Nunavunmi Maligaliuqtiit

NUNAVUT COURT OF JUSTICE

Cour de justice du Nunavut

Citation: LRT Construction Ltd. v. Igloolik

Housing Association et al,
2018 NUCJ 3
Date: 20180213
Docket: 07-12-134
Registry: Iqaluit

Plaintiff: LRT Construction Ltd.

-and-

Defendant: Igloolik Housing Association, Nunavut

Housing Corporation, Government of
Nunavut and Terry Adams
________________________________________________________________________

Before: The Honourable Mr. Justice Earl D. Johnson, Deputy Judge

Plaintiff: Alan Regel

Defendants (IHA, Adams): James Scott
Defendant (NHC): David Stout

Location Heard: Iqaluit, Nunavut

Date Heard: August 9, 2017
Matters: Rules of the Supreme Court of the Northwest Territories,
NWT Reg (Nu) 010-96, rules 175 and 181; Financial
Administration Act, RSNWT (Nu) 1988, c F-4;
Government Contract Regulations, RRNWT (Nu) 1990, c
F-3; Nunavummi Nangminiqaqtunik Ikajuuti

REASONS FOR JUDGMENT

(NOTE: This document may have been edited for publication)

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I. INTRODUCTION

[1] The action arises in relation to certain repair work performed by or on

behalf of the defendant Igloolik Housing Association [IHA] to Unit 77
[Burn Unit] and to Units 37 and 74 [M&I Units] located in Igloolik in or
about September 2009 and June 2010.

[2] Units 77, 37 and 74 are public housing units owned by the defendant
Nunavut Housing Corporation [NHC] and made available to “core
needs” families and individuals under the NHC’s Public Housing
Program.

[3] The NHC delivers the Public Housing Program in all 25 Nunavut
communities through the Management Agreements entered between
the NHC and the local housing organizations [LHOs], including the
IHA.

[4] The NHC engages the LHOs to deliver its housing program in each
community, with funding and support provided by the NHC.

[5] Under the Management Agreements, the LHOs are responsible for
the complete care of the Public Housing portfolio, from unit
allocations, to rental assessments and collections, to maintenance
and repairs.

[6] The NHC provides funding (based on the NHC’s Local Housing
Organization Funding Formula), training and support to assist the
LHOs with program delivery.

[7] The NHC is a body corporate under the Nunavut Housing Corporation
Act, RSNWT (Nu) 1988, c N-1 [NHCA] and the IHA is a corporation
incorporated under the Societies Act, RSNWT (Nu) 1988, c S-11
[Societies Act]. Each has a separate board of directors and bylaws
that govern how each operates. On July 27, 2006, the NHC entered
into a contract [Management Agreement] with the IHA. Under the
Management Agreement, the IHA was responsible for the delivery of
NHC’s housing programs in Igloolik.

[8] In performing its roles and responsibilities under the Management

Agreement, the NHC and the IHA are contractually bound to comply
with all federal and territorial legislation and policies. As the time in
question, these included the Nunavummi Nangminiqaqtunik Ikajuuti
(20 April 2006) [NNI Policy], the Agreement between the Inuit of the
 3

Nunavut Settlement Area and Her Majesty the Queen in Right of

Canada [Nunavut Land Claims Agreement], the Financial
Administration Act, RSNWT (Nu) 1988, c F-4 [FAA], and the
Government Contract Regulations, RRNWT (Nu) 1990, c F-3 [GCR].

[9] The plaintiff alleges that the IHA failed to comply with the NNI Policy
or the GCR in the administration of the funding for the Burn Unit and
the M&I Units provided by the NHC under the Management
Agreement. The plaintiff alleges that the IHA acted as an agent of the
NHC and that the NHC is legally responsible for the actions of the IHA
in failing to comply with these policies.

[10] The defendant NHC applies for summary judgment dismissing all of
the claims set out in the Statement of Claim as against the NHC.

