Bombardier granted injunction in Toronto dispute
The Ontario Superior Court of Justice has ruled in favour of Bombardier Inc. in its dispute with Metrolinx, granting an injunction that at least temporarily stops the provincial government’s transit agency from terminating a $770-million contract for light-rail vehicles.
Justice Glenn Hainey said in his ruling Wednesday that the interlocutory injunction prevents Metrolinx from cancelling the contract for 182 light-rail vehicles, which has seen several delays, until a dispute resolution process to determine whether Bombardier was in “material default” of the contract is completed.
The cars have been designated for Toronto rail lines including the new Eglinton Crosstown and Finch West LRT routes.
Under the contract, Metrolinx can terminate for “material default” — if, for example, Bombardier failed to perform its obligations — but it is still subject to the dispute resolution provisions both parties agreed to, Hainey said in the ruling.
Without the injunction, Bombardier could suffer “irreparable harm,” he added. “The stigma resulting from a termination of the Contract for material default would likely result in lost LRV (light rail vehicle) business for (Bombardier) in the future ... There is meaningful doubt that damages could adequately compensate (Bombardier) for this type of loss,” he said in the ruling.
Termination of the contract would also cause problems for its supply chain and potentially result in a loss of employee expertise, he added. That, in turn, would make it even harder for Bombardier to fulfil the contract if the dispute resolution board finds that it is not in material default.
Hainey ordered that Bombardier take “reasonable steps to expedite the dispute resolution process.”
Bombardier said Wednesday it was “pleased” with the court ruling and was “eager to sit down with Metrolinx to find a clear path forward.”
John Jensen, president and chief executive of Metrolinx, said “nothing in today’s decision changes our focus on delivering high-quality vehicles on time. We remain uncompromising on that point.”
In 2010, Bombardier and Metrolinx entered into the contract, with delivery of the light-rail vehicles scheduled to start in 2018. In July 2016, Metrolinx claimed that Bombardier was in material default under the contract because of its “persistent inability to deliver on its contractual obligations.”
In November, Metrolinx formally notified Bombardier that it intended to cancel the contract, citing “significant quality and manufacturing issues.” Bombardier filed for a court injunction to stop the cancellation, saying that it was in fact Metrolinx that was responsible for project delays. “Since the contract was signed in 2010, Metrolinx has changed the scope, the timelines, and the technical qualifications countless times,” Bombardier said in a statement at the time.