CRUISE CONNECTIONS CHARTER MANAGEMENT 1, LP et al v. ATTORNEY GENERAL OF CANADA et al

Filing 102

MEMORANDUM AND OPINION. Signed by Judge Rosemary M. Collyer on 7/21/2014. (lcrmc1)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
CRUISE CONNECTIONS CHARTER )
MANAGEMENT 1, LP, et al.,
)
)
Plaintiffs,
)
)
v.
)
)
ATTORNEY GENERAL OF CANADA, )
et al.,
)
)
Defendants.
)
)

Civil Action No. 08-2054 (RMC)

OPINION
Canada hosted the 2010 Winter Olympic Games in Vancouver, British Columbia.
Expecting crowds, the Royal Canadian Mounted Police sought alternative housing for its multiagency task force that provided security to athletes and visitors at the various Olympic venues.
Through a competitive bidding process in 2008, Plaintiff Cruise Connections Charter
Management 1, LP, was selected as the broker to negotiate charters for three ships to be berthed
at Vancouver’s Ballentyne Pier as floating hotels for security personnel during the Games.
Canada later changed its contracting representatives and terminated its agreement with Cruise
Connections. Cruise Connections sued for breach of contract and the Court found RCMP liable.
The matter then proceeded to a bench trial on damages. For the reasons set forth below, the
Court will award $19,001,707, plus prejudgment interest.
I. PROCEDURAL HISTORY
Cruise Connections Charter Management 1, LP, and Cruise Connections Charter
Management GP, Inc., (collectively, CCCM) are Plaintiffs in this action. Defendants are the
1

Queen in Right of Canada, the Attorney General of Canada, and the Royal Canadian Mounted
Police (RCMP). RCMP executed a contract with CCCM for the performance of brokering
services for three ships to house the Integrated Security Unit (ISU), a multi-agency task force
composed of security personnel from all Canadian Provinces, at the 2010 Winter Olympics in
Vancouver. 1 CCCM filed suit on November 26, 2008, alleging that RCMP breached the
Contract. The case was initially assigned to the Honorable James Robertson in Washington,
D.C.
RCMP moved to dismiss the Complaint on March 31, 2009, arguing that Canada
is immune from suit under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1330,
1602–1611, and that no exception to FSIA applied. RCMP also argued that the case should be
heard in a British Columbia court for convenience to the parties. Judge Robertson granted the
motion to dismiss, finding that Canada was immune from suit under FSIA. See June 9, 2009
Minute Entry; Mem. in Support of Ruling [Dkt. 18]. The D.C. Circuit disagreed and reversed on
April 6, 2010, holding that Canada was not immune from suit because it had engaged in
commercial activities that had a direct effect in the United States. Cruise Connections Charter
Mgmt. 1, LP v. Att’y Gen. of Can., 600 F.3d 661 (D.C. Cir. 2010).
On remand, RCMP moved to dismiss, arguing that this action should be
transferred to British Columbia and that Count II of the Complaint, which alleged that RCMP
had violated the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 751 et seq., should be dismissed for failure to state a claim. Because Judge Robertson had retired,
the case was transferred to this Court.
1

The parties’ agreement is reflected in a series of documents, including the Project Services
Agreement and the Articles of Agreement. These documents are collectively identified as “the
Contract” for ease of reference.
2

On February 15, 2011, the Court granted in part and denied in part RCMP’s
Motion to Dismiss. See Feb. 15, 2011 Mem. Op. [Dkt. 42]. Specifically, the Court granted
RCMP’s request that the Court apply British Columbia law and dismiss Count II, and denied its
motion to transfer the case to a British Columbia court. The parties then engaged in fact
discovery, which was completed on October 12, 2012.
On November 30, 2012, RCMP and CCCM filed cross-motions for summary
judgment, each arguing that the opposing party had breached the Contract so that no liability
should attach to the movant. After exhaustive review and detailed findings, the Court granted
summary judgment to CCCM. See Cruise Connections Charter Mgmt. v. Att’y Gen. of Can., 967
F. Supp. 2d 115 (D.D.C. 2013). The Court found that RCMP anticipatorily repudiated the
Contract on September 26, 2008 and that RCMP formally terminated the Contract on November
17, 2008, by declaring default.
After the parties submitted pretrial motions, the Court set a Contract valuation
date of September 26, 2008, i.e., the date on which RCMP anticipatorily breached the Contract,
for the purpose of setting an exchange rate from Canadian dollars (CAD) to U.S. dollars (USD).
See Nov. 15, 2013 Order [Dkt. 88] at 5; Dec. 6, 2013 Supp. Order. 2 The Court granted Canada’s
motion to admit evidence of CCCM’s alleged failure to mitigate damages and granted CCCM’s
motion to exclude evidence of alleged contributory fault. See Nov. 15, 2013 Minute Orders. A
three-day bench trial commenced on November 18, 2013. At its conclusion, Canada asked to

2

The Court issued an abbreviated Order on November 15, 2013, to aid the parties with trial
preparation. The Court filed a Supplemental Order on December 6, 2013, to explain its analysis
and provide citations to cases upon which the Court relied.
3

submit a closing trial brief in lieu of closing argument. The Court agreed and the parties’ posttrial submissions were fully briefed on February 10, 2014.
II. FINDINGS OF FACT 3
A. The Contract: Charter Costs
1. RCMP contracted to pay CCCM $55,348,136 CAD to provide three cruise ships as
accommodations for the ISU during the 2010 Winter Olympics in Vancouver. Nov. 18,
2013 Trial Tr. [Dkt. 97] at 62; Pls. Trial Ex. 3 (Aug. 25, 2008 CCCM Contract
Amendment).
2. The valuation date for the Contract is set at September 26, 2013. See Dec. 6, 2013 Supp.
Order. As of September 26, 2008, $55,348,136 CAD converted to $53,482,904 USD.
See Bank of Canada Daily Noon Exchange Rates,
<http://www.bankofcanada.ca/rates/exchange/10-year-lookup/> (last visited June 7,
2014).
3. It is undisputed that, under British Columbia law, CCCM’s lost profits must be measured
by subtracting the anticipated costs of Contract performance from the $53,482,904 USD
contract price. See Bank of Am. Can. v. Mut. Trust Co., 2002 CarswellOnt 1114, ¶ 47
(S.C.C. 2002) (reciting the “general rule of contract damages” that “‘the amount which
would have been received if the contract had been kept, is the measure of damages if the
contract is broken’” (quoting Hadley v. Baxendale, 9 Exch. 341 (Eng. 1854) (other
citation omitted))); M.J.B. Enters. Ltd. v. Defence Constr., 1999 CarswellAlta 301, ¶ 55
(S.C.C. 1999) (“The general measure of damages for breach of contract is, of course,
3

This section addresses general assumptions underlying the parties’ estimates, as well as
uncontested profit and expense items. The Court will decide contested cost and profit categories
in the Analysis section of this Opinion.
4

expectation damages.”). The first category of expenses relates to costs that CCCM would
have paid to charter the ships.
4. In its charter party agreement with Holland America Lines (occasionally, Holland
America), CCCM agreed to pay $9,440,080 USD for the ms Statendam, plus $651,040
USD for hotel service charges and $2,408,848 USD for guaranteed net onboard revenue
(OBR). 4 Pls. Trial Ex. 4 (Holland America Charter Party Agreement) at 2. In total,
CCCM would have paid $12,499,968 USD for the charter hire of one Holland America
ship named the ms Statendam. Id.; Nov. 18, 2013 Trial Tr. at 65.
5. In a charter party agreement with Royal Caribbean Cruise Lines (occasionally, Royal
Caribbean), CCCM agreed to pay $18,167,100 USD for two Royal Caribbean ships
named Jewel of the Seas and Radiance of the Seas; $1,240,830 USD for hotel service
charges; and $6,330,000 USD for guaranteed net OBR. Pls. Trial Ex. 5 (Royal Caribbean
Charter Party Agreement) at 3–4. In total, CCCM contracted to pay $25,737,930 USD
for the charter hire of two Royal Caribbean ships. Nov. 18, 2013 Trial Tr. at 66.
6. The parties do not dispute that the total cost to CCCM for the charters of one ship from
Holland America and two ships from Royal Caribbean would have been $38,237,898
USD.
B. The Contract: Administrative and Operational Costs
7. CCCM also would have incurred port-related costs while performing its obligations
under the Contract. See Nov. 19, 2013 Trial Tr. [Dkt. 98] at 24.

4

Charterers are generally required to guarantee that cruise lines will earn a certain amount of
revenue above and beyond the contracted-for services through incidental passenger purchases,
such as sundries, alcohol, and personal services. It is customary for charterers to post letters of
credit to guarantee this “onboard revenue,” sometimes called “OBR.”
5

8. Stanley Webber, an experienced Port Agent at Ballentyne Pier in Vancouver, would have
been CCCM’s Port Agent for the 2010 Winter Olympic Games. Id. at 40–41. Mr.
Webber’s testimony went largely unchallenged by RCMP, and thus, the Court accepts as
true those statements that went unchallenged.
9. In his career as a port agent, Mr. Webber has been tasked with the negotiation of various
services, including garbage, recycling, and stevedoring. Id. at 28. Further, Mr. Webber
has contracted for services on behalf of cruise lines involved in this matter, including
Royal Caribbean Radiance Class vessels and the Holland America ms Statendam. Id. at
30.
10. Mr. Webber testified that he would have charged CCCM approximately $46,000 CAD to
serve as its Port Agent for the duration of the charter hire. Id. at 40–41.
11. Mr. Webber’s company “arrange[s] contracts with and maybe even negotiate[s] contracts
with the folks who are going to take garbage off and do recycling.” Id. at 28. Based on
his years of experience at the Ballentyne Pier, Mr. Webber estimated that recycling and
solid garbage removal would have cost CCCM approximately $212,000 CAD. See id. at
39.
12. Mr. Webber testified that the costs of one embarkation and one disembarkation 5 would
have been $80,000 CAD each, or $160,000 CAD total. Id. at 41–42. This estimate was

5

Mr. Webber described the process of embarkation and disembarkation as follows: “[W]e set up
booths at the [airport] terminal . . . and as the RCMP passengers [came] to the terminal, we
would have help[ed] to provide meet and greet at the airport . . . . [W]e would have met them at
the airport . . . . [p]rovide[d] transportation to the terminal and then [met] with them at the
terminal and assign[ed] them the rooms for the categories that they were allotted to each of the
ships.” Nov. 19, 2013 Trial Tr. at 42.
6

in accord with CCCM’s expectations and the Contract, although the Contract also
allowed RCMP to add embarkations and disembarkations for additional fees.
13. Yet Donna Kaluza testified that RCMP did not intend to use CCCM’s port agent to
“collect its personnel from airports and hotels . . . before embarking on the cruise ships.”
Nov. 20, 2013 Trial Tr. at 75. CCCM, however, included this service in its estimated
costs for embarkation and disembarkation. See Nov. 19, 2013 Trial Tr. at 42.
14. Because RCMP would not have used CCCCM’s transportation and greeting services for
purposes of embarkation and disembarkation, the Court finds that Mr. Webber’s
estimated costs must be reduced. However, since the parties have not submitted
alternative cost estimates, the Court will set CCCM’s expenses for one embarkation and
one disembarkation at $80,000 CAD total.
15. Mr. Webber testified knowledgeably about water bunkering requirements for the Holland
America and Royal Caribbean ships, as he regularly negotiates and contracts for water
bunkering services for these cruise lines at Ballentyne Pier. Nov. 19, 2013 Trial Tr. at
30–31. Based on his experience, Mr. Webber estimated that CCCM would have paid
approximately $125,000 CAD for water bunkering over the duration of the charter hire.
Id. at 43–44.
16. Mr. Webber testified that, as CCCM’s Port Agent, he would have negotiated a customary
charge for ground services. Id. at 33. He estimated that CCCM would have paid $50,000
CAD to move RCMP personnel to and from the airport and Ballentyne Pier. Id. at 53.
Although RCMP’s original plans appear to have required CCCM to provide
transportation from the airport, see id. at 53, Donna Kaluza, a former RCMP Inspector,
testified at trial that RCMP changed its plan to use CCCM ground services. Nov. 20,
7

