Yukon Energy Corporation has won its day in court.
In what Justice Leigh Gower deemed a “close and difficult case,” Yukon Energy Corp. and Chant Construction Company Ltd., the company hired to build the Mayo-Dawson transmission line, will settle their dispute in Supreme Court.
The $36.2-million line, which carries hydro-electrical power to Dawson City, was completed in 2003.
The project was $7 million over budget and was more than one year late.
The debacle has both sides pointing fingers at the other.
Between 2005 and 2007, the two companies filed claims against each other — and other subcontractors and professionals that worked on the project — alleging mismanagement and negligence in building the 223-kilometre line.
Ontario-based Chant wanted to resolve its dispute with Yukon Energy outside the courtroom.
In November, it applied to Yukon Supreme Court to have the matter stayed and sent to arbitration.
But Yukon Energy asked that the claims be dealt with in court.
This week, in a 33-page judgment, Gower sided with Yukon Energy. The claims will be settled in court.
“There is significant reason why the matters in dispute should not be referred to arbitration,” wrote Gower.
If it went to arbitration, Yukon Energy may have to prove its case numerous times in prosecuting the similar claims it launched against the other contractors. That’s because the arbitration’s findings would not be binding on any third party, wrote Gower in his judgment.
“The complexity of the issues makes the case more suitable for resolution by a court than an arbitral tribunal,” he wrote.
“Were the arbitration to proceed, YEC could face significant and unfair procedural difficulties, such that it would not be in the interests of justice to stay the within action.”
Construction on the line began in 2001 and was originally slated for completion in November 2002.
During the course of the project, a number of disputes arose between Yukon Energy and Chant.
In 2003, the conflicts escalated into a two-month long stop-work order during which Chant was not allowed on the construction site.
Chant and Yukon Energy tried to resolve their differences informally for more than three years from May 2003 to August 2006.
In April 2005, Chant delivered a summary of 22 claims against Yukon Energy adding up to more than $14.8 in damages.
Chant alleged that Yukon Energy staff, and other project consultants, delayed the company’s work and caused the company to lose time, money and new business.
“Alleged changes and extras to the project’s scope of work also gave rise to delay and loss,” it claims.
Plus, Chant claimed an additional $6 million for alleged interference in Chant’s relationship with its bonding company.
Yukon Energy “negligently misrepresented” the project to Chant’s bonding company causing that company to refuse services.
That meant Chant was unable to bid on other projects and lost potential profits totaling $6 million.
In the following months between December 2005 and August 2006, Yukon Energy filed a suit against Chant, and four other suits against subcontractors and consultants it hired to work on the project.
Yukon Energy claimed about $9.5 million in its suit against Chant.
The corporation claimed that some of Chant’s designs and constructions were deficient, that Chant delayed the project and failed to supply equipment, materials and services that Yukon Energy had paid for.
Yukon Energy also claimed “negligence, negligent misrepresentation, breach of fiduciary duty” and “unjust enrichment” against Chant and the other contractors it hired on the project.
“The judgment will shorten timeframes and make the process more efficient,” said Yukon Energy president David Morrison on Wednesday.
No court date has been fixed for the proceedings.
Morrison is meeting with the corporation’s lawyers next week to prepare documents.
Chant Construction president Ted Chant could not be reached before press time.