion to strike out the $6 million claim.

In its pleadings, Priestly’s lawyers admitted it was a novel concept to claim for future earnings in a sector where jobs aren’t automatically awarded.

“Priestly argues that the future lost profits are damages that arise from the breach of the demolition contract for No. 1 Cottrell, were foreseeable by Vale when it breached the contract, and are quantifiable,” Justice Davies noted. “As a result, Priestly argues that even if its claim is novel and perhaps unlikely to succeed, it is not doomed to fail.”

However, Justice Davies continued, despite a “generous” reading of the claim and that despite it being a novel argument, it was destined to fail at trial because it was speculative and even if Priestly could prove future losses, there was no guarantee it would win any bids for future contracts.

Vale did not ask the court to dismiss the claim for $2.413 million in payment and that issue is still before the courts.

Priestly was also ordered to pay Vale $10,757.34 for their legal costs. The lawsuits however are still on the docket but both Priestly and Vale declined to comment because the matter is before the court.