2013 Trial Tr. [Dkt. 99] at 75. The cost for ground services also included monies for
deliveries and last-minute errands. See Nov. 19, 2013 Trial Tr. at 33. Therefore, CCCM
would have incurred some charges related to ground services even if RCMP had provided
its own transportation for ISU personnel.
17. Mr. Webber is familiar with harbor pilot 6 charges to and from the Ballentyne Pier and he
estimated that CCCM would have paid $45,000 CAD for Vancouver harbor pilots. Nov.
19, 2013 Trial Tr. at 56.
18. Based on Mr. Webber’s experience negotiating for stevedoring 7 services at Ballentyne
Pier, he testified that CCCM would have paid $225,000 CAD. Nov. 19, 2013 Trial Tr. at
28, 62.
19. Phillip Sloane, CCCM’s Chief Financial Officer, testified concerning operational and
administrative expenses that CCCM would have paid in connection with its Contract
performance.
20. Mr. Sloane came out of retirement to perform accounting tasks for CCCM. He prepared
cash flow projections, which were primarily intended to secure financing from the Royal
Bank of Canada. Nov. 19, 2013 Trial Tr. at 108–09; see Pls. Trial Ex. 34 (2008 Cash
Flow Projections). Mr. Sloane “took the conservative approach” to the cash flow
projections because he “didn’t want to overplay [his] hand . . . [or] exaggerate.” Nov. 19,
2013 Trial Tr. at 110.
21. CCCM planned to hire a forensic accountant to ensure accurate financial reporting on the
Contract. Nov. 19, 2013 Trial Tr. at 112–13. Mr. Sloane estimated that CCCM would
6

A pilot guides ships through harbors and, possibly, other dangerous or congested waters to
ensure ship safety.
7
Stevedoring refers to the process of loading and unloading a ship.
8

have paid $45,000 CAD for a forensic accountant based on information provided by an
Assistant Professor of Accounting at Florida State University. Id. at 113–14.
22. CCCM also would have paid approximately $22,000 USD for internet technology costs,
which included “any rewriting of software that might [have been] necessary for managing
the inventory.” Id. at 117. Hill Tech, the writer of CCCM’s proprietary software
program, provided information supporting this cost estimate. Id. at 118.
23. Insurance on the Contract would have cost $6,450 USD. Id. Wilson Insurance, CCCM’s
insurance agency, provided this cost estimate as a direct quote to CCCM. Id.
24. CCCM estimated a cost of $66,500 USD for travel and airfare. Id. Mr. Sloane’s brother
provided this estimate based on his experience as a travel agency employee. Id. at 118–
19.
25. Mr. Sloane estimated that CCCM would have expended $80,000 USD in legal costs
associated with its performance of the Contract. Id. at 119. Mr. Sloane developed his
estimate by taking “the most expensive lawyer that was on [CCCM’s] staff at the time,
Mr. Joiner. He was charging [CCCM] $400 an hour. And [Mr. Sloane] estimated $200
[USD] for drafting documents and reviewing closing statements.” Id. CCCM offered no
additional support for this figure, but Canada did not contest the amount of this expense
item.
26. Mr. Sloane’s cash flow projections included two $100,000 USD charges for
miscellaneous expenses. Id. at 119–20. Mr. Sloane testified that the first item of
miscellaneous expenses covered unanticipated subcontracting costs. Id. at 115. The
second item of miscellaneous expenses covered “minor things that would come up on a

9

monthly basis over the course of reaching the actual when the ships came in . . . . It [was]
a catch all for things that you can’t have a line item for.” Id. at 120.
27. Mr. Sloane further testified that CCCM would have paid $70,000 CAD for office space in
an apartment near Vancouver. Id. at 120. Mr. Sloane determined this figure by
researching the typical cost of an apartment and then “ratchet[ing] . . . up” the number to
reflect anticipated overcharging during the 2010 Winter Olympics. Id. at 121.
28. Mr. Sloane estimated that CCCM would have paid $32,000 CAD for hotel rooms to
accommodate CCCM partners and operations personnel from October of 2009 to March
of 2010. Id. Mr. Sloane’s estimate assumed that CCCM’s partners and operations
personnel would have stayed in hotels for the entire six month period before and
immediately after the Olympics. Mr. Sloane later realized that CCCM’s partners and
staff would have stayed onboard the ships, and not in hotels, for approximately one
month during the Olympics. See id. at 123–24. Therefore, Mr. Sloane testified that an
appropriate estimate would have budgeted for five months of hotel costs for operations
personnel. CCCM now claims $25,600 CAD for this cost.
29. Mr. Sloane originally estimated a further expense of $180,000 CAD to cover per diem for
CCCM partners and staff in Vancouver. Id. at 122. He included the estimated food costs
for CCCM partners lodging in Vancouver hotels, with an allotment of $400 per-personper-day over a six-month period. Id. Mr. Sloane testified that he overestimated per diem
expenses because he did not account for the fact that certain staff members would be
housed onboard the ships for at least one month. Id. at 122–23. CCCM now claims
$150,000 CAD for this cost.

10

30. Mr. Sloane estimated that CCCM would have paid $150,000 CAD in salaries for
operations personnel. Id. at 123. He testified that these expenses were calculated to
cover wages for five employees at approximately $30,000 CAD each. Id. at 123–24.
31. CCCM budgeted $6,000 CAD for site inspections. Id. at 124. Mr. Sloane testified that
he projected this amount based on information from Sue Edwards, CCCM’s Vice
President of Operations and Project Manager. Ms. Edwards instructed Mr. Sloane to
budget for four site visits at $1,500 CAD each to cover associated incidental expenses.
Id.
32. Mr. Sloane anticipated that CCCM would have paid $7,500 CAD for a new employee to
assist Ms. Edwards in February and March of 2010. Id. Mr. Sloane testified that the
executive assistant, who had not yet been hired, was “primarily going to be working for
[Ms. Edwards] while the ships were in port.” Id.
33. Mr. Sloane testified that CCCM anticipated a fee totaling $493,125 CAD for letters of
credit. Id. at 125. His estimate included letters of credit for Contract performance costs
and CCCM’s guarantee of OBR to the cruise lines. Id. at 125, 137.
34. Finally, Mr. Sloane testified that CCCM would have paid $37,050 CAD in interest on the
letters of credit. Id. at 125, 137.
C. The Contract: Costs Omitted By CCCM
35. RCMP contends that CCCM has omitted certain costs that would reduce total damages,
such as the cost of a Letter of Credit from John Sessions and prospective payments to
Phillip Sloane. CCCM’s costs of performance do not include any payment to John
Sessions for a critical letter of credit that supported CCCM’s bid to RCMP. Close to the
deadline for submitting its bid, and to satisfy a necessary element of the Request for
11

Proposal, CCCM and Mr. Sessions agreed that he would provide “an unredeemable,
nonpayable Letter of Credit in the amount of $5,057,500 [USD].” See Defs. Trial Ex. 4
(Sessions Letter of Intent). CCCM agreed that, if it won the bid, it would pay John
Sessions’s choice of “either . . . [a] special limited partnership interest or . . . allocations
and distributions of the amounts described above [i.e., $5,057,500] within 10 days after
the Partnership receives its initial payment from the [RCMP] . . . .” Id. at 1–2.
Negotiated hastily, the Letter of Intent anticipated that the parties would “work in good
faith toward the preparation and execution of a definitive Limited Partnership
Agreement.” Id. at 2. In fact, those parties never negotiated or executed a Limited
Partnership Agreement.
36. CCCM also omitted any salary for Phillip Sloane from its cost estimates. CCCM agreed
to pay Phillip Sloane $500,000 USD for his work as Chief Financial Officer. Mr. Sloane
insists that any payment to him was “not a salary” from anticipated profit because “there
was no guarantee. It was voluntary on [the CCCM partners’] part. It was out of profits.”
Nov. 19, 2013 Trial Tr. at 137.
37. Normande Morin, RCMP’s Director of Strategic Procurement, testified that CCCM
omitted or underestimated certain expenses that it would have incurred in performing the
Contract. See Nov. 20, 2013 Trial Tr. at 116.
38. For instance, while the Contract specified certain port-related expenses, see Contract at
CAN0000146 ¶ 6.1, Ms. Morin testified that CCCM would have incurred additional
expenses, as experienced by the replacement cruise lines, which it should have deducted
here.

12

39. Ms. Morin testified that a one-page document titled “Recap of Known Port Costs
Associated with the RCMP Charter” (“Recap”) was a “revised . . . actual” list of expenses
incurred by the cruise lines that contracted directly with RCMP after the Contract was
terminated. Id. at 127–28; see also Pls. Trial Ex. 26 (Recap).
40. The record does not support Ms. Morin’s testimony. First, the Recap has no identified
author and is undated and unsigned. Second, Ms. Morin could not provide any
foundation as to its origin beyond the fact that it was located in her files. Third, the Court
finds it highly doubtful that the Recap listed final actual costs. See Nov. 20, 2013 Trial
Tr. at 148 (Court: “[The exhibit] absolutely can’t be the final, final because the numbers
aren’t precise enough. I mean, there’s no cents or anything, nothing would ever come out
that way.”). In addition, the Recap included several costs that were not identified in the
Contract list of CCCM work responsibilities. Compare Pls. Trial Ex. 26 (Recap) with
Pls. Trial Ex. 1 (Contract) at CAN0000146 ¶ 6.1. Such added costs included janitorial
services, fencing, and traffic expenses. Because the Recap was undated, unsigned, and
without a proper foundation, and because it failed a commonsensical evaluation and
included costs the Contract did not impose on CCCM, the Court finds it is entitled to no
weight.
41. The value of the Recap is further undermined by the testimony of former RCMP
Inspector Donna Kaluza, who testified that certain costs listed on the Recap concerned
security costs that were paid by Canada. For instance, Ms. Kaluza testified that “when
[RCMP] designated [Ballentyne Pier as] a venue site[,] all of the security planning and
funds became available to put in protective barriers, perimeters, special mooring, do
certain searches and secure that area basically to a degree that [] was . . . impenetrable.”
13

