Bombardier Transportation has won an injunction making it more difficult for Metrolinx to cancel a $770-million contract to buy light-rail vehicles for the Toronto area.
The Ontario Superior Court ruling does not mean that the contract is necessarily safe. But it means that Metrolinx would have to undergo a potentially lengthy dispute-resolution process in order to end it without paying damages. And the win for Bombardier staves off, at least temporarily, what the company warned would be serious financial and reputation damage.
“I am satisfied that [Bombardier] has established that there is a meaningful risk that it will suffer irreparable harm if the Contract is terminated for material default because its ability to successfully bid on future [light-rail vehicle] projects will be adversely affected,” Justice Glenn Hainey wrote in a decision released Wednesday.
The ruling could have major impacts for Toronto-area commuters. The dispute centres on a contract to build 182 light-rail vehicles, primarily to equip the Eglinton Crosstown line being built in midtown Toronto. Metrolinx, the regional transit agency that is an arm of the provincial government, has alleged that being forced to stay with Bombardier could inhibit its ability to provide the transit it has promised.
“I expect all of our suppliers to honour their contractual obligations, perform professionally, and to recognize that there are consequences for failing to do so,” Transportation Minister Steven Del Duca said in a statement. “Over the coming weeks, we will carefully assess today’s decision, as well as what options are available to us.”
Judge Hainey acknowledged that the agency still has the power to kill the contract “for its own convenience at any time,” provided it compensates Bombardier, and that it has raised the prospect of going to another supplier. However, he was “not persuaded” that Metrolinx actually had any intention of terminating the contract.
“It appears to me that [Metrolinx] is using the threat of termination for negotiating purposes,” the judge wrote. “An interlocutory injunction will issue prohibiting [Metrolinx] from terminating the Contract for material default until the [dispute resolution process] has issued its ruling on the dispute.”
In a statement, Bombardier praised the ruling for confirming “our belief that Metrolinx acted inappropriately” and called for new talks with the agency “to find a clear path forward.”
The new Metrolinx CEO, John Jensen, said that they were “reviewing the decision and identifying the best path forward. We will take the appropriate time to finalize details.”
In Toronto, where the TTC has had its own issues with Bombardier meeting deadlines for producing streetcars, Mayor John Tory told reporters that the proof would be in the company’s performance.
“We just can’t operate on the basis that we build transit and a major supplier in whom we’ve placed great confidence … then [proceeds] to let us down badly,” he said. “They know they’ve got a job to do, regaining and restoring confidence in themselves, and more importantly even than that, getting on with building streetcars and building LRT cars.”
Metrolinx has alleged that the company had missed repeated deadlines, putting the 2021 opening of the line into doubt. Bombardier insisted that these interim deadlines were no longer relevant, and that it would produce the vehicles in time.
The agency issued a notice of default on the contract last summer and, in the autumn, issued a formal notice of intent to terminate the contract. At the time, Benoit Brossoit, president of the Americas for Bombardier Transportation, warned then-Metrolinx CEO Bruce McCuaig that the company “will not hesitate to commence litigation.”
It’s a dispute that has turned nasty. In an affidavit, a Metrolinx official made a withering comment suggesting that Bombardier no longer had much of a reputation to lose. And in its own legal filings, the company alleged that some Metrolinx officials were incapable of doing their jobs properly.
The contract at issue dates to 2010. Valued at $770-million, with another $100-million in taxes added on, it calls on Bombardier to produce vehicles for light-rail lines along Eglinton, Finch and Sheppard avenues, as well as one in Scarborough.
With a report from Jeff GrayReport Typo/Error