[11] The action against the Government of Nunavut [GN] was

discontinued.

[12] The IHA and Terry Adams [Adams] took no position on the application
of the NHC.

[13] In support of the motion, the NHC filed the Affidavit of Stephen Hooey
sworn on March 15, 2017 [Hooey Affidavit], the Affidavit of John
Corkett sworn July 28, 2017 [Corkett Affidavit], the Affidavit of Kyle J.
Stout sworn August 2, 2017 and the transcripts of the examination for
discovery of Lee Turbide [Turbide], Adams and Solomon Allurut
[Allurut].

[14] The plaintiff filed the Affidavit of Turbide sworn on July 24, 2017
[Turbide Affidavit] in opposing the motion and also relied on the
discovery of Corkett, Adams and Allurut.

[15] Although the use of discovery evidence is limited to a party adverse in

interest, both Counsel agreed that I could consider all the evidence in
the transcripts and give it the appropriate weight.

[16] The plaintiff applied for an order permitting it to amend the Statement
of Claim and for an order that the defendants attend at a further
examination for discovery to answer questions that they refused to
answer on the previous examination for discovery. The plaintiff also
requested leave to cross-examine Corkett on the Corkett Affidavit in
court before the commencement of argument.
 4

[17] The motions were argued before me on August 9, 2017. I denied the
plaintiff’s motions to compel answers to questions objected to at the
examination for discovery with reasons to follow in this reserved
judgment on the NHC’s motion for summary judgment.

II. PLAINTIFF’S MOTIONS

[18] The proposed amendments to the Statement of Claim were extensive

and added 23 new paragraphs as well as changed the relief claimed
from $1,000,000 in damages to $1 and a declaration that Adams and
the IHA frustrated the NNI Policy, the FAA and the GCR.

[19] The plaintiff also sought an order that the defendants re-attend
examinations for discovery at their own expense to answer questions
that they refused to answer at the previous examinations and for
preparation and attendance costs for the examinations.

[20] The defendants objected to the amendments because they were

submitted very late, shortly before the hearing. The amendments
were substantive and effectively sidetracked the NHC motion because
there was no discovery on the new pleadings. If this Court allowed the
amendment, the NHC requested an adjournment.

[21] The plaintiff argued that the defendants were provided with a draft of
the Amended Statement of Claim in February 2017 so there was no
element of surprise.

[22] After some exchanges with the Court, the plaintiff accepted the
rationale for an adjournment and agreed to withdraw the motion for
the amendments so the summary judgment application could proceed
on the merits.

[23] On the motion to re-attend for examination for discovery, the Court
referred Counsel for the plaintiff to Nunavut v Northern Transportation
Company Limited, 2010 NUCJ 05, 2010 CarswellNun 2, as authority
for the proper way to compel answers to questions or undertakings
that were refused at an examination for discovery. The plaintiff should
prepare a list of each refused question or undertaking and the reason
stated for the refusal so a Judge could analyze it and give a ruling.
Without this information, I found it impossible to rule on the application
and denied it with leave to bring it in the future in the proper form.
 5

[24] Both the NHC and the IHA objected to the cross-examination of
Corkett in court. The experienced Counsel for these defendants
stated that during their many years in practice they have not heard of
viva voce evidence being permitted in a special chambers type of
motion. Counsel for the NHC saw no reason why Counsel for the
plaintiff could not deal with any inconsistencies in the affidavit by way
of submissions.

[25] I informed Counsel that I could only remember one occasion during
my years of practice in the Northwest Territories when such a cross-
examination was permitted on a short, narrow issue in a fast-moving
battle between a trustee in bankruptcy and a receiver.

[26] However, I informed Counsel for the plaintiff that I understood his
desire for cross-examination given the late filing of the affidavit and
told him I was prepared to grant him an adjournment. Faced with the
prospect of an adjournment, he agreed to withdraw his motion and to
proceed without the cross-examination.