Nov. 20, 2013 Trial Tr. at 73–74. Put differently, once the Ballentyne Pier became an
official venue, the Government of Canada—not the cruise lines or even RCMP itself—
agreed to provide all necessary funding for security needs. Id. at 106.
42. Specifically, Ms. Kaluza testified that the Government of Canada’s funding would have
covered security fencing to restrict public access to Ballentyne Pier. Id. at 107.
43. Ms. Kaluza also suggested that traffic coordination would have been a security cost to be
paid by Canada. See id. at 110 (When asked about traffic coordination costs, Ms. Kaluza
responded: “[I]t is my understanding . . . that all related security planning costs that
would have been deemed appropriate . . . to secure that site to the level that was required
would have . . . been borne under this special [designation] for security funding”). Ms.
Kaluza’s testimony on these costs supports CCCM’s understanding of its obligations and
explains the absence of such items from the Contract.
44. Snow removal was not identified as a Contract expense to be paid by CCCM. However,
Ms. Kaluza testified that “[s]now removal was a key component of all of our planning
. . . . It was felt and decided that we could not anticipate nor control the weather and
therefore, we needed to make sure that snow removal was in place.” Nov. 20, 2013 Trial
Tr. at 75–76. She further testified that “the normal process for snow removal in Canada
. . . is you pay for it up front . . . . If it doesn’t snow all winter well it was basically
insurance but when it snows it’s necessary to have it.” Id. at 76.
45. Mr. Webber agreed that snow removal would be an important consideration for RCMP
security forces because “snow would . . . have been a very difficult problem if the troops
had to move very fast . . . .” Nov. 19, 2013 Trial Tr. at 101. However, Mr. Webber
testified that he would not have advised CCCM to pre-pay for snow removal, as its
14

occurrence in Vancouver is so uncertain. Because it did not snow at Ballentyne Pier
during the 2010 Olympics, Mr. Webber and CCCM maintain that there would have been
no Contract cost for snow removal. Id. at 75–76.
D. Lost Onboard Revenue
46. In its charter party agreement with Holland America, CCCM guaranteed $2,408,840 USD
in net OBR. Pls. Trial Ex. 4 (Holland America Charter Party Agreement) at 2. CCCM
agreed to pre-pay $1,204,424 USD, or fifty percent of the guaranteed amount, by
December 31, 2009. Id. at 4.
47. CCCM guaranteed Royal Caribbean $6,330,000 USD in combined net OBR for both of
its ships. Pls. Trial Ex. 5 (Royal Caribbean Charter Party Agreement) at 3. CCCM
agreed to pre-pay $3,165,000, or fifty percent of the guaranteed amount, by December
31, 2009. Id. at 8.
48. To assure payment of the cruise lines’ guaranteed OBR, both charter party agreements
required CCCM to set aside $8,738,840 in funds received from RCMP to cover the full
guaranteed amount. See Nov. 18, 2013 Trial Tr. at 75–83. Of this amount, CCCM was
required to pre-pay one-half to each cruise line on December 31, 2009. If a cruise line
recovered less than half of its full guaranteed OBR, it would retain the full pre-payment
and CCCM would have covered the additional loss from the set-aside funds. If a cruise
line earned half of its guaranteed OBR, it would keep the entire pre-payment (thus
realizing 100% of the guarantee) and CCCM would retain the second half as profit. If a
cruise line earned the full guaranteed OBR, as CCCM anticipated CCCM could achieve
through heavy marketing, the cruise lines would repay to CCCM the pre-paid half of

15

OBR and CCCM would keep the second half, thereby transforming all of the potential
cost into a profit. See id.
49. The charter party agreements were enforceable in the United States, and CCCM
guaranteed OBR in USD. As a result, all figures supporting the total OBR calculation are
expressed in USD.
50. CCCM presented the testimony of Adam Snitzer, an independent consultant for Peak
Revenue Performance in Miami, Florida, to establish that CCCM would have recouped
the full net OBR guaranteed to the cruise lines. Mr. Snitzer testified that he had worked
in the cruise industry for approximately eighteen years and had extensive experience with
estimating and forecasting OBR. See Nov. 19, 2013 Trial Tr. at 142, 144, 145–47. Mr.
Snitzer worked as Chief Revenue Management Officer of Kenard Cruises, a subsidiary of
the Carnival Corporation; Vice President of Special Projects for Carnival Corporation;
Vice President of Onboard Revenue Management for Costa Cruise Lines, a subsidiary of
Carnival Corporation; and Vice President of Marketing and Revenue Management for
Seabourn Cruise Lines, a subsidiary of Carnival Corporation. Id. at 146–48.
51. Without conceding that Mr. Snitzer qualified as an expert, defense counsel expressed no
objection to his testifying at the damages trial. Id. at 151. The Court reserved the
question of whether Mr. Snitzer was qualified to provide expert testimony on the
calculation and projection of cruise line onboard revenue. Based on Mr. Snitzer’s
uncontested expertise in the cruise line industry, the Court finds that Mr. Snitzer is
qualified to provide expert testimony on the calculation and projection of cruise line
onboard revenue, and therefore accepts him as an expert. See Fed. R. Evid. 702

16

(providing that a witness may qualify as an expert “by knowledge, skill, experience,
training, or education”).
52. Mr. Snitzer based his OBR estimates on the assumption that ISU members would pay for
various services onboard the ships, including bars, casinos, food in the alternative
restaurants, box lunches, shore excursions, shops, photos, spas, communications, laundry,
medical services, and art. Nov. 19, 2013 Trial Tr. at 153.
53. Mr. Snitzer based his estimates on documents that he reviewed in connection with this
case, the charter party agreements, deposition excerpts, and email communications. Id. at
154. From these sources, Mr. Snitzer surmised that RCMP had an interest in
“maintaining morale, providing a relaxing atmosphere, allowing people to drink while on
board, [and] preferring [that] people . . . spend time on board during their recreation”
rather than venture into certain parts of Vancouver that were close to the port and unsafe.
Id.
54. Mr. Snitzer’s estimates also assumed that the cruise ships would have been full while in
port at Ballentyne Pier. Id. at 175. Mr. Snitzer explained that “typically when a company
acquires space . . . for a venue like the [Olympics] . . . the intention is to use all the space
because you’re paying for it all. So typically you would expect that people would fill this
space first before they use any other space that’s available to them.” Id. at 175–76.
Similarly, Tracey Kelly, a CCCM partner, testified that the Contract provided for one
embarkment and one disembarkment. Nov. 18, 2013 Trial Tr. at 57–58. Mr. Kelly
explained that CCCM negotiated contract terms with Kelly Meikle, RCMP Contracting
Officer, and that Ms. Meikle had represented that the cruise ships would be full, and, in

17

fact, worried that the vessels would not be able to accommodate all of the ISU personnel.
Id. at 58.
55. Yet Donna Kaluza testified that when RCMP contracted with CCCM, RCMP was not
certain as to how personnel would have embarked, or “ramped up.” Nov. 20, 2013 Trial
Tr. at 84. Moreover, the Contract provided that “any additional[] embarkation and disembarkation dates are possible, but would require additional funding.” Pls. Trial Ex. 1
(Contract) at CCCM001095 ¶ f. Thus, RCMP rejects Mr. Snitzer’s estimates, which
were based on one embarkment and one disembarkment.
56. Mr. Snitzer described a chart that demonstrated his methodology for estimating a perperson-per-day (pppd) OBR for the Royal Caribbean ships:
The number at the very bottom of the column is $44.10 which is
the net on board revenue that the Royal Caribbean Corporation
reported on their 10-K statement for 2010. So that was their actual
experience that they reported in their public filings. Then I
allocated the $44.10 according to the percentages in the [column
titled] breakdown by on board venue . . . . So for example, based
on my experience I estimate that of the $44.10 about $12 of that
would have been in bar. Nearly $9 of that would have been in
casino and for shore excursions.
Nov. 19, 2013 Trial Tr. at 156. Mr. Snitzer used the same methodology to calculate a
per-person-per-day figure for the Holland America ship. Id.
57. From this methodology, Mr. Snitzer calculated the likely OBR for the Contract under
thirteen individual revenue categories: (1) Bar/Lounges; (2) Bar/Alternative Restaurants;
(3) Casino; (4) Food/Alternative Restaurants; (5) Food/Box Lunches; (6) Shore
Excursions; (7) Shops; (8) Photo; (9) Spa; (10) Communications; (11) Laundry;
(12) Medical; and (13) Art. See Pls. Trial Ex. 9 (Net OBR Estimate Detail Chart).

18

58. Mr. Snitzer started with an analysis of standard OBR for each cruise line on a typical
cruise. See Net OBR Detail Chart; Nov. 19, 2013 Trial Tr. at 155–58. Mr. Snitzer then
considered how each OBR category would have varied under the Contract. See Nov. 19,
2013 Trial Tr. at 158–60.
59. Mr. Snitzer estimated that ISU members would have spent no money on casinos, art, and
medical expenses because “by contract the casinos were meant to be closed . . . . [a]rt was
going to be closed and . . . [RCMP] was going to cover medical.” Id. at 158. Mr. Snitzer
also estimated that the cruise lines would not realize photo revenue because the photo
operation would have been closed. See Net OBR Detail Chart.
60. Mr. Snitzer estimated that Bar/Lounges revenue would total $17.87 USD per-person-perday. See id. Mr. Snitzer “assumed that the bar numbers would be higher during this
operation” because he believed that ISU members would be mostly male, of drinking age,
and that no spouses would be on board. Nov. 19, 2013 Trial Tr. at 159. Mr. Snitzer also
assumed that, because RCMP would be assigning two people to a room, ISU personnel
would “congregate in the lounges where they would be drinking . . . . This would be
essentially the only form of unwinding entertainment and socializing on the ship.” Id.
Therefore, Mr. Snitzer estimated that the cruise lines would have earned two-thirds more
than a typical cruise from onboard bars and lounges. Id. at 160.
61. Mr. Snitzer estimated that revenue from Bar/Alternative Restaurants would total $3.94
USD per-person-per-day. See Net OBR Detail Chart. Mr. Snitzer testified that general
food services would have been buffet style, available twenty-four hours a day. Nov. 19,
2013 Trial Tr. at 161. He therefore projected that “a little bit more than once a week each
person would go into an alternative dining venue in order to enjoy . . . table service, sit
19

down, a varied menu, more choice and more selection.” Id. Mr. Snitzer also assumed
that when ISU members dined in an alternative restaurant, they would have consumed
one cocktail and one-half bottle of wine per visit. Id.
62. Mr. Snitzer estimated that revenue from Food/Alternative Restaurants would total $5.14
USD per-person-per-day. See Net OBR Detail Chart. This figure assumed 1.2 meals
per-person-per-week in an alternative restaurant at $30 CAD per person, including
gratuity. Id.
63. Mr. Snitzer estimated that revenue from Food/Box Lunches would total $2.86 USD perperson-per-day. Id. This figure assumed that fifty percent of guests would purchase an
$8.00 CAD box lunch each working day. Id.
64. Mr. Snitzer estimated that shore excursion revenue would total $6.11 USD per-personper-day. See Net OBR Detail Chart. In reaching this number, he assumed that shore
excursions revenue would be lower than a typical operation “because people were not . . .
on vacation the whole time. They were working. But I had assumed that a little bit less
than half of the people would participate in one tour on each of two days off per week.”
Id. at 163. The Court finds that Mr. Snitzer presented an insufficient foundation for this
figure, particularly given that ISU personnel would have been working and attending
Olympic events. Because Mr. Snitzer presented no alternative, the Court will deduct
shore excursions entirely from the total OBR calculation.
65. Further, Mr. Snitzer estimated that shopping revenue would total $1.70 USD per-personper-day. See Net OBR Estimate Detail Chart. This figure was based on the assumption
that guests would only purchase sundries onboard the vessels. Id. Mr. Snitzer testified
that “[to] the extent that [passengers] were going to purchase souvenirs they would
20

