Company that provides services to Northern Ranger sues ferry owner for $2.4M
The future of the Northern Ranger, a ferry on Labrador's north coast, is once again in limbo, with the company that provides services to the ship suing the owner of the vessel for $2.4 million.
In a statement of claim filed in federal court in early March, Canship Innu Marine alleges Natuashish Shipping has failed to make multiple payments since August, two months after the Mushuau Innu First Nation purchased the formerly retired vessel.
If Natuashish Shipping doesn't pay, the operating company is asking for the Northern Ranger to be sold to settle the debt.
According to the statement of claim, in January 2020 Canship Innu Marine agreed to provide services to the Northern Ranger including administration, accounting, crew training, supervision and management of dry dockings as well as repairs and maintenance.
It also says the agreement stated that Natuashish Shipping would pay an annual management fee of $250,000 plus 50 per cent of the net profits made off the Northern Ranger and would also pay an estimate of the expenses required to run the ship.
But Canship Innu Marine alleges those fees have not been paid, month after month.
According to the statement of claim, Canship Innu Marine made legal demands in early December for payments and later that month both parties agreed to written correspondence to a monthly payment plan for the outstanding amounts.
Canship Innu Marine says Natuashish Shipping made its first monthly payment of more than $450,000 in December but no further payments.
It says in the statement it continues to "incur-out-of pocket costs related to operations and maintenance of the Northern Ranger."
"By failing to respond to the Canship Innu Marine's correspondence regarding the outstanding amounts and a proposed resolution of [the] same, Natuashish has acted in bad faith," says the statement.
Natuashish Shipping denies allegations
In its statement of defence, Natuashish Shipping denies the allegations.
Natuashish Shipping says it did not enter into an agreement with Canship Innu Marine and that even if it is found that they did, it believes the operating company failed to perform its obligations and therefore breached any agreement.
Natuashish Shipping said that's because Canship Innu Marine failed to apply good management practices, like preparing or considering any reliable cash flow plan, and did not implement a proper budget for operating expenses, refit and dry dock repairs.
The statement says Canship Innu Marine failed to do its research on competitive freight and cargo pricing for the vessel, resulting in extremely low revenues and a decline in its revenue-generating capacity.
Natuashish Shipping also alleges Canship Innu Marine did not implement a proper business plan, analyze market conditions or target new customers.
The statement of defence says any money that was due to Canship Innu Marine has been received, and Natuashish Shipping is requesting that lawsuit be dismissed.
Neither statement has been tested in court, and there is no court date set yet.
Both companies declined CBC's request for comment on the lawsuit.
It's unclear what implications the court action will have on the services provided by the Northern Ranger.