III. LAW ON MOTION FOR SUMMARY JUDGMENT

[27] Both parties rely on rules 175 and 181 of the Rules of the Supreme
Court of the Northwest Territories, NWT Reg (Nu) 010-96 [Rules of
Court].

[28] On the interpretation of the Rules of Court, the plaintiff relies on

Hryniak v Mauldin, 2014 SCC 7, [2014] 1 SCR 87 [Hryniak]; Leishman
v Hoechsmann et al, 2016 NWTSC 27, 2016 CarswellNWT 37
[Leishman]; Callidus v Deepak International et al, 2016 NWTSC 71,
2016 CarswellNWT 71; and Nunavut Tunngavik Incorporated v
Canada (Attorney General), 2014 NUCA 02, 2014 CarswellNun 14
[NTI CA 2014].

[29] The NHC relies on Ford Motor Co of Canada v Ontario Municipal

Employees Retirement Board, 36 OR (3d) 384, 1997 CanLII 1302
(ON CA) [Ford]; Ellis v Allen, [1914] 1 Ch 904 [Ellis] quoted in
Shinkaruk v Ecclesiastical Insurance Office Public Ltd, 1986
CarswellSask 392, [1986] SJ 588 [Shinkaruk]; Armoyan Group Ltd v
Dartmouth (City), 1998 NSCA 55, 1998 CarswellNS 30 [Armoyan];
Admiral Canada Inc v Freekick Ltd, 2006 ABQB 451, 2006
CarswellAlta 1761 [Admiral]; Canada (Attorney General) v Lameman,
2008 SCC 14, [2008] 1 SCR 372 [Lameman]; Base v Hadley et al,
 6

2006 NWTSC 04, 2006 CarswellNWT 3 [Base]; and NTI v Canada

(Attorney General), 2003 NUCJ 01, 2003 CarswellNun 2 [NTI 2003].

[30] The plaintiff argues that the expansion of the use of summary
judgment in Hryniak must be exercised with caution because it dealt
with the Ontario Rules of Civil Procedure, RRO 1990, Reg 194.
Shaner J. at paragraph 40 of Leishman summarized the law post
Hryniak as:

“[t]he question is not whether there is a genuine issue for trial

but rather, whether there is a genuine issue requiring trial - and
tools such as cross-examination available in the trial process -
to allow a court to reach a fair and just result.” [Emphasis
original]

[31] Hryniak was applied by the Nunavut Court of Appeal in NTI CA 2014.

[32] The NHC submitted that the operation of rules 175 and 181 of the
Rules of Court makes summary judgment available where there are
admissions and undisputed facts that provide an evidentiary basis for
the Court to conclude that there is no genuine issue for trial, and
where the admissions are in respect of matters that would entitle a
party to a judgment. At paragraph 48 of Ford, the Court of Appeal for
Ontario stated that an order based on an opposing party’s admissions
“will typically take the form of a summary judgment for part of the
plaintiff’s claim.”

[33] When considering a Saskatchewan equivalent of Nunavut rule 181 of

the Rules of Court, Shinkaruk adopted a finding that the rule is
intended to “enable a party to obtain speedy judgment where the
other party has made a plain admission entitling the former to
succeed.”

[34] In this context, as noted at paragraph 14 of Admiral, admissions are

concessions or voluntary statements made by a party concerning the
existence of facts that are relevant to the adverse party’s cause. The
answers given by Turbide, Allurut and Adams in the examination for
discovery are binding on the each party.

[35] As held at paragraph 3 of Armoyan, the Court is entitled to make a

finding of liability when there are clear and unequivocal admissions of
facts, in the face of which it would be impossible for the party making
 7

the admissions to succeed.

[36] As held at paragraph 10 of Lameman, Alberta’s equivalents of rules

174 and 175 of the Rules of Court are intended to advance procedural
justice by preventing from proceeding to trial those defences and
claims that have no chance of success. The trial of unmeritorious
claims and defences “imposes a heavy price in terms of time and cost
on the parties to the litigation and on the justice system.”

