North Bay news: Ontario bans contractor after problems with Tilden Lake Dam project

An Ontario construction company is embroiled in a provincial lawsuit over the construction of a dam in the North-Bay area – and the province’s decision to bar the company from bidding on future contracts.

At the center of the dispute is a $6 million contract awarded in 2019 to HugoMB Contracting Inc. to replace Tilden Lake Dam, north of North Bay.

Tilden Lake Dam is located at the southern outlet of Tilden Lake, about 30 kilometers north of North Bay, in Lyman Township.

It was built in 1961 and consists of a 4.4-meter high concrete gravity structure with two stop log sluiceways and earth embankment on both sides.

Dissatisfaction with HugoMB’s work led the province to terminate the contract in March 2021. Then in August of that year, HugoMB was barred from bidding on any provincial contracts for two years.

In response, HugoMB invoked a clause in the Tilden Lake contract that sent disputes under the contract to arbitration for resolution.

It submitted several issues for arbitration, but the province disputed HugoMB’s claim for $4.1 million in compensation for the province’s decision to bar the company from bidding on future contracts, called Claim No. . 7.

None of the claims in the lawsuit have been proven in court or arbitration.

The province brought a motion to determine whether the arbitrator had jurisdiction over Claim No. 7 and the arbitrator ruled that he had jurisdiction.

The province appealed that decision to the Ontario Superior Court of Justice, arguing that Claim No. 7 was beyond the scope of the arbitration clause in the Tilden Lake contract.

The court agreed with the province and ruled that HugoMB should bring a separate court action against the province to pursue its claim for damages under Claim No. 7.

The contract was awarded in June 2019 for a total of $5.828 million. HugoMB should “substantially” complete the project by February 2020, with all work completed by May 2020.

“HugoMB did not meet the timelines of the contract,” according to the court’s decision.

“On March 8, 2021, the ministry informed HugoMB that it was in default and that, unless HugoMB provided an acceptable schedule to resolve the default, the ministry could terminate HugoMB’s right to continue work. “

While the company submitted a schedule on March 15, the province said it was unacceptable and terminated the contract.

“To protect the dam from possible flood damage, including from unpredicted floods, and to minimize potential risks to the residents downstream, (HugoMB’s) right to continue work is terminated with immediate effect ,” the province said in a letter to the company.

CLAIMS DENIED

The company denied the province’s claims.

“HugoMB stated that it was in full compliance with the contract and that the ministry ‘subsequently and improperly disqualified Hugo MB from bidding on additional contracts’ with the ministry,” the court ruling said.

In its decision, the court ruled that the agreement between the province and HugoMB is limited to addressing claims arising from the Tilden Lake Dam contract, not all disputes that may arise between the contractor and the province.

“The arbitration provision appears to be designed to remove disputes within the agreement itself, which must be resolved to ensure that the fixed-price contract between the parties operates smoothly,” the decision said.

“There is nothing in the language of the (contract) that suggests that all disputes of any kind between HugoMB and the Ministry should be resolved through arbitration.”

Read the full decision here.