probably purchase their souvenirs in the [O]lympic venues because again, the ship was
not the main event.” Nov. 19, 2013 Trial Tr. at 160–70. Therefore, Mr. Snitzer
calculated shopping revenue at one-third the rate of a typical cruise operation. See Net
OBR Estimate Detail Chart.
66. Mr. Snitzer estimated that spa revenue would total $2.21 USD per-person-per-day. See
Net OBR Estimate Detail Chart. This figure assumed that “50% of guests [would] get
one $40 haircut every two weeks, 30% [would] have one $80 spa treatment every two
weeks, [and] 30% [would] participate in two $15 fitness classes every week.” Net OBR
Estimate Detail Chart. While passengers on a typical cruise have a tendency to spend
more money on massages and salons, Mr. Snitzer projected that “during the [Olympics]
. . . it would be more utilitarian.” Nov. 19, 2013 Trial Tr. at 169.
67. Mr. Snitzer estimated that communications revenue would total $3 per-person-per-day.
See Net OBR Detail Chart. These charges would have primarily consisted of internet,
phone cards, and cell phone use while onboard. Nov. 19, 2013 Trial Tr. at 163. Noting
that the Contract provided that RCMP would subsidize internet costs, Mr. Snitzer’s
calculation “include[d] the subsidy and also increased usage because the price was
subsidized and because people would be away from family and friends for a prolonged
period of time . . . .” Id. at 163–64.
68. Mr. Snitzer estimated revenue of $7.00 USD per-person-per-day for laundry services.
See Net OBR Detail Chart. Although laundry would have been subsidized by RCMP,
Mr. Snitzer forecasted higher laundry expenditures than a typical cruise because the
prices would have been reasonable and ISU staff would have been onboard for a
prolonged period. Nov. 19, 2013 Trial Tr. at 164.
21

69. Based on these items, Mr. Snitzer estimated that the Contract likely would have
generated a total onboard revenue figure of $49.84 USD per available lower berth days
(ALBD), i.e., per bed. See Net OBR Total Detail Chart.
70. Mr. Snitzer then determined the number of ALBDs for ISU members on the ships:
Holland America’s ms Statendam had 55,088 ALBDs and the two Royal Caribbean ships
had a total of 126,600 ALBDs, for an overall total of 181,688 ALBDs. See Pls. Trial Ex.
12 (Net OBR Estimate Summary); see also Nov. 19, 2013 Trial Tr. at 175.
71. By multiplying his OBR estimate of $49.84 USD per-person-per-day by 181,688 ALBDs,
Mr. Snitzer estimated a net total OBR of $9,060,000 USD. Nov. 19, 2013 Trial Tr. at
172–73; see also Net OBR Estimate Summary.
72. CCCM also offered evidence concerning its missed opportunity to earn OBR during two
anticipated repositioning cruises on the ms Statendam, which would have traveled from
San Diego, California, to Vancouver, Canada, and back. 8 Using the same methodology,
Mr. Snitzer estimated that vacationing passengers on the repositioning cruises would
have spent an estimated $41.33 USD per ALBD. Nov. 19, 2013 Trial Tr. at 173.
73. The ms Statendam had a capacity of 1,252 passengers and, thus, two four-day
repositioning cruises would have totaled 10,016 ALBDs. See Pls. Trial Ex. 12 (Net OBR
Estimate Summary). Multiplying $41.33 USD per-person-per-day by 10,016 ALBDs led

8

A repositioning cruise is usually a one-way trip in which a ship moves from one location to
another to be available for further business. Often, a cruise line offers less expensive costs for
such a cruise because the ship does not return passengers to the port of origin. In this case,
repositioning cruises would have transported passengers from San Diego, California, to
Vancouver, Canada, before the Games, and back again at the Games’ conclusion. See Nov. 19,
2013 Trial Tr. at 172.
22

Mr. Snitzer to estimate that CCCM would have earned $413,961 USD 9 in total OBR
from the repositioning cruises. Nov. 19, 2013 Trial Tr. at 175; see also Pls. Trial Ex. 12
(Net OBR Estimate Summary).
74. Mr. Snitzer’s total net OBR projection for the Contract and the repositioning cruises was
$9,047,000 USD.
75. RCMP rebutted CCCM’s OBR estimates with information from the replacement charters
that RCMP executed directly with Holland America and Carnival after it terminated the
Contract. Under the replacement charters, Holland America and Carnival earned a
combined total of $676,603 10 in net OBR for three vessels at Ballentyne Pier during the
2010 Winter Olympics. This translates into an overall revenue rate of approximately $5
per-person-per-day.
76. Data from the replacement charters shows an approximate occupancy rate of seventypercent. In response, Mr. Snitzer provided alternate OBR calculations based on a 69.9
percent occupancy rate, i.e., the actual combined ship utilization rate for the replacement
charters. See Nov. 19, 2013 Trial Tr. at 181.
77. In this alternative calculation, Mr. Snitzer multiplied $49.83 USD per-person-per-day by
the actual combined occupancy rate. Based on that calculation, Mr. Snitzer determined

9

Mr. Snitzer misspoke at trial, indicating that the net OBR for repositioning cruises would have
been $41,000. Nov. 19, 2013 Trial Tr. at 175. The Court notes that Mr. Snitzer multiplied
$41.33 by 10,016 ALBDs, which results in a projection of approximately $410,000. See id.
10

This figure represents the combined total OBR earned by Holland America and Carnival. All
financial reports of Holland America are subject to a protective order; therefore, no details have
been provided in this Opinion. See Stipulated Protective Order [Dkt. 31].
23

that CCCM would have generated $6.74 million USD in net OBR from the Contract and
repositioning cruises. Id. at 183.
78. RCMP rebutted Mr. Snitzer’s estimates with testimony from Ms. Kaluza, who testified
that she had been on cruises with “buffets” and “extravagant menus,” but that RCMP was
“not looking for that kind of formality.” Nov. 20, 2013 Trial Tr. at 54.
79. Ms. Kaluza further testified that ISU personnel worked twelve-hour shifts, with four
workdays followed by four days off. Id. at 54–55. The four workdays consisted of two
successive daytime shifts, from 6:00 a.m. to 6:00 p.m., and two successive nighttime
shifts, from 6:00 p.m. to 6:00 a.m. Id. Ms. Kaluza attested that security personnel could
have worked overtime to receive supplemental pay. Id. at 53.
80. Ms. Kaluza noted that RCMP would have paid for basic housing and food costs for all
ISU personnel. As a result, security personnel were limited to a per diem of $17.00 CAD
per day, which left limited funds for meals and tours. See id. at 66.
81. Despite preliminary discussions between CCCM and RCMP regarding the sale of box
lunches, none would have been provided by the ships and no OBR would have been
realized therefrom. Donna Kaluza explained that “[RCMP personnel] were directed by
. . . the Vancouver organizing committee, that we were not allowed to take any food of
any type into any venue sites, that they were providing food and it was necessary for
[ISU members] to . . . purchase these vouchers and [] use these vouchers for food.” Id. at
58.
82. RCMP also contests CCCM’s initial OBR projections for laundry and internet services.
Donna Kaluza testified that if CCCM had presented a rate of $12 CAD per-person-per-

24

day for laundry, she would have sought out alternative arrangements, such as a drop-off
dry cleaning service at Ballentyne Pier. 11 Id. at 68.
83. Ms. Kaluza also described an internet estimate of $7 to $10 CAD per-person-per-day as
“excessive.” 12 Id. at 69. Ms. Kaluza testified that RCMP “could have set up a wireless
network that would serve the cruise ship,” id., although neither she nor RCMP provided
evidence from internet service providers to support her position.
84. Ms. Kaluza stated that RCMP generally intended to provide an “accommodation level for
the personnel staying at the [O]lympics [at] no lesser standard than you would find at a
Holiday Inn Express Hotel which is a chain and a respected chain in Canada which would
usually have no more than a three star rating in the hotel trade.” Id. at 50–51.
85. Further, Ms. Kaluza testified that certain ISU personnel would have been onboard with
spouses that also served on the ISU; however, RCMP offered no evidence regarding how
many couples actually worked the 2010 Olympic Games, which renders this testimony
unsupported and speculative.
86. To refute Mr. Snitzer’s presupposition that ISU members would have sought diversions
from crowded staterooms, Ms. Kazula testified that room assignments were to be based
on alternate shift schedules to minimize the amount of overlap in stateroom occupancy.
Id. at 70–71.
87. CCCM argues in rebuttal that OBR generated on the replacement charters is irrelevant
due to reduced scope of RCMP’s requested services as compared to the original Contract.
11

Mr. Snitzer provided a laundry estimate of $7 CAD per-person-per-day. Ms. Kaluza’s
testimony, however, referenced Tracey Kelly’s initial estimate of $12 CAD per-person-per-day.
12

Mr. Snitzer provided an internet estimate of $3 CAD per-person-per-day. Again, Ms. Kaluza’s
testimony referenced Tracey Kelly’s initial estimate of $7 to $10 CAD per-person-per-day.
25

88. First, Mr. Kelly testified that “[w]hen [CCCM] met with Kelly Meikle and Michael Day
and Donna Kaluza and also in meetings with Bud Mercer [RCMP’s Assistant
Commissioner] we had direct communication from them that they wanted a phenomenal
experience for the [RCMP] personnel. That this was a once in a life time type of
experience. These people were coming from all over Canada [and] they would work
hard, but they were to play hard.” Nov. 18, 2013 Trial Tr. at 83–84.
89. Mr. Snitzer testified that “all of [the] money” in the replacement charter contracts,
including net OBR, “was just rolled up into the charter hire figure and there was no
separate breakout for [OBR] or for gratuities. But in fact the dollars involved were
essentially the same number of dollars.” Nov. 20, 2013 Trial Tr. at 33. RCMP did not
challenge this testimony and it explains, in part, why RCMP paid so much more to
charter three ships, even without the cost of a broker. See Cruise Connections Charter
Mgmt., 967 F. Supp. 2d at 217 (identifying $76,000,000 CAD as the actual cost to RCMP
of the replacement charters).
90. Relatedly, Tracey Kelly testified that the replacement charters did not include any budget
for marketing and promoting services that would have earned OBR. Nov. 18, 2013 Trial
Tr. at 95. Mr. Kelly testified that “Holland America didn’t apply a budget [to generate
OBR,] and if they didn’t apply a budget, they didn’t provide any resources to promote on
board revenue.” Id. As further evidence of the replacement charters’ inattention to OBR,
Mr. Kelly testified that only three of twenty-four bars on the ms Statendam were open
during the replacement charter, and one of those was an open-air bar that held little
appeal in a Vancouver winter. Id. at 96.