[37] As set out at paragraph 14 of Base, a party moving for summary

judgment has the burden of establishing that there is no genuine
issue for trial and the judgment should be granted. However, the
respondent has an evidentiary burden to put its “best foot forward”.
The respondent cannot rest on unsupported allegations or denials,
but must adduce evidence of specific facts showing there is a genuine
issue that requires a trial. The Court is entitled to both assume that
the evidence produced by the respondent is all the evidence that is
available to it and to decide the motion on the basis of the evidence
before the Court. This principle, reflected in rule 176(1) of the Rules of
Court, has also recently been addressed by this Court in Adlair
Aviation (1983) Ltd v Commissioner of Nunavut, Government of
Nunavut and Mark McCulloch, 2017 NUCJ 18, 2017 CarswellNun 24.

[38] As noted at paragraph 10 of NTI 2003 if, after taking a “hard look” at
the evidence, the Court is satisfied that there is not a genuine issue
for trial, the Court must grant summary judgment. If the only genuine
issue is a question of law, the Court has discretion to determine the
question and grant summary judgment.

IV. BURN UNIT

A. Facts

[39] I am satisfied that the evidence filed is capable of supporting the

following facts for the purpose of this application.

[40] In September 2009, the IHA undertook certain repair work on the
Burn Unit as a result of damage caused by two fires commenced in
the unit. The NHC provided the IHA with $120,000 in funding to carry
out the repair work in accordance with the Management Agreement.
 8

[41] The plaintiff was incorporated in the mid-2000s by Turbide and her
husband, Richard Turbide, in order to purchase the construction
business her father, Carl Herman, had operated in Igloolik since 1987.
The business depended to a large extent on obtaining regular
contracts from the IHA and NHC.

[42] The plaintiff had a good relationship with the NHC and IHA until
Adams and Danny Maurice [Maurice] started working for the IHA.

[43] Maurice was a supervisor for the IHA or the NHC on projects carried
out in Igloolik pursuant to the Nunavut Housing Trust [NHT]. The NHT
was created by the Government of Canada in 2006 to provide
Nunavut with $200,000,000 to build 700 to 750 affordable units in
Nunavut between 2006 and 2009. The money was used by the GN
through the NHC to build the units. The NHT program is described in
“Nunavut Housing Trust Delivery Strategy” published by the NHC in
2006 and attached as exhibit “D” of the Turbide Affidavit. During the
summer of 2009, the NHT employed workers in Igloolik on housing
projects.

[44] During the summer of 2009, Adams, Maurice and others working on
NHT projects wanted to incorporate a company to compete with the
plaintiff for local housing work. The District Director for the NHC found
out about it and did not think it was a good idea because the
employees were receiving free flights, meals and accommodations.
Corkett told Adams that if they proceeded with the incorporation, they
might lose their benefits. As a result, Adams and Maurice decided not
to incorporate.

[45] During the summer of 2009, Adams was the maintenance manager
for the IHA. He reported to the Housing Manager and the Board of
Directors of the IHA. At the time the work was carried out, the
Housing Manager was Joanasie Sarpinak [Sarpinak]. He is now
deceased and was replaced by Allurut as the IHA officer, whom the
plaintiff examined at the discovery.

[46] While the work on the Burn Unit was carried out, Sarpinak was ill and
Adams was the Acting Housing Manager. Adams admitted he was
basically running the IHA “along with the board of directors, and still
answering to the chain of command”. He described the chain of
command as being the Chairman of the board of directors and the
NHC employees Wayne Price [Price] and Eric Palmer [Palmer], who
 9

in turn reported to Corkett.

