Executive Summary: Key Legal and Evidentiary Issues

• Colony wrongfully terminated its contract with PR Construction, entitling PR to damages.

• Change Order 15 (CO 15), which covered Winter Work, was found valid and enforceable despite Colony's objections.

• CO 15 invoices were only partially substantiated; PR was awarded $1,099,077.00 of its $2.75M claim under CO 15.

• Colony’s allegations of a conspiracy between Ronald and Lacroix were dismissed due to insufficient evidence.

• No damages were awarded on Colony’s counterclaim, as Lacroix's employment breaches caused no proven loss.

• The Guarantee Company of North America (GCNA), as bond surety, was held jointly liable under the Labour & Material Bond.

Background and contractual relationships

In 2012, PR Construction Ltd. subcontracted with Colony Management Inc. for steel erection work on the Syncrude Canada Ltd. Mine Replacement Project at Mildred Lake, Alberta. Colony, in turn, was subcontracted to Kiewit Management Co., which worked under Fluor Canada Ltd., the project manager. PR’s contract was backdated to December 19, 2012, and included special terms that excluded certain “flow through” provisions found in standard construction contracts, thus increasing Colony’s financial exposure.

Change Order 15 and the dispute over Winter Work

Delays caused PR’s work to extend into winter months. To address added costs, PR and Colony executed CO 15 on June 17, 2013. The order set a compensation methodology based on inefficiency factors tied to winter conditions. Lacroix, then a Colony project manager, signed CO 15. Colony later challenged its enforceability, arguing Lacroix lacked authority, the order lacked consideration, and the methodology was vague. The Court found Lacroix had legal authority at the time and rejected arguments of uncertainty and lack of consideration. The methodology was based on projected labour inefficiencies due to winter, using hourly rates and scheduling adjustments.

Termination of contract and enforcement of CO 15

Despite CO 15 being entered into, Colony refused to pay invoices submitted under it, citing insufficient documentation. On February 24, 2014, Colony declared CO 15 “void, invalid and cancelled.” The Court found this correspondence constituted an anticipatory breach. PR issued Notices of Default and suspended work starting March 12, 2014. Colony terminated the contract on March 17, 2014. The Court held that Colony wrongfully terminated the contract and that PR’s suspension was justified by Colony’s repudiation.

Claims and damages

PR claimed approximately $6.5 million against Colony and GCNA. The Court found CO 15 enforceable but determined only $1,099,077.00 was owed due to documentation gaps. Additional claims totaling $3,661,360.77 were partially upheld. Set-offs claimed by Colony were assessed, and some were accepted. Colony’s claims of overpayment or improper invoicing were rejected where PR’s documentation and prior acceptance sufficed.

The Court noted PR’s internal Cost Allocation Sheet (CAS) was the agreed-upon method of tracking hours, though inconsistently used. Expert witness Peter Dent reviewed CAS entries and adjusted claimed amounts. The Court disallowed reliance on PR’s 2020 "truing up" calculations.

Conspiracy and employment claims

Colony counterclaimed against Lacroix (and his company, 0989842 BC Ltd.) and Ronald, alleging conspiracy and breach of fiduciary duty. The Court rejected the conspiracy claim, finding no evidence of unlawful agreement or intent to harm. While Lacroix did breach employment obligations (e.g., failing to follow Thompson’s instructions, revealing internal discussions), no damages were proven. Thus, no compensation was awarded on the counterclaim.

Bond liability

GCNA, which issued a $23,134,480.00 Labour & Material Bond for Colony, was held jointly liable. The Court rejected GCNA’s argument that the claims were for extras and thus not bond-covered. It found PR’s claims fell squarely within the bond’s scope for work performed and were supported by sufficient documentation shared with Colony and GCNA.

Outcome

PR Construction was awarded $1,099,077.00 under CO 15, plus additional amounts on other invoices, less applicable set-offs. Colony was denied recovery on its counterclaim. GCNA was found jointly liable under the bond. The Court invited parties to calculate the final amount owed based on its findings and reserved the issue of costs for further submissions.

No exact amount provided for monetary award at this stage.