26

E. Repositioning Cruises
91. CCCM’s charter party agreement with Holland America anticipated that CCCM would
sell repositioning cruises for the four-day sail from San Diego to Vancouver before the
Olympics and the four-day sail from Vancouver to San Diego after the Olympics. Nov.
18, 2013 Trial Tr. at 106. CCCM agreed informally with AA Worldwide, a travel service
agency, to sell two repositioning cruises. Id. AA Worldwide agreed to pay CCCM $125
USD per-person-per-day for an eight-day sub-charter. Id. at 108–110.
92. However, certain terms of the repositioning agreement were never finalized. As of
November 17, 2008, when RCMP terminated the Contract, CCCM had not sent a
confidentiality agreement to AA Worldwide for signature. In addition, Colleen Ladwig
of AA Worldwide testified in deposition that the agency planned to sell a pre-packaged
cruise, which suggested that the repositioning cruises would not have generated OBR.
Compare Deposition of Colleen Ladwig (Ladwig Dep.) at 16:2–18:16 with Kelly Trial
Testimony, Nov. 18, 2013 Trial Tr. at 113.
93. RCMP breached the Contract before AA Worldwide and CCCM reached final terms on
an agreement for the sale of repositioning cruises. Id. at 107.
94. Ms. Ladwig’s license has since been revoked for allegedly fraudulent activities that took
place during the fall of 2008.
II. LEGAL STANDARDS
The Project Services Agreement provided that the Contract “must be interpreted
and governed, and the relations between the parties determined, by the laws in force in British
Columbia.” Pls. Trial Ex. 1 (Contract) CAN0000149 § 9. Therefore, the Court reviews the legal
principles that apply to determine damages for breach of contract under British Columbia law.
27

A. Breach of Contract Under British Columbia Law
It is undisputed that the appropriate measure of damages is lost profits. The
general rule is that contract damages should place a plaintiff in the economic position that it
would have achieved had the defendant performed the contract. See, e.g., Bank of Am. Can. v.
Mut. Trust Co., 2002 CarswellOnt 1114, ¶ 47 (S.C.C. 2002) (reciting the “general rule of
contract damages . . . . [that] the amount which would have been received if the contract had
been kept, is the measure of damages if the contract is broken’” (quoting Hadley v. Baxendale, 9
Exch. 341, 156 Eng. Rep. 145 (Eng. 1854) (other citation omitted)); M.J.B. Enters. Ltd. v.
Defence Constr., 1999 CarswellAlta 301, ¶ 55 (S.C.C. 1999) (“The general measure of damages
for breach of contract is, of course, expectation damages.”). A plaintiff that proves a breach of
contract can collect damages that are shown to be the reasonable result of the breach. Berhe v.
Coblez Holdings Ltd., 2013 CarswellBC 3562, ¶ 32 (B.C. Ct. App. 2013).
However, damages cannot be recovered if they only represent a plaintiff’s
speculations about lost profits, or are too remote to have been contemplated at the time of
contracting. See Houweling Nurseries Ltd. v. Fisons W. Corp., 1988 CarswellBC 471, ¶ 27
(B.C. Ct. App. 1988) (citing Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145, 151 (1854)). In
other words, “damages arising in respect of a breach of contract should be such as arise either
naturally, i.e., in the usual course of things, or such as may reasonably be supposed to have been
in the contemplation of both parties, at the time they made the contract, as the probable result of
a breach.” RBC Dominion Secs., Inc. v. Merrill Lynch Can. Inc., 2008 CarswellBC 2099, ¶ 10
(S.C.C. 2008) (citing Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854)). A plaintiff
seeking damages based on a lost opportunity must show that the lost opportunity was reasonably

28

likely to result in a profit. Eastwalsh Homes Ltd. v. Anatal Devs. Ltd., 1993 CarswellOnt 587,
¶¶ 33–45, 57–59 (Ont. Ct. App. 1993).
Under British Columbia law, a defendant may rely on the actual results from a
substitute contractor employed to complete a breached contract as an appropriate benchmark for
calculating damages. Tercon Contractors Ltd. v. British Columbia (Minister of Transp. and
Highway), 2006 CarswellBC 730, ¶ 156 (B.C.S.C. 2006), reversed on other grounds, 2010
CarswellBC 296 (S.C.C. 2010). However, actual results from a substitute contractor can only be
used when a defendant shows that “the conditions . . . of both contractors would have been
comparable.” Id.
B. Duty to Mitigate
“Mitigation is a doctrine based on fairness and common sense, which seeks to do
justice between the parties in the particular circumstances of the case.” Southcott Estates Inc. v.
Toronto Catholic Dist. Sch. Bd., 2012 CarswellOnt 12505, ¶ 25 (S.C.C. 2012). A plaintiff has a
duty to take all reasonable steps to mitigate any loss arising from a breach of contract, and may
not recover any part of the loss that is due to its own neglect or failure to take such reasonable
steps. Id. But a defendant bears the burden of demonstrating that a plaintiff has failed to
mitigate damages. See Michaels v. Red Deer Coll., 1975 CarswellAlta 57, ¶ 11 (S.C.C. 1975)
(“If it is the defendant’s position that the plaintiff could reasonably have avoided some part of
the loss claimed, it is for the defendant to carry the burden of that issue . . . .”). If a defendant
makes the required showing, a court is authorized to reduce an award of damages. See Onta
Holdings Inc. v. Bonosusatya, 1998 CarswellBC 1968, ¶ 30 (B.C.S.C.); Van Snellenberg v.
Cemco Elec. Mfg. Co., 1946 CarswellBC 128, ¶ 6 (S.C.C. 1946).

29

III. ANALYSIS
RCMP contracted to pay CCCM $55,348,136 CAD, which converts to
$53,482,904 USD as of September 26, 2008. CCCM claims that RCMP’s breach caused it to
lose additional profit opportunities from onboard revenue and the sale of repositioning cruises,
while RCMP claims that CCCM underestimated expenses, omitted necessary costs, and failed to
mitigate damages. The Court will assess damages based on the Contract and certain lost onboard
revenue, but not repositioning cruises, for which the evidence is too speculative. The Court will
then address questions of law related to the proper interest rate and mitigation of damages.
A. The Contract
RCMP objects to CCCM’s estimated costs of performance because CCCM
omitted certain expenses and allegedly underestimated other costs. The Court will address each
contested category of contract expenses, i.e., the $5,000,000 USD to John Sessions and $500,000
USD to Phillip Sloane, as well as the costs of recycling and garbage removal, snow removal,
water bunkering, ground services, miscellaneous expenses, and hotel and per diem. As to the
uncontested categories, such as costs for stevedoring, a port agent, harbor pilots, forensic
accounting, information technology, insurance, airfare, and legal services, the Court accepts
CCCM’s estimated costs of performance.
i. $5,000,000 to John Sessions
RCMP contends that CCCM entered into a binding and enforceable agreement
with John Sessions for $5,057,500 USD. RCMP emphasizes that the Sessions Letter of Credit
ensured CCCM’s eligibility to bid for and secure the Contract, and, as the successful bidder,
CCCM had an obligation to repay Mr. Sessions. As a result, RCMP claims that CCCM must
deduct from its claimed profit the full $5,057,500 USD owed to Mr. Sessions. CCCM responds
30

that the Sessions Letter of Credit was insufficiently definite in its terms to constitute a binding
agreement. CCCM also argues that “any payment made to [Mr.] Sessions is outside the costs to
perform the Contract and would be paid, in any event, by the partners from profits after RCMP
made its payment to CCCM under the contract.” CCCM Reply [Dkt. 100] at 7.
The Letter of Intent memorialized Mr. Sessions’s agreement to provide an
“unredeemable, nonpayable Letter of Credit in the amount of $5,057,500” to support CCCM’s
bid for the Contract. Defs. Trial Ex. 4 (Sessions Letter of Intent) at 1. The Letter of Intent
provided that if RCMP awarded a contract to CCCM, Plaintiffs would pay “[Mr.] Sessions’
choice of either the redemption for [a] special limited partnership interest or . . . allocations and
distributions of the amounts described above [i.e., the $5,057,500] within 10 days after the
Partnership receives its initial payment from the [RCMP] . . . [which is] (currently expected to be
75% of the total project fee) (the ‘Initial Fee Installment’).” Id. at 1–2. The Letter of Credit also
committed the parties to “work[ing] in good faith toward the preparation and execution of a
definitive Limited Partnership Agreement,” which never happened. Id. at 2.
But the Sessions Letter of Intent made no mention or reference to CCCM’s
performance on the Contract. Indeed, the self-identified “nonpayable Letter of Credit” intimates
that Mr. Sessions never put any money at risk, which could complicate any prospective effort to
collect. Further, the terms of the Letter of Intent required later substantive negotiations to
finalize the arrangement through the establishment of a limited partnership; the absence of such
further agreement could also complicate Mr. Sessions’s efforts to collect from CCCM. These
observations are not intended to express an opinion on the enforceability of the Letter of Intent,
but rather to indicate that CCCM’s alleged obligation to Mr. Sessions is not entirely certain.
Without regard to these predicate issues, the Court finds that CCCM’s execution of the Contract
31

and receipt of funds were preconditions to any payment to Mr. Sessions. See id. Mr. Sessions’s
entitlement to payment, if any, is a matter to be settled between Mr. Sessions and CCCM from
the award here, but the Sessions Letter of Intent is not a cost of performance to be deducted. See
Waterman v. IBM Can. Ltd., 2013 CarswellBC 3726, ¶ 72 (S.C.C. 2013) (“[A]n important
purpose of the law of contracts is to protect the reasonable expectations of the parties,” and
therefore, courts must “ensure that there is a good ‘remedial fit’ between the breach of obligation
and the remedy”). The Court finds that CCCM is not required to deduct $5,057,500 USD as an
anticipated expense of Contract performance.
ii. Phillip Sloane’s Salary
RCMP contends that CCCM should have deducted $500,000 USD owed in salary
to Phillip Sloane. It is agreed by all parties that Mr. Sloane came out of retirement to serve as
CCCM’s Chief Financial Officer. CCCM claims, however, that Mr. Sloane would not have been
paid a “salary,” but, rather, a stipulated payment divided among each partner’s share of the
profits.
Mr. Sloane testified that his receipt of $500,000 was “not a salary . . . because . . .
there was no guarantee. It was voluntary on their part. It was out of profits.” Nov. 19, 2013
Trial Tr. at 137. Despite vigorous cross examination, RCMP could establish no more than that
CCCM had agreed to pay Mr. Sloane $500,000 out of profits. See id. at 138. An agreement to
pay funds out of anticipated profits does not constitute a “salary” tantamount to overhead or
expenses; to the contrary, the payment itself is dependent on sufficient profit. Mr. Sloane’s
testimony indicated that he functioned as a partner insofar as his payment depended on CCCM
earning a profit; the actual payment depended on subsequent agreement of the partners; and his
payment was capped at $500,000 regardless of the final profit. Although Mr. Sloane was an
32