[47] Adams and the chain of command decided that the IHA would do the
work on the Burn Unit in-house even though the IHA did not have a
sufficient number of workers to do the work. They decided that they
would hire employees working for the NHT to work on the project after
hours and on weekends. Adams had the authority as the Acting
Housing Manager to hire the employees and he decided which
employees to use on the project. Those employees who were chosen
to do the work, including Adams and Maurice, were paid overtime.

[48] In early October 2009, Turbide complained to the NHC that

employees of the NHC and the IHA were taking work away from the
plaintiff so the employees could do it themselves.

[49] Ed Newhook, NHC Manager of Community Development, advised

Turbide that the work was carried out in-house using IHA employees
and that there was no conflict of interest involved.

[50] Corkett deposed at paragraph 20 of his affidavit that the default

method for delivery for LHOs at the time was in-house. This is
contradicted by several NHC publications attached to the Turbide
Affidavit. Those publications suggest that LHOs are not set up to carry
out major construction projects.

B. Argument

i. NHC

[51] The NHC argues that in 2009 section 8(1) of the GCR required that a
“contract authority” issue a request for tenders prior to entering into
any contract. The NNI Policy at the time applied to the design, award,
administration and interpretation of any contract to which the GN was
a party.

[52] The uncontroverted evidence is that the IHA did not enter into any
contract with respect to the Burn Unit. All work on the Burn Unit was
performed by the IHA using its own resources and employees in
accordance with the default delivery of LHO services in Nunavut.

[53] The funding for the repairs was provided by the NHC.
 10

[54] The manner in which the repairs were done, including the decision to
carry out the repairs in-house rather than to contract, was determined
by the IHA without any involvement by the NHC.

[55] Sarpinak had absolute discretion to hire workers and assign any of
the employees of the IHA to the project.

[56] Since the IHA did not enter into a contract of any kind in respect of the
repairs to the Burn Unit, it was not required under the GCR, the NNI
Policy or otherwise at law to issue a request for tenders for the
project.

[57] The NHC submits that there is no genuine issue requiring a trial in
respect of the plaintiff’s claim that:

• The IHA entered into a contract or was required to

issue a request for tenders in respect of the Burn
Unit;

• The plaintiff had a legitimate expectation that it

would be afforded an opportunity to submit a bid for
the repair work; or

• The NHC is liable to the plaintiff as a result of the

IHA having undertaken the repairs to the Burn Unit
using its own forces.

[58] The NHC distinguished Boychuk v Northwest Territories Housing

Corporation et al, [1985] NWTR 159, 1985 CarswellNWT 51
[Boychuk] because in that case the housing authority was created
under the Northwest Territories Housing Corporation Act, 1972 (2), c
22; re-en. RSNWT 1974, c N-1 [NHCA 1974]. In this case, the IHA
was incorporated under the Societies Act. As a result, the relationship
is governed by contract.

[59] As an independent contractor, the IHA has sole discretion—

independent of any direction, control or oversight by the NHC—to
determine the manner in which the IHA will perform its work in fulfilling
its obligations under the Management Agreement.
 11

ii. Plaintiff

[60] The plaintiff argues that the way in which the Burn Unit was repaired
undermined the objectives of the NNI Policy and the NHT. Instead of
encouraging local businesses to carry out the repairs, the IHA did not
give the plaintiff the opportunity to offer their assistance. The person
apparently in charge decided that the repairs would be done in-house.
The decision did not involve the use of local labour, which had an
established residence in the community. Instead the repairs were
carried by the decision-maker and a select group of IHA employees,
whose presence in the community was subsidized by the NHC.

[61] Adams acknowledged that while he was practically running the IHA,
such decisions were made by the chain of command which included
the NHC staff up to and including Corkett.

[62] Carrying out the repairs is far different than simply deciding to carry
out the work in-house using the ordinary employees of the IHA.
Although Corkett deposed that the NHC did not supervise the IHA, he
did become involved on the issue of whether Adams and others could
incorporate and compete for local business.

[63] The select group of workers did not do the work as part of the usual
and ordinary course of their employment. Instead, they carried out the
work as a side job on which they were paid overtime. This action was
contrary to NHC’s published objectives in relation to the NHT.

