Yukon companies owed $3.3M from hospital construction mess

Yukon businesses are owed $3.3 million in unsecured debt in the wake of the Watson Lake and Dawson City hospital construction controversies.

Yukon businesses are owed $3.3 million in unsecured debt in the wake of the Watson Lake and Dawson City hospital construction controversies.

Much of that debt is owed to hotels and other local businesses that provided services to the projects’ general contractor, Dowland Contracting. One of the biggest debts is to Arcrite Northern Ltd., which is owed nearly $2.2 million, according to documents filed in Dowland’s receivership.

Companies like Arcrite likely assumed that on two major government projects, the North’s largest construction company was good for the cash. But it wasn’t.

Just as the hospitals were nearing construction, Dowland collapsed into receivership under a mess of liens and lawsuits over unpaid work at the two sites, and the Yukon Hospital Corporation was dragged into the legal mess.

When it found out about the unpaid work, the hospital corporation declared Dowland in default of its contract and the company’s bonding company, Intact, was brought in to cover the risk.

Now Liberal Klondike MLA Sandy Silver says some of those subcontractors still aren’t getting paid, and he wants the Yukon government to do something about it.

“It has come to my attention that some companies that did work for Dowland have not in fact been paid out. Some have even been told that they are not covered by the bonding process and will not be receiving any money at all,” Silver said in the legislature on Wednesday.

“How does the government plan to honour the commitment made by the chair of the hospital board that everyone who is owed money will in fact actually get paid?” he asked.

Yukon Health Minister Doug Graham said he wasn’t worried about the subcontractors, because the hospital corporation would dip into its funds to pay out any legitimate claims that the bonding company refuses.

“The chair of the hospital corporation obviously made that comment with some assurance that he would be able to fall back on the hospital corporation’s resources in the event that a legitimate claim for payment came forward that was not to be paid by the insurance company,” Graham said.

“These companies – these alleged companies – that the member opposite is talking about that have not received payment, or have been informed (they) will not be paid, should be contacting the hospital corporation. That’s who the bond is with; it’s not with the government,” the minister said.

Except that they shouldn’t, because the hospital corporation isn’t involved in the payouts to subcontractors.

“The bonding company is responsible for evaluating the claims, not the hospital corp.,” said CEO Jason Bilsky.

“It’s appropriate for the minister to look at the hospital corp. as the party that is involved. Having said that, we are not involved in the contractual relationship between the contractor and the subcontractors,” he said.

It would actually be a breach of the hospital corporation’s original contract with Dowland if it got involved, Bilsky said.

Bilsky explained that there is a labour and materials bond in place, which covers most of the construction work, but peripheral costs like travel, hotel bills, or airline tickets will have to be evaluated by Intact.

Because Dowland is in receivership, companies with claims can also use the courts to fight for what they are owed, Bilsky said.

Contact Jesse Winter at

jessew@yukon-news.com