A B.C. Court of Appeal ruling has upheld a B.C. Supreme Court (BCSC) ruling allowing CMI Roadbuilding Inc. to appoint a receiver to sell a US$3.087 million asphalt plant it sold to Key-West Asphalt Products Ltd. in mid-2020.
“We are in the process of selling it,” said Ricky Dhatt, CEO of the Key-West Asphalt Products, who is also the owner and president of Key West Asphalt (333) Ltd., Key West Asphalt and other Key West companies, all located at the same Surrey address.
Dhatt said he is attempting to regain his deposit. FTI Consulting Canada Inc. has been appointed the receiver following the December B.C. Court of Appeal ruling.
Court records state the U.S. company negotiated a deal where Key-West Asphalt Products was to pay 20 per cent down, US$25,000 monthly for 12 months after the commission/production date and the balance within 12 months.
“To date, Key-West has only paid 20 per cent down to activate the order,” the December ruling stated.
BCSC records state CMI learned “Key-West was operating the subject plant in a manner that CMI considered a risk to its integrity and safety of those using it.”
On May 26, 2022 CMI petitioned the court to appoint a receiver to gain control of the plant and sell it with the funds paid into the court. The BCSC September decision centred on commissioning and Key-West’s obligation to pay.
Key-West had trucked the plant to Williams Lake, B.C., in three stages from the U.S. and a CMI commissioning technician helped with the assembly and onsite testing in late October 2020. Key-West did not operate it until 2021.
Key-West argued the company did not have to pay until the plant reached a commissioning/production of 300 tonnes which was never reached.
The court document describes the plant as having the ability to produce approximately 300 tonnes but with no guarantee and required 13 operating conditions, most of which Key-West didn’t meet or provide.
Key-West submissions to the court found no favour with the judge. It claimed the plant operated190 hours over three days in October 2021 and six days in February 2022. Court evidence found the plant was used on 62 different dates from September 2021 to May 2022 producing a total of nearly 30,000 tonnes of asphalt with much used on a government contract that required a total of 55,000 tonnes for a 41-kilometre stretch of road.
“All such production was undertaken by Key-West without telling anyone at CMI that the subject plant was running or that it was mixing asphalt,” the court record said.
Key-West supplied expert testimony to support its conclusion that neither the commissioning or production figure had been met.
However, the court rejected the expert witness statement stating he had no expertise in the field and was mainly a fire investigator. Secondly, a court should not rely upon an expert witness for meaning of ordinary words in an agreement.
The BCSC judge determined the plant had been producing and could be considered commissioned “well before the end of 2021.”
The judge claimed Key-West failed to disclose the extent of actual production to the court and that kept CMI from knowing when production began and its extent.
“It did that to rationalize its non-compliance with its contractual obligations to make payment,” the BCSC court found.
Key-West appealed the BCSC decision arguing the court could not bring a receivership order under CMI’s petition but it should have been brought under a civil order.
The BC Court of Appeal judge rejected the argument stating although jurisdiction came under the Law and Equity Act, it relied upon Rule 10 of the Supreme Court Rules which empowers a justice to appoint a receiver. The appeal judge would also not grant Key-West a stay.
The blow to Dhatt comes after emerging in January 2022 from a five year-ban on contract bidding imposed by the City of Chilliwack.
In January 2017 council voted unanimously to strike Key-West Asphalt (333) Ltd. from its bidding list as a contractor or subcontractor.
The motion extended to any company comprised of the same critical team members and equipment as Key-West.
City staff’s report citied safety concerns such as leaving a traffic area unsupervised and quality of work done.
WorkSafeBC has reported only two fines against Key-West Asphalt (333) Ltd. for safety violations.
In February 2017, a worker in Chilliwack fell from a shoulder grader that was found to be unsafe and was injured. A fine of $15,925.51 was levied. In November 2021, in Williams Lake, a skid steer loader struck and injured another worker. Lack of training was cited and a $13,560.94 fine imposed.
Key-West is featured in the Williams Lake Tribune in late 2020 as having successfully complied the city’s paving contract on time and also having secured a provincial highways contract.
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