[64] After being told they could not compete with the plaintiff, Adams and
the other workers circumvented the direction from Corkett. They
simply decided to do the work themselves without competing. They
denied the plaintiff the opportunity to bid and allocated the work to
themselves as an in-house project, resulting in the plaintiff losing the
opportunity to earn a profit. The actions of Adams and those assisting
him were inconsistent with the published objectives of the NHC.

[65] As held in Boychuk, the NHC may be responsible for the actions of a
housing association on an agency basis. The NHC cannot simply
contract out its responsibilities of ensuring compliance with the NNI
Policy and the GCR to the IHA.

[66] The NHC had the ability to control the actions of Adams and the IHA.
Regardless of whether the employees who carried out the work were
on the payroll of the IHA or the NHC, they were in Igloolik working on
 12

a project the NHC had a responsibility to implement. The NHC

prescribed and published the terms and conditions of employees
working on the NHT and had the ability to ensure the IHA complied
with the requirements of the NNI Policy and the GCR.

[67] Higher up the chain of command, NHC and IHA employees who
approved how the work was done knew or ought to have known that
those employees doing the work were personally benefiting from the
project, contrary to the terms of their employment on the NHT. The
NHC should have known that the effect of these actions was to
prevent contractors such as the plaintiff from bidding on the work. No
action was taken until the plaintiff complained.

[68] Simply telling the employees not to do it again was not an effective
means of control because there was no follow-up monitoring. The
NHC simply had no interest in enforcing any orders.

C. Analysis

[69] As I alluded earlier, Shaner J. stated in paragraph 40 of Leishman:

“[t]he question is not whether there is a genuine issue for trial

but rather, whether there is a genuine issue requiring trial - and
tools such as cross-examination available in the trial process -
to allow a court to reach a fair and just result.” [Emphasis
original]

[70] In Boychuk, the Housing Association was not incorporated by

Ministerial Order under NHCA 1974, but rather under the Societies
Act, RSNWT 1974, c S-10, in the same fashion as the IHA. It
operated under a similar management agreement as the
Management Agreement between the NHC and the IHA. De Weerdt
J. held that the management agreement was sufficient to create an
agency relationship between the Housing Association and the
Northwest Territories Housing Corporation.

[71] De Weerdt J. also noted that the relationship between the two parties
was not strictly restricted to the formalities of the management
agreement. He stated at paragraph 12:

In addition to its formal mandate under the management

agreement, the Association exercised a broader and less formal
mandate on behalf of the Corporation, relaying local concerns
 13

to the Corporation about contract work done for the

Corporation by contractors such as the plaintiff, or as to
problems experienced in the community with the contractor.
This broader mandate was acknowledged in Mr. Logsdon's
testimony, and is reflected in much of the plaintiff's testimony.
Indeed, the plaintiff's testimony shows that this mandate was
interpreted much more broadly by the Association than may
well have been initially intended by the Corporation.

[72] There is some evidence that the NHC was involved in the decisions
made by the IHA. There were communications within the Qikiqtaaluk
district office of the NHC and Corkett about the propriety of Adams
and Maurice incorporating a company to compete with the plaintiff. As
Adams admitted in discovery, there was chain of command up to
Corkett that discussed the decision to do the work in-house.

[73] I am satisfied that the evidence in this application is sufficient to

conclude that the same agency relationship was in place between the
NHC and the IHA as there was in Boychuk. This may saddle the NHC
with responsibility for any unlawful or illegal actions of the IHA.

[74] There appear to have been some irregularities in how this work was
carried out and there may be merit to the plaintiff’s argument that the
way the IHA administered the Burn Unit contract undermined the spirit
and objectives of the NNI Policy. However, the NNI Policy and the
GCR are secondary legislation and the plaintiff has the onus of
proving that the legislation was breached.

