Hospital contractor’s quagmire keeps growing

Dowland Contracting's financial woes have spread much farther than the Yukon Hospital Corporation projects. Until it defaulted in February, Dowland had been working as the general contractor building the new hospitals in Watson Lake and Dawson City.

Dowland Contracting’s financial woes have spread much farther than the Yukon Hospital Corporation projects.

Until it defaulted in February, Dowland had been working as the general contractor building the new hospitals in Watson Lake and Dawson City. Last week it defaulted on another hospital job, this time in Iqaluit, Nunavut.

The company walked away from a $36-million renovation of Iqaluit’s Qikiqtani General Hospital with no prior warning to staff or subcontractors at the site. According to a senior member of the project in Iqaluit, the company didn’t tell any of its employees that the project was in jeopardy until a week before it defaulted.

“They just called and said, ‘Everyone’s plane tickets are booked. Get out of Iqaluit now,’” the employee said.

A bonding company has stepped in to ensure that subcontractors at the Iqaluit project will continue working.

Dowland has declined to comment on its financial difficulties in the past. Nobody at the company’s offices in Edmonton, Whitehorse or Kamloops picked up the phone this week.

The Yukon Hospital Corporation has said it didn’t know anything about Dowland’s troubles until February of this year, when news broke that it and Dowland were being sued for unpaid work by subcontractors on the Watson Lake and Dawson City projects.

“Dowland is a very large corporation and, like everyone else, we had no idea until it actually happened in February,” Jason Bilsky, CEO of the Yukon Hospital Corp., told the legislature on Monday.

But that’s contradicted by a letter the hospital corp. received one year ago from a subcontractor owed more than $1 million for its work on the hospital projects. Edmonton-based Nelson Drywall wrote to the hospital corporation’s project manager, Michael Cowper, on May 28, 2012, about its difficulties with Dowland. The NDP Opposition tabled the letter in the legislature on Monday.

Bilsky maintains that all the subcontractors on both projects are being paid again, now that a bonding company and a new general contractor have taken over the projects.

“I think it is very important to state here that all of the subtrades have either been paid or the money that is due them has been put in trust with the bonding company to ensure that they will be paid,” Bilsky said.

Not so, said Nelson’s chief financial officer, Pat McGaffey, in an interview. His company still hasn’t been paid, nor has it heard from the bonding company, he said.

“To date we’ve got no response, not from the hospital corp., from the bonding agency, not from Dowland, nothing,” McGaffey said.

Although he sent a follow-up letter to the hospital corp. via registered mail three weeks ago, he still hasn’t received a reply, and repeated attempts to contact Dowland and the bonding company have all been unsuccessful, said McGaffey.

According to Les Nelson, the president of Nelson Drywall, Dowland CEO Patrick McGuinness agreed to meet in March to resolve the outstanding invoices, but never showed up to the meeting and stopped returning calls.

Essentially, Dowland just stopped paying the contractors and went to ground, letting the projects default under a pile of liens and lawsuits, McGaffey said.

In addition to Nelson Drywall, B.C.-based contractors Dennis Smith Construction and RL-7 Mechanical are also suing Dowland and the Yukon Hospital Corp. over unpaid work at the Watson Lake and Dawson City hospital construction projects.

Dowland is also in trouble in Terrace, B.C., where it is facing 15 lawsuits for unpaid work at the Dasque-Middle hydroelectric project.

In a memo sent to its B.C. subcontractors, Dowland said it is owed millions by the project owner, Veresen Inc., and has taken that company to court for outstanding payments.

According to the March 6 memo, “Dowland has performed a significant amount of work for which we are owed payment by Veresen and, due to the owner’s unwillingness to compensate Dowland as per agreements, we have submitted several claims.”

Dowland’s Iqaluit default comes on the heels of other problems for the construction company. Emails obtained by the News from Gary Fielding, the vice president of operations for Dowland’s industrial branch, say that in April Dowland withdrew money from its employees’ bank accounts after a round of payroll deposits failed to clear the bank.

Fielding’s email blames the bank for the payment reversal, and says it means the company is no longer in control of its finances.

Several other Dowland employees have also confirmed the bank withdrawals, and say even though that round of payroll was eventually put back, they are still owed back-pay by Dowland, in some cases up to three months’ worth.

According to Dowland employees, the Edmonton, Whitehorse and Kamloops offices have been emptied.

Contact Jesse Winter at

jessew@yukon-news.com

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