Higgs government loses legal bid to pay less for Fredericton-Moncton highway maintenance
The Higgs government has lost its legal bid to avoid paying more than $300 million to the company that built and maintains the Trans-Canada Highway between Moncton and Fredericton.
The New Brunswick Court of Appeal has ruled that the province had no legal right to challenge an arbitration decision that it should pay that amount to the Maritime Road Development Corporation.
The province, through a Crown corporation called the New Brunswick Highway Corporation, felt it should pay MRDC only $164.3 million for the final 10 years of the contract.
MRDC wanted $438.8 million.
The case revolves around a 195-kilometre stretch of highway that became a major political controversy as it was being built: a newly twinned road that, under an initial Liberal government plan in 1998, would require drivers to pay tolls.
The dispute was over what the province was required to pay MRDC for maintenance for the final 10 years of the contract from 2018 to 2028.
When they couldn't agree, the two sides went to an arbitration panel chaired by former Supreme Court of Canada Chief Justice Beverley McLachlin.
It came up with the figure of $307.6 million, close to the midpoint between the two numbers.
The province then tried to challenge that figure.
Appeal court upholds decision
The New Brunswick Highway Corporation filed a motion with the courts asking for a ruling that it could challenge the arbitration decision on legal points.
But the judge hearing that motion said based on previous Supreme Court rulings, the province could only fight the award if there were a "palpable and overriding error," which did not exist in this case.
A three-judge panel of the appeal court has now upheld that.
"NBHC asks this Court to do exactly what the Supreme Court explicitly warned against," Justice Kathleen Quigg wrote in the decision.
Legal precedent "unquestionably instructs" that an appeal court can review a lower court's interpretation of a contract "only in rare cases," Quigg wrote.
"This is not one of them."
Contract signed 25 years ago
Premier Blaine Higgs said Friday he hadn't reviewed the decision and it was too early to say if the province would appeal it to the Supreme Court of Canada.
The initial contract was signed by a Liberal government in 1998 through the highway corporation with MRDC, a private-sector consortium.
Under the 30-year agreement, the province would pay the consortium for maintenance of the highway, while tolls charged to drivers would pay down part of the debt from construction.
The toll requirement became a major controversy in the 1999 election, with the Progressive Conservatives, led by Bernard Lord, promising to scrap it.
Lord's government negotiated a change to the contract that led the province to make so-called "shadow toll" payments based on traffic volume.
The province and MRDC agreed in 2013 to replace the shadow tolls with fixed monthly payments.
Under the maintenance part of contract, the highway corporation had to pay MRDC $172 million for the first 20 years of the agreement, with the amount for the final 10 years to be negotiated later.
When that point was reached in 2018, the two sides couldn't agree on the amount, triggering the dispute.