[75] There is merit in the NHC argument on section 8(1) of the GCR and
the application of the NNI Policy. A contracting authority is only
required to issue a request for tenders prior to entering into any
contract. The NNI Policy applies to the design, award, administration
and interpretation of any contract to which the GN is a party. Both
specify that they do not apply to employment contracts. As a result,
neither applies to the work the IHA carried out on the Burn Unit.

[76] The evidence is clear that the repair work was carried out by the IHA
with money provided by the NHC. The issue raised by the plaintiff
concerns how the IHA managed its resources to do the work. It did
not have the resources to do the work and hired other employees in
Igloolik who were available. While there was consultations with the
NHC about doing the work in this manner, the final decision was
made by the IHA. The plaintiff may have some concerns about the
 14

internal workings of the IHA and LHOs generally, but there was
nothing unlawful or illegal in the way the work was done. The plaintiff
complained about it and the NHC investigated and found there was
no conflict of interest.

[77] I am satisfied that there is no genuine issue requiring a trial on the

Burn Unit work.

V. M&I UNITS

A. Facts

[78] I am satisfied the evidence filed is capable of supporting the following

facts for the purpose of this application.

[79] On March 12, 2010, IHA issued an Invitation to Tender [the Materials
and Labour RFT] for the supply of materials and labour for certain
modernization and improvement retrofit repairs to the M&I Units.
Tenders closed on April 15, 2010 and the RFT was advertised in
northern newspapers.

[80] The terms of payment contained in the Materials and Labour RFT
provided that the full contract price would be paid by the IHA to the
successful proponent by way of a one-time payment upon completion
and acceptance of the work.

[81] The one-time payment term was underlined in the RFT and was not
the way the plaintiff had been paid in previous contracts with the IHA.

[82] The plaintiff expressed interest in the project but advised the IHA and
the NHC that the underlined one-time payment precluded the plaintiff
from bidding because it was not financially feasible to pay for the
materials upfront and then wait to get paid. The plaintiff did not want
to take a bank loan to meet the payment terms.

[83] The plaintiff communicated its reasons for not tendering by emails to
George Hickes, the Executive Assistant to Hunter Tootoo (the
Minister Responsible for the NHC), Corkett and to Louis Tapardjuk,
the Member of the Legislative Assembly for the district of Amittuq.
 15

[84] The email to the Minister indicated that Turbide had been informed by
Price that it would take years to change the one-time payment term.

[85] Neither the IHA nor the NHC would grant an exception to the one-time
payment so the plaintiff could bid on the contract and no bids were
submitted in response to the RFT.

[86] The IHA then separated the supply of materials from the contract for
the installation of the materials and issued a second Invitation to
Tender [the Labour Only RFT] for the supply of labour only in respect
of repairs to the M&I Units [the Labour Only Contracts] on May 25,
2010. The terms of payment contained in the Labour Only Contracts
were identical to the Terms of Payment contained in the Materials and
Labour RFT. The Labour Only RFT provided that bids “in a sealed
envelope” would be received from May 25 to June 4, 2010. The RFT
was not advertised in any northern or southern newspaper. It may
have been posted on local bulletin boards.

[87] The contract to supply materials to the M&I Units [Materials Only
Contract] was structured such that 50 per cent of the contract price
was paid upon the goods being shipped and the balance upon
acceptance of the materials when they arrived in Igloolik. The contract
was not awarded by public tender. Instead, Northern Networks Ltd.
[NNL] and Ikpiarjuk Services Ltd. were awarded the contracts and the
plaintiff was not invited to submit a tender.

[88] The Turbides were vacationing in Kelowna and Las Vegas from May
6 to June 18, 2010. They did not make any inquiries of the IHA as to
whether any tenders had been issued in Igloolik and they did not have
anyone monitoring for tenders in the media while they were away.