interested witness, his testimony was cogent and unequivocal, and therefore is credited by the
Court. As with Mr. Sessions, payment to Phillip Sloane is to be decided between him and the
CCCM partners. See Waterman v. IBM Can. Ltd., 2013 CarswellBC 3726, ¶ 72 (S.C.C. 2013).
CCCM is not required deduct $500,000 USD as a cost of performance.
iii. Recycling and Garbage Removal
RCMP argues that CCCM underestimated costs that it would have incurred for
recycling and garbage removal for three vessels at Ballentyne Pier. Specifically, RCMP urges
the Court to rely on CCCM’s cost estimate from July 29, 2008, which projected a cost of
$880,000 CAD for recycling and garbage removal. RCMP is dubious of CCCM’s current
estimate of only $212,000 CAD, which is less than one-quarter of the initial projection. CCCM
retorts that its own preliminary estimates are not reliable and the Court should base its
calculation on the uncontroverted testimony of its expert witness, Stanley Webber.
RCMP provides no basis for the Court to select the July 2008 preliminary cost
estimate by Phillip Sloane as opposed to Stan Webber’s detailed trial testimony concerning
normal actual costs for these ships at Ballentyne Pier. Mr. Webber testified that he had extensive
experience with Holland America and Royal Caribbean Cruise Line ships at Ballentyne Pier.
Nov. 19, 2013 Trial Tr. at 30–31. He also testified that, as a longtime Port Agent, he understood
waste removal requirements and “coordinate[d] with Tymac for the removal of the sludge and
dry and wet garbage and recycling.” Id. at 31. Based on his experience, Mr. Webber opined that
the cost for recycling and garbage removal for the duration of the 2010 charters would have been
approximately $212,000 CAD. RCMP offered no rebuttal witness. It did, however, offer an
exhibit indicating that the actual cost of recycling and garbage removal totaled $187,267.51
CAD for the replacement charters. See Pls. Ex. 21A (Tymac Invoices). Mr. Webber justified his
33

higher estimate by explaining that the replacement charters consisted of “two smaller ships[,] so
less people and less waste.” Nov. 19, 2013 Trial Tr. at 59. The Court finds that Mr. Webber’s
testimony was direct, clear, and highly credible. The trial evidence supports a cost of $212,000
CAD for recycling and garbage removal.
iv. Snow Removal
The parties contest whether CCCM would have pre-paid $79,800 CAD for snow
removal despite the fact that it never snowed at Ballentyne Pier during the 2010 Winter
Olympics. This dispute has two components: first, whether snow removal should be treated as a
necessary pre-payment or as an actual expense; and second, whether CCCM would have been
responsible for snow removal at all.
RCMP contends that prepayment for snow removal was required to ensure its clearance
from Ballentyne Pier and, therefore, is a cost that would have been incurred without regard to
actual snowfall. By contrast, CCCM argues that snow removal, at best, would have been an
actual cost, incurred only if it had snowed at the Pier during the Winter Olympics. Noting that
snow accumulation would have hampered ISU’s ability to mobilize for emergencies, CCCM also
contends that snow removal was a security-related expense to be paid by Canada. See id. at 101
(On cross examination, Mr. Webber testified that “snow would [] have been a difficult problem
if the troops had to move very fast”).
CCCM’s assertions are supported by the record. CCCM correctly notes that the
Contract is silent as to snow removal, omitting it as an expense for which CCCM would have
been responsible. Moreover, Mr. Webber attested that he would not have advised CCCM to prepay for snow removal. Nov. 19, 2013 Trial Tr. at 76. To be sure, Ms. Kaluza testified that
RCMP required the replacement cruise lines to pre-pay for snow removal because “[w]hether it
34

gets used, it doesn’t matter . . . . If it doesn’t snow all winter [] it was basically insurance but
when it snows it’s necessary to have it.” Nov. 20, 2013 Trial Tr. at 76. But the Court finds that
this testimony related to decisions that were made after RCMP breached the Contract and revised
the scope of the charter hires.
In sum, the trial evidence demonstrates that snow removal was not a Contract
expense that CCCM would have pre-paid. It is undisputed that there was no snow at Ballentyne
Pier during the 2010 Olympics, which means that snow removal would not have been an actual
expense. Without Contract language requiring CCCM to pre-pay for snow removal, the Court
will not add it to CCCM’s costs of Contract performance. The Court need not decide whether
snow removal would have been a security-related cost under the Contract.
v. Water Bunkering 13
RCMP calculates Contract costs for water bunkering by referencing CCCM’s
June 2008 estimate of $200,000 CAD. It argues that Mr. Webber’s current projection of
$121,902 CAD is woefully insufficient and the Court should rely on CCCM’s original estimate
to determine the total cost, raising it by $78,098 CAD. CCCM responds that Mr. Webber’s
testimony should control, as it was based on his thirty years of experience as a Port Agent,
twenty-six years of which he served as a cruise line Port Agent at Ballentyne Pier. See Nov. 19,
2013 Trial Tr. at 24–25.
RCMP offers no rationale as to why the Court should select CCCM’s rough 2008
estimate over Mr. Webber’s uncontroverted testimony. RCMP claimed that CCCM’s expense

13

Mr. Webber testified that water bunkering costs consist of charges from the City of Vancouver
for water a ship takes on board. Nov. 19, 2013 Trial Tr. at 32. He further testified that the cost
of water bunkering was approximately $2.00 CAD per ton during the 2010 Winter Olympics. Id.
at 44.
35

calculations at the damages trial were inaccurate because “[t]he invoices received and paid by the
RCMP in connection with the actual charters provide the best evidence of the additional costs
that Cruise Connections would have incurred, but omits from its calculations.” Defs. Closing
Trial Brief at 15. Yet RCMP made no such showing at trial. Because RCMP offered no reason
to select the higher 2008 estimate and because Mr. Webber’s testimony was entirely credible, the
Court concludes that CCCM properly estimated water bunkering at $125,000 CAD.
vi. Ground Services
CCCM initially estimated that it would have paid approximately $50,000 CAD
for ground services during the 2010 Winter Olympics. It now contends that the trial testimony of
Donna Kaluza established that CCCM would not have incurred any cost for ground services
because “RCMP had its own transportation group that was responsible for shuttling security
personnel between the airport and the cruise ships, and [] RCMP had no intention of using
CCCM’s port agent for these services.” Pls. Closing Trial Brief at 5. Thus, CCCM asks the
Court to assess $0 CAD for ground services. RCMP argues that CCCM would nonetheless have
paid for ground services because this expense item “had to do with ground operations, hiring
employees to make deliveries, paying for such shipping, and last minute running.” Defs. Closing
Trial Brief at 17. RCMP discounts the impact of Ms. Kaluza’s testimony, although she was its
own witness, and urges the Court to recognize the full amount of $50,000 CAD as an expense
that would have been incurred in Contract performance.
Donna Kaluza testified that RCMP “had [its] own transportation group” and
would not have relied on CCCM’s Port Agent to collect its personnel from hotels and airports
before embarkation. Nov. 20, 2013 Trial Tr. at 75. Her testimony indicates that CCCM would
not have expended a full $50,000 CAD, as budgeted, for ground services. However, it is
36

difficult to discern from the record whether RCMP would have used Mr. Webber’s ground
transportation if the Contract with CCCM had remained in force during the 2010 Olympics,
because the intentions of RCMP’s contracting agents changed dramatically once Ms. Morin
assumed control. In addition, CCCM offered no witnesses or evidence to dispute that it would
have incurred at least some cost for “deliveries and last minute running.” Nov. 19, 2013 Trial
Tr. at 33; see also Nov. 20, 2013 Trial Tr. at 75. Nor did CCCM provide an alternate estimate to
reflect the projected costs for deliveries, ground shipment, and last minute runners, without
transportation of passengers before embarkation. In this respect, the Court finds that CCCM
failed to overcome RCMP’s evidence that $50,000 CAD for ground services is an exaggerated
amount. Because all witnesses agree that some expense would have been incurred, the Court
will recognize a cost of $25,000 CAD for ground services.
vii. Miscellaneous
Phillip Sloane charted his cash flow projections for the Contract, which included
two “Miscellaneous” categories of $100,000 each. 14 See Pls. Trial Ex. 34 (Cash Flow
Projections). At trial, Mr. Sloane offered the following testimony regarding the “Miscellaneous”
items:
I had a hundred thousand dollars down below the line where you
see other expenses. And I got nervous at the end actually because I
didn’t have anything for subcontractors and it was the last minute
decision on my part, still trying to be all ultra conservative, and I
was trying to make sure that I had all of my bases covered. Quite
frankly, I didn’t know what [the first “Miscellaneous” item] was
for. So I put [it] down . . . [because] I . . . really wanted to just
cover my [bases] in case we had anything uncovered.
14

While the first $100,000 Miscellaneous item covered subcontracting expenses, the second
$100,000 covered unidentified expenses. Because the first $100,000 Miscellaneous item applied
to subcontracting expenses, however, the Court finds that this expense item would have been
paid in CAD rather than USD.
37

Nov. 19, 2013 Trial Tr. at 115.
CCCM now argues that, since Mr. Webber’s testimony clearly identified all
subcontractor expenses for which CCCM would have been liable, the evidence shows that the
second $100,000 would not have been expended. CCCM therefore maintains that one of the
Miscellaneous items, in the amount of $100,000, should be excluded from its cost of
performance. Pls. Closing Trial Brief at 7 n.6. RCMP, however, notes that both miscellaneous
budget items of $100,000 have been included in nearly every cost estimate exchanged between
the parties. RCMP contends that “[i]f Mr. Sloane changed his mind about this expected cost,
Cruise Connections had a duty to correct its interrogatory responses.” Id.
Mr. Sloane explained that he included two $100,000 miscellaneous charges to
support an “ultra-conservative” profit estimate for the purpose of securing bank financing. See
Nov. 19, 2013 Trial Tr. at 115. Mr. Webber provided thorough testimony regarding the
subcontracting costs that CCCM would have incurred in performing the Contract. But because
the Contract was never performed, it cannot be said that Mr. Sloane’s inclusion of additional
costs was unnecessary. Given the complexity and duration of performance, the uncertainty of
operating at a time of increased expenses during the Games, and CCCM’s continued inclusion of
two Miscellaneous items in its pre-trial damages calculations, the Court finds that CCCM did not
carry its burden of showing that one of the Miscellaneous charges should be omitted from the
cost of performance.
viii. Hotel and Per Diem
Finally, CCCM seeks to reduce its hotel and per diem estimates by one month
based on the trial testimony of Phillip Sloane. Specifically, CCCM contends that “Mr.
38

