Appeals court upholds decision ordering N.L. to pay quarry company $10M

City Sand and Gravel operated off Topsail Road, near the Outer Ring Road, in Paradise. (Google Maps - image credit)
City Sand and Gravel operated off Topsail Road, near the Outer Ring Road, in Paradise. (Google Maps - image credit)
Google Maps
Google Maps

An appeals court has upheld an order for the Newfoundland and Labrador government to pay $10 million to a salt and gravel company over lost business during construction of the Outer Ring Road in the late 1990s.

On Nov. 8, Justice Gillian Butler wrote in her decision that City Sand and Gravel Ltd., which operated a quarry near Paradise until 2018, is entitled to compensation.

Problems began in 1994, when a Department of Transportation and Works commissioned a report that concluded no changes to the company's drilling and blasting operations would be needed to accommodate the Outer Ring Road and that only intermittent road closures would be required.

Between 1995 and 1996 the province expropriated property from City Sand and Gravel for the construction of the new highway. At its closest point the proposed highway was about 40 metres from the quarry.

In March 1997 the company expressed concerns that the Outer Ring Road would adversely affect its quarry operations and advised the department's counsel that land expropriation could lead to detrimental loss of business.

The department maintained the company would not have to change its drilling and blasting operations.

In 1998, a blast at the quarry resulted in a "flyrock incident," with debris landing outside the quarry, damaging a nearby subdivision development. Operations were suspended and didn't resume until July 1999.

As the company neared the second phase of the quarry's operations, approved by the province in 2008, it began preparing for possible problems with the nearby Outer Ring Road.

CBC
CBC

City Sand and Gravel hired an outside company to complete a risk assessment. That company recommended that all development and production blasts within 100 metres of the new highway be covered with rubber tire blasting mats, something City Sand and Gravel had never used before.

The province imposed the conditions in its final approval for the blasting plan in 2011.

The final blast took place in November 2014. By 2018 the existing stockpiles at the quarry were exhausted. City Sand and Gravel shut down that year, deciding it wouldn't be economically feasible to continue with the second phase under the province's requirement to use blasting mats, which had nearly tripled the normal cost of quarry operations.

In October 2018, City Sand and Gravel filed an application with the Public Utilities Board asking it to determine the compensation payable to them for their detrimental affection claim.

They sought $10,356,443.92 plus interest and costs and won that decision in April 2021.

The provincial government appealed, arguing the PUB had "erred in finding that the expropriation and construction of the ORR resulted in unreasonable interference with the use of the respondents' lands sufficient to constitute detrimental affection."

The appeal also took issue with the amount of the compensation, arguing there was value to the rock remaining in the quarry but the company decided not to continue.

The appellate court decision upheld the finding of unreasonable interference, and reduced the original award by just over $109,000, the value of rock that had been produced in the second phase before the company shut down operations.

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