Yukon government files $17.3M lawsuit over Carmacks arena construction

The Yukon government has filed a $17.3-million lawsuit against a contractor and insurance company after a project to build an arena in Carmacks was never completed.

Contractor Scott Design Build Inc. signed a nearly $14.6-million construction contract with the Yukon government in 2018 for the 2,500-square-metre facility that was originally supposed to be completed by November 2020.

The total cost of the project had been set at $16.5 million, with $10.5 coming from the federal Small Communities Fund.

However, in a statement of claim filed to the Yukon Supreme Court on Feb. 12, the territorial government alleged that Scott Design Build "did not perform the work as required by the contractual terms, specifications, and standards."

The lawsuit accuses the contractor of failing to complete the project, propose an amended work schedule or pay its subcontractors, and is seeking $10 million in damages.

The government is also going after the insurance company that held a performance bond on the project for nearly $7.3 million.

The lawsuit alleges that Echelon Financial Holdings Inc. was obligated to fix Scott Design Build's work, find another contractor to take over the project or pay the cost of the bond should Yukon declare Scott Design Build in default. It failed to do so.

The government had declared the contractor in default of the contract in 2020 after construction failed to resume in the spring following a planned winter shut-down.

At the time, a spokesperson for the Department of Community Services told the Yukon News that Scott Design Build had "expressed unwillingness to work under our COVID-19 self-isolation requirements," even after the government offered to pay for self-isolation costs.

The allegations in the lawsuit have not been tested in court yet. As of Feb. 16, neither Scott Design Build nor Echelon Financial Holdings had filed statements of defence.

The Yukon government said in a press release on Feb. 12 that it will be re-tendering the construction contract in March.

Carmacks mayor Lee Bodie said in the release that while the village "has been disappointed with the myriad of project delays," it appreciated the territorial government's efforts to "keep this project moving forward in order to assist in making Carmacks a better place to live and play, especially for our younger citizens."