Sloane[’s] . . . estimated hotel cost assumed that CCCM operations personnel would stay in
hotels for a six-month period that included the time when the cruise ships were to be in port, an
assumption that he later realized was incorrect.” Pls. Closing Trial Brief at 7 n.7. Similarly,
CCCM avers that Mr. Sloane included an extra month of per diem costs because he mistakenly
assumed that CCCM partners would be lodged in hotels for six months. Id. at 7 n.8 (noting that
“the per diem cost has been reduced by one month (to $150,000 [CAD]), reflecting the fact that
the CCCM partners would have stayed on the cruise ships at least during February 2010”).
RCMP objects to these reductions as “arbitrary,” and argues that “[t]here is no evidence that the
hotel cost and per diem as previously estimated by Cruise Connections did not already make []
an allowance” for the reduced time that CCCM partners would have stayed in hotels.
Mr. Sloane further testified that his per diem estimate was based on dining and
incidental costs for CCCM partners over six months, but he later realized that “a lot of these
people were going to be on the ships, but [he] didn’t go back and reduce [the] numbers.” Id. at
122. Mr. Sloane was subsequently asked where CCCM partners would be lodged while the ships
were in port, and he responded that “[t]hey were on the ships.” Nov. 19, 2013 Trial Tr. at 123.
RCMP does not contest that Mr. Sloane’s testimony applied to both CCCM partners and
operations personnel. Accordingly, the Court finds that CCCM properly adjusted its hotel and
per diem estimates by one month, with hotel costs totaling $25,600 CAD and per diem totaling
$150,000 CAD.
B. Lost Onboard Revenue During the Olympics
CCCM claims that RCMP’s breach of contract deprived CCCM of $9,060,000
USD in OBR profits during the Olympics, as calculated by Adam Snitzer. RCMP’s objections to
Mr. Snitzer’s estimates are twofold. First, RCMP contests CCCM’s OBR projections based on
39

the actual onboard revenue reported by Holland America and Carnival during the replacement
charters. Second, RCMP attacks certain assumptions underlying Mr. Snitzer’s estimates as
inconsistent with the intended purpose or scope of the Contract.
As to the first point, RCMP argues that CCCM overestimated its OBR profit
because Holland America and Carnival realized actual onboard revenue at a rate of
approximately $5 per-person-per-day. RCMP contends that CCCM’s OBR estimate of
approximately $50 per-person-per-day assumes that CCCM could have earned ten times more
OBR than Holland America or Carnival, “two of the best-known powerhouses in the cruise
business.” Def. Closing Trial Brief at 3. CCCM retorts that its plans cannot be compared to the
replacement charters’ OBR because “the cruise lines made no effort to generate OBR on the
ships which led to incredibly low actual spends.” CCCM Reply at 2. Specifically, CCCM notes
that Holland America did not allocate funds to marketing or promoting OBR during the Winter
Olympics, and that all but three bars on the Holland America ms Statendam were closed during
the Games. CCCM concludes that “the cruise lines dedicated minimal resources to the
generation of OBR because they had no reason to spend money going after money they already
had in hand.” Id. at 3.
British Columbia courts recognize that a defendant might use actual results from a
substitute contractor as an appropriate damages benchmark for breach of contract. See Tercon
Contractors Ltd. v. British Columbia (Minister of Transp. and Highway), 2006 CarswellBC 730,
¶ 156 (B.C.S.C. 2006). While RCMP relies on this principal, it failed to show that “the
conditions . . . of both contractors would have been comparable.” Id. When questioned at trial
about the actual OBR generated by Holland America and Carnival, Adam Snitzer testified that
he had “never seen numbers this low.” Nov. 20, 2013 Trial Tr. at 34. Mr. Snitzer further
40

testified that onboard revenue in the replacement contracts was “just rolled up into the charter
hire figure and there was no separate breakout for OBR or . . . gratuities. But in fact, the dollars
involved were essentially the same number of dollars.” Id. at 33. In other words, OBR was an
unspecified cost built into the basic charter hire rate in RCMP’s contracts with Holland America
and Carnival. Id. RCMP did not contest that the replacement charters failed to budget for the
marketing of onboard services, Holland America closed most of the available bars onboard the
ms Statendam, and the replacement charters increased their hire rates to include typical OBR
figures. Nor did RCMP present evidence that its replacement charter contracts were sufficiently
similar to justify relying on actual OBR as a benchmark for damages under the Contract. In fact,
rather than having OBR in hand, CCCM had guaranteed a high revenue rate on OBR and had
every incentive to earn it. The evidence shows that RCMP’s approach to onboard activities, and
therefore the resulting OBR, entirely changed from its initial requirements and expectations for
CCCM. The Court finds that the replacement charters are not sufficiently equivalent to
determine CCCM’s reasonably-anticipated OBR income.
RCMP also argues that CCCM’s damages calculations have failed to appreciate
that the ships would not have been full for the thirty-one to forty-four days that the CCCM
charters were to be in port. RCMP relies on the lower occupancy rates of the Carnival and
Holland America ships, which were attributable to the fact that “the security forces concentrated
in Vancouver gradually ramped up their presence as the Olympics approached and then ramped
down after the Olympics were over,” so that, overall, the ships were not full. Id. From these
facts, RCMP argues that CCCM based its OBR estimates on the erroneous assumption of a 100%
occupancy rate during the entire 2010 Olympics. CCCM responds that the Contract “called for
one embarkation of passengers at the beginning of the Olympics and one disembarkation of
41

passengers at the end.” CCCM Reply at 4 (citing Nov. 18, 2014 Trial Tr. at 57–59, 100) (other
citation omitted). CCCM also argues that Kelly Meikle, RCMP’s Manager of Contracting,
represented that the ships would be full throughout the Olympics. Id. at 5. In the alternative,
CCCM offered an OBR projection prepared by Mr. Snitzer based on a seventy percent utilization
rate. Id. at 5.
The Contract clearly stated that there would be “one embarkation date . . . and one
disembarkation date . . . .” Pls. Trial Ex. 1 (Contract) at CCCM001095. Yet it also provided that
“[a]ny additional embarkation and dis-embarkation dates are possible, but will require
additional funding.” Id. (emphasis added). Accordingly, multiple embarkation and
disembarkation dates, such as those that occurred in fact, were within the contemplation of the
Contract. While CCCM’s planning in 2008 assumed that the ships would be full while in port,
see Nov. 18, 2013 Trial Tr. at 58, the Contract clearly allowed a different schedule. Changes
would have required additional funding, but neither party offered evidence of additional costs or
profit margins to cover such a possibility. Because RCMP’s gradual onboarding process was
within the scope of the Contract and CCCM presented no evidence of additional costs, the Court
will assess damages based on the actual seventy percent occupancy rate of the replacement
charters.
Further, RCMP contends that CCCM’s OBR estimates are speculative and fail to
recognize the spending habits of ISU personnel on a government per diem. Consistent with
CCCM’s negotiations with RCMP’s first representatives, Adam Snitzer testified that his revenue
estimates assumed that RCMP would be concerned with “maintaining morale, providing a
relaxing atmosphere, allowing people to drink while on board, [and] preferring [that] people . . .
spend time on board during their recreation versus going into certain parts of town in Vancouver
42

that were close to the port.” Nov. 19, 2013 Trial Tr. at 154. In contrast, based on RCMP’s
changed requirements after the Contract breach, Donna Kaluza testified that RCMP intended to
provide an “accommodation level . . . no lesser [] than you would find at a Holiday Inn Express
Hotel which . . . would usually have no more than a three star rating in the hotel trade.” Nov. 20,
2013 Trial Tr. at 51. Ms. Kaluza testified that RCMP planned to increase morale by providing
ISU personnel with an opportunity to work additional hours and earn overtime pay. Id. at 53.
But RCMP offered no records of such overtime pay and failed to otherwise demonstrate the
limited availability of ISU personnel. Without such support, the Court finds that Ms. Kaluza’s
generalized testimony is insufficient to reduce CCCM’s cost of performance.
The full record, including the deposition testimony of Bud Mercer and Donna
Kaluza; the compensation and profit structure of the Contract; and the OBR guarantees in the
charter party agreements between CCCM and the cruise lines, corroborate Mr. Snitzer’s general
assumption that CCCM would have had opportunities to maximize onboard revenue from
selected venues that were to remain open. Ms. Kaluza’s testimony to the contrary was consistent
only with the revised expectations that RCMP applied to the replacement charters after it
breached the Contract.
RCMP further relies on CCCM’s contemporaneous OBR estimates, which were
lower than the estimates it presents here, and argues that CCCM’s current numbers should be
discounted. RCMP emphasizes that CCCM’s OBR estimates have moved ever upward since
2008, with an initial estimate of $15 per-person-per-day in 2008, an estimate of $20 to $25 perperson-per-day in January 2009, and a current estimate of $49 per-person-per-day. The purpose
of each of these estimates shows the flaw in RCMP’s argument: on August 23, 2008, before the
charter party agreements between CCCM and the cruise lines had been finalized, a cautious
43

Phillip Sloane estimated an OBR rate of $15 per-person-per-day for the purpose of obtaining
financing, see Def. Ex. 6 (Aug. 23, 2008 Email from Phillip Sloane to Tracey Kelly); Tracey
Kelly estimated an OBR figure of $20 to $25 per-person-per-day in December 2008 when
CCCM was trying to convince Royal Caribbean to submit a bid after RCMP breached the
Contract. Neither of these estimates, tied to their purposes and authors, affects the analysis of
CCCM’s legitimate expectation from OBR revenues based on the Contract and charter party
agreements that it actually obtained.
Aside from generalized objections, RCMP also contests itemized portions of
CCCM’s OBR projections. Specifically, RCMP contends that CCCM would not have realized
any revenue from box lunches. The Court agrees. The trial testimony established that security
personnel could not bring lunches inside the security perimeters for the 2010 Games, and
therefore, CCCM would not have earned OBR from box lunches. See Nov. 20, 2013 Trial Tr. at
57–58.
RCMP also asserts that CCCM submitted inflated rates for onboard laundry and
internet service. Relying on Tracey Kelly’s approximations of $10 per day for internet access
and $12 per day for laundry, see Nov. 18, 2013 Trial Tr. at 158–59, RCMP stands on Donna
Kaluza’s testimony that if CCCM had presented her with those rates, she would have searched
for alternative arrangements. Nov. 20, 2013 Trial Tr. at 68. This argument entirely ignores the
lower estimations provided by Mr. Snitzer. See Nov. 19, 2013 Trial Tr. 163–64. In any event,
Ms. Kaluza’s testimony suffered from the inherent limits of after-acquired knowledge. When
RCMP accepted a lower bid price from CCCM in 2008 than it actually paid for replacement
charters in 2010, RCMP neither knew nor asked for the bases underlying CCCM’s onboard
revenue estimates; those details were provided only in the charter party agreements, but not the
44

Contract to which RCMP was a party. RCMP failed to provide any reasoned basis for an
alternate estimate under the Contract. Nor has RCMP proffered any evidence of alternative
sources from which lesser costs for laundry or internet service could have been obtained. Based
on the record, the Court finds that CCCM supported its estimates for OBR from laundry and
internet service and that RCMP failed to overcome that estimate.
C. Repositioning Cruises
The final category of CCCM damages is lost profit from the sale of repositioning
cruises before and after the 2010 Winter Olympics. CCCM contends that it had a definite
agreement with AA Worldwide to sell repositioning cruises on the Holland America ms
Statendam, and that CCCM would have earned approximately $1,252,000 USD from the sale of
those cruises. While CCCM acknowledges that its agreement with AA Worldwide was not
reduced to writing, it insists that an oral agreement with definite terms existed, whereby AA
Worldwide would sell repositioning cruises and, in return, would pay CCCM $125 USD perperson-per-day to sub-charter the ms Statendam for eight days. In response, RCMP argues that
CCCM and AA Worldwide never entered into an enforceable agreement because “the cruise ship
business does not function on oral contracts.” Defs. Closing Trial Brief at 11.
The Court agrees with RCMP. Before RCMP breached the Contract, CCCM had
not submitted final documents, including a confidentiality agreement, to Colleen Ladwig at AA
Worldwide. Moreover, it is clear that Ms. Ladwig and CCCM had materially different
understandings regarding the scope and quality of the repositioning cruises. Ms. Ladwig
testified at deposition that AA Worldwide was planning a “fully inclusive” cruise package. See
Ladwig Dep. at 16. CCCM did not share the same understanding, as it envisioned additional
opportunities to earn OBR from spas, sundries, bars, special events, and shore excursions. See
45

