Judge blocks Metrolinx from terminating $770M contract with Bombardier
Chris Fox, CTV Toronto
Published Wednesday, April 19, 2017 12:01PM EDT
Last Updated Wednesday, April 19, 2017 3:22PM EDT
A judge has granted an injunction that will stop Metrolinx from terminating its $770 million contract with Bombardier for the construction of more than 180 light-rail vehicles.
Ontario Superior Court Justice Glenn Hainey made the ruling on Wednesday, a little more than two months after Bombardier first sought the injunction.
At the time, Bombardier accused Metrolinx of an “unwillingness to work in good faith” and said that it was “fully capable” of delivering the trains on time despite suggestions to the contrary.
For its part, Metrolinx has said that Bombardier has failed deliver a prototype vehicle that was initially supposed to be in the transit agency’s hands by September, 2015.
In his written ruling, Hainey said that he has not been persuaded that Metrolinx “intends to terminate the contract for default” and rather has been led to believe that the company is “using the threat of termination for negotiating purposes.”
Hainey also said that the “evidence falls short” of establishing that there is an alternate supplier who could deliver the vehicles by the 2018 deadline set out in the contract with Bombardier.
The vehicles are needed for the $5.3 billion Eglinton Crosstown line, which isn’t expected to open until 2021. Testing on the line is supposed to begin in 2019.
“Metrolinx had not confirmed in any of the material before the court that it’s going to terminate the contract for material default, only that it may terminate it for material default. This also weighs in favour of granting the injunction,” Hainey wrote.
In its submission to the court, Bombardier cited the potential for “irreparable harm” from the cancellation of the contract, something Hainey agreed with in issuing his ruling.
He said that that if the contract were terminated about 230 jobs that were created as a result would be lost and that 32 Bombardier employees dedicated to engineering work on the light-rail vehicles would be terminated.
Furthermore, he said that the cancellation of the contract would “seriously impact” Bombardier’s reputation and goodwill with its suppliers.
“I am satisfied that (Bombardier) has established that there is a meaningful risk that it will suffer irreparable harm if the contract is terminated for material default because its ability to successfully bid on future LRV (Light Rail Vehicle) projects will be adversely affected,” the ruling states.
Hainey said that his injunction will remain in effect while a dispute resolution process in Metrolinx’s contract with Bombardier plays out.
He said that if a dispute resolution board concludes that Bombardier is in “material default” of the contract, the injunction will be lifted.
In a statement issued on Wednesday, Bombardier said that Hainey’s ruling confirms the company’s belief that “Metrolinx acted inappropriately in seeking to avoid the dispute resolution provisions of the contract.”
“It is unfortunate that Bombardier had to resort to the courts to resolve this matter and it is our hope that today’s ruling will now allow the parties to focus on delivering the light rail expansion projects on time and on budget,” the statement says. “We are eager to sit down with Metrolinx to find a clear path forward; one that delivers value to all.”
Metrolinx first sought to terminate its contract with Bombardier in July.
In a statement released on Wednesday afternoon, President and CEO John Jensen did not comment on the injunction explicitly, other than to say that Metrolinx is “reviewing the decision and identifying the best path forward.”
“Nothing in today's decision changes our focus on delivering high-quality vehicles on time,” Jensen wrote. “We remain uncompromising on that point.”