Nov. 18, 2013 Trial Tr. at 113. These material differences clarify that Ms. Ladwig and the
CCCM partnership had not reached a definite agreement on all material terms related to the
repositioning cruises. Because there was no definite contract—oral or otherwise—the Court
finds that CCCM cannot claim lost profits from the repositioning cruises as part of its damages
here. Since CCCM’s agreement with AA Worldwide was too speculative to warrant a damages
award for lost profits, CCCM is similarly barred from recovering onboard revenue from the sale
of repositioning cruises.
D. Duty to Mitigate
RCMP contends that CCCM’s damages should be reduced by twenty-five percent
because CCCM failed to mitigate its damages by pursuing other charter opportunities.
Specifically, RCMP claims that CCCM could have secured other similar projects and that
CCCM considered other ventures in Vancouver associated with the 2010 Winter Olympics.
Based on the experience of CCCM’s partners in the cruise industry and Ms. Ladwig’s deposition
testimony that CCCM had discussed using other ships for different cruises, RCMP urges the
Court to find that CCCM had a reasonable opportunity to mitigate any damages arising from
RCMP’s breach. CCCM counters that it could not have reasonably mitigated damages because
the charter party agreements provided that the ships were reserved for the “express and exclusive
use” of RCMP during the 2010 Winter Olympics. See Pls. Trial Ex. 4 (Holland America Charter
Party Agreement at 3, ¶ 2); Pls. Trial Ex. 5 (Royal Caribbean Charter Party Agreement at 1).
CCCM also contends that RCMP’s breach made it impossible for CCCM to secure financing for
the charter of any other ships.
British Columbia law is clear that a plaintiff has a duty to take all reasonable steps
to mitigate any loss resulting from a breach of contract, and may not recover any part of a loss
46

that is due to its own neglect or failure to take reasonable mitigation efforts. See Southcott
Estates Inc. v. Toronto Catholic Dist. Sch. Bd., 2012 CarswellOnt 12505, ¶ 24 (Can. S.C.C.
2012). A defendant bears the burden of proving that a plaintiff failed to mitigate damages. See
Michaels v. Red Deer Coll., 1975 CarswellAlta 57, ¶ 11 (S.C.C. 1975) (“If it is the defendant’s
position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for
the defendant to carry the burden of that issue . . . .”). If a defendant makes the required
showing, the court may reduce an award of damages. See Onta Holdings Inc. v. Bonosusatya,
1998 CarswellBC 1968, ¶ 30 (B.C.S.C.); Van Snellenberg v. Cemco Elec. Mfg. Co., 1946
CarswellBC 128, ¶ 6 (S.C.C. 1946).
RCMP failed to carry its burden. The question of mitigation devolves into
whether CCCM could have chartered other ships to serve as floating hotels during the 2010
Vancouver Olympics. But RCMP presented no evidence to demonstrate that CCCM had an
opportunity to charter Holland America or Royal Caribbean ships, much less any other cruise
ships, during the 2010 Olympics, which was the period during which mitigation might be
measured. Any charters to other destinations are too speculative to assess meaningfully, and no
evidence supports such opportunities.
Moreover, Colleen Ladwig’s deposition testimony does not prove that CCCM had an
actual opportunity to mitigate damages. Ms. Ladwig generally stated that CCCM had discussed
the possibility of using other ships for additional cruises during the 2010 Winter Olympics, but
this testimony was too speculative and imprecise to prove that CCCM could have chartered other
ships during the 2010 Winter Olympics. Accordingly, the Court finds that RCMP failed to
establish that CCCM failed to mitigate damages.

47

E. Interest
CCCM seeks a prejudgment interest rate of three percent (3%) per year above the
average bank rate in Canada in the calendar month preceding the date that Canada pays the
judgment. CCCM asserts that the rate for prejudgment interest set under the British Columbia
Court Order Interest Act (COIA), R.S.B.C. 1996, ch. 79, is irrelevant because the parties
specified an alternative rate. See Pls. Trial Ex. 1 (Contract) at CAN007118–19, ¶ 14. Not so.
CCCM cites a Contract provision titled “Interest on Overdue Accounts,” which required only
that RCMP remain liable for unpaid and overdue Contract services at an average rate plus 3%.
Id. The parties’ agreement concerning uncontested, overdue amounts during Contract
performance does not control CCCM’s demand for prejudgment interest.
More to the point, CCCM contends that the Registrar’s rates are “only rates of
convenience to trial judges . . . [that] might not be appropriate,” and seeks prejudgment interest
at the prime rate, which has averaged 3.29% since September 26, 2008, 15 the date of the breach.
Id. CCCM notes that neither COIA nor British Columbia precedents require limiting
prejudgment interest to the rates set by the Registrar. Id. To the contrary, RCMP argues that the
Court is bound by COIA, which establishes prejudgment interest at the rate set by the Court
Registrar.
COIA provides that the applicable prejudgment interest rate is set by the Court
Registrar. See Battrum v. MacKenzie Estate, 2010 CarswellBC 2417, ¶ 36 (B.C.S.C. 2010).
However, in Hardwoods Specialty Products LP Inc. v. Rite Style Manufacturing Ltd., 2006
CarswellBC 595 (B.C. Ct. App. 2006), the British Columbia Court of Appeal explained:
15

Given the Court’s ruling that the breach occurred on September 26, 2008, when Ms. Morin
anticipatorily repudiated the contract, see Cruise Connections Charter Mgmt., 967 F. Supp. 2d at
236–39, it is undisputed that interest should be measured from on or around that date.
48

Under [section] 1 of the Court Order Interest Act, the appellant
must pay interest at “a rate the court considers appropriate in the
circumstances” from when the cause of action arose to judgment
. . . . However, the rates of interest fixed by the Registrar are only
rates of convenience to trial judges who resolve disputed claims,
whether or not the claims are liquidated. In a commercial case the
Registrar’s rates might not be appropriate. Business entities often
must borrow working capital at bank rates of interest that are
higher than the rates fixed by the Registrar. Other business entities
often invest excess cash on hand, also at higher rates of return.
Therefore, . . . the rate fixed by the Registrar at any given time
should not be seen to be a default rate with respect to disputed
claims.
Id. ¶ 17.
CCCM anticipated that it would receive all payments from RCMP by March 31,
2010, approximately four years ago. See Contract at CAN0000147. As a North Carolina
corporation, CCCM would have taken its profits, converted Canadian dollars to U.S. dollars, and
deposited those funds into an interest-bearing account. See Nov. 19, 2013 Trial Tr. at 140
(Tracey Kelly testified that CCCM intended to deposit any profits into an interest-bearing bank
account). RCMP failed to refute this testimony. While CCCM contends that a higher interest
rate is permitted here because of the length of the delay, it has failed to provide any evidence or
testimony that it “borrow[ed] working capital at bank rates of interest that [were] higher than the
rates fixed by the Registrar.” See Hardwoods Specialty Prods. LP Inc. v. Rite Style Mfg. Ltd.,
2006 CarswellBC 595, ¶ 17 (B.C. Ct. App. 2006).
Finally, CCCM claims that, if not for RCMP’s breach, CCCM would have
deposited its profits into a bank account earning compound interest. While COIA generally
prohibits an award of compound interest, see R.S.B.C. 1996, ch. 79, § 2(c) (“The court must not
award interest under section 1 on interest or on costs.”); Teal Cedar Prods. v. British Columbia
(Forets), 2013 CarswellBC 2954, ¶ 10 (S.C.C. 2013) (noting that simple interest “remains the
49

rule in British Columbia”), compound interest is permitted “where there is evidence that the
parties agreed, knew, or should have known, that the money which is the subject of the dispute
would bear compound interest as damages.” Bank of Am. Can. v. Mut. Trust Co., 2002
CarswellOnt 1114, ¶ 55 (S.C.C. 2002). CCCM offered no evidence that RCMP knew or should
have known that it could be held liable for compound interest. As a result, the Court finds that
CCCM is entitled to a prejudgment interest under COIA, with no additional allowance for
compound interest.
F. Final Damages Calculation
The Court will award CCCM damages as provided below. While RCMP contests
certain damages categories, it does not challenge CCCM’s method of calculating and converting
expenses. Accordingly, the Court accepts CCCM’s methodology for calculating damages as
uncontested, and converts all expenses based on the exchange rate that applied on the date that
CCCM contends the expense would have been paid. The RCMP Contract has been converted to
U.S. dollars using the exchange rate that applied on September 26, 2008. See Dec. 6, 2013
Supplemental Order [Dkt. 92] at 2. Expenses that would have been paid in U.S. dollars are only
listed by the U.S. dollar amount.
Category

Canadian Dollars
(CAD)
$55,348,136

RCMP Contract Price

U.S. Dollars (USD)
$53,482,904

Cruise Ship Expenses
Charter Hire for Ships
Charter Hire for Royal Caribbean Ships

$18,167,100

Charter Hire for Holland America Ship

$9,440,080

50

Total Charter Hire

$27,607,180

Hotel Service Charges (Gratuities)
Royal Caribbean Ships

$1,240,830

Holland America Ship

$651,040

Total Hotel Service Charges

$1,891,870

Onboard Revenue Guarantee
Royal Caribbean Ships

$6,330,000

Holland America Ship

$2,408,840

Total Onboard Revenue Guarantee

$8,738,840

Other CCCM Costs
Garbage and Recycling

$212,000

$209,437

Port Agent

$46,000

$45,019

Embarkation

$40,000

$39,624

Disembarkation

$40,000

$39,624

Water Bunkering

$125,000

$121,870

Ground Services

$25,000

$24,713

Harbor Pilots

$45,000

$42,579

Forensic Accounting

$45,000

$44,775

Miscellaneous (Subcontracting Costs)

$100,000

$96,733

Stevedoring

$225,000

$223,875

Information Technology

$22,000

Insurance

$6,450

Airfare

$66,500

51

Legal

$80,000

Miscellaneous

$100,000

Apartment/Office

$70,000

$66,472

Hotel Room

$25,600

$24,502

Per Diem

$150,000

$143,295

Operations Personnel

$150,000

$143,068

Site Inspections

$6,000

$5,865

Executive Assistant

$7,500

$7,214

Letter of Credit Fees

$647,284

$626,053

Interest on Line of Credit

$37,050

$30,099

Total Expenses

$40,447,657

RCMP Contract Profit

$13,035,247

Additional Income
Net Onboard Revenue

$5,966,460

Repositioning Cruises

$0

$19,001,707

Total Profit

52

IV. CONCLUSION
For the reasons set forth above, the Court will award CCCM $19,001,707 USD,
with prejudgment interest under COIA. A memorializing Order accompanies this Opinion.

Date: July 21, 2014

/s/
ROSEMARY M. COLLYER
United States District Judge

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