[89] The only bidder on the Labour Only Contracts was a company from
Quebec, Construction FHD Inc. [CFHD]. Groupe F.H.D. Inc is the only
shareholder of CFHD and Fernand Dumas [Dumas] is the only
shareholder and director of Groupe F.H.D and the only director of
CFHD. The total amounts payable under the CFHD contracts for M&I
Units were $97,650 and $126,625 respectively.
 16

[90] The IHA worked with NHC employees to ensure compliance with the
tendering requirements in the GCR and the NNI Policy. The decision
to separate the contracts was discussed by Adams and Sarpinak and
may have been discussed with NHC employee Wayne Price. Adams,
however, had no part in the decision which was made by the chain of
command.

[91] Although Adams recalled at discovery that there were

communications with CFHD during the tendering process, there were
no written records produced by the NHC or the IHA. The CFHD bid
may have been non-compliant with the bid requirements because it
was not delivered in a sealed envelope but sent in by fax. Instead of
rejecting the bid, Adams recommended to NHC that CFHD be
awarded the contract.

[92] Adams, Price and Palmer did not investigate the potential conflict of
interest among Adams, Maurice and Dumas in awarding the contract
to CFHD. Adams admitted that he had communicated with CFHD
before the bids closed but did not produce records about the
communication.

[93] In addition to the bid being possibly non-compliant, there were other
irregularities including:

• CFHD was not required to register as a corporation in

Nunavut, obtain a business licence, obtain worker’s
compensation coverage or obtain a building permit;

• CFHD was permitted to use IHA tools, equipment and

employees;

• Adams and Maurice both worked on the job for

CFHD;

• Adams arranged for the only person CFHD sent to

Igloolik from Quebec to stay with a friend of his; and

• The job was completed before the materials for the

job arrived on the sealift.

[94] Although the IHA and the NHC were not prepared to make
concessions relating to draw or progress payments for the plaintiff—
 17

who met the above-listed requirements unlike the CFHD—the NHC

(through the IHA) paid the CFHD in installments.

[95] The CFHD received assistance from Adams and the IHA in
performing the work on the M&I Units. The assistance included the
use of IHA equipment and labour and free accommodation.

[96] When the plaintiff complained to the NHC about missing the
opportunity to bid on the contract, it was advised that the job had
been advertised in southern and northern newspapers. The NHC later
advised that the job was not advertised in newspapers but was placed
on local bulletin boards. However, at discovery Adams was not sure if
the job was actually placed on local bulletin boards.

[97] Turbide admitted at the examination for discovery that the plaintiff’s
total profit on the Labour Only Contracts would have been
approximately $40,000.

[98] The plaintiff confirmed on answers to undertakings that it would

typically build a 30 to 43 per cent profit margin into bids. The plaintiff
confirmed on answers to undertakings that if it had bid on the Labour
Only Contracts, its bid would have been $725 higher than the
successful bid.

[99] The NHC is not a party to, or otherwise referenced in any of the
documentation for any of the tendering for the Labour Only Contracts.

[100] The NHC is not a party to and is not referenced in any of the
contracts entered into between the IHA and NNL for the supply of
materials on the M&I Units.

[101] Iglulik Construction Inc. [Iglulik] was incorporated on April 15, 2010.
Maurice and Dumas were directors and the shareholders were
Groupe C.T.R. Inc. [CTR] and Maurice. The only shareholder and
director of CTR is Dumas. Iglulik was incorporated almost a year after
Adams, Maurice and others working for NHT were told that it was a
bad idea to incorporate and compete with the plaintiff for housing
work. The NHC contracting report for the year ending on March 2011
shows that Iglulik was awarded a labour contract for a five-plex.
 18

B. Argument

i. NHC

[102] Under the Government of Nunavut Contracting Procedures Manual

(2nd edition) [the GN Procedures Manual], the GN prescribes a
minimum RFP closing period of 15 calendar days where the contract
exceeds $25,000.

[103] The Labour Only RFT was open for acceptance for a period of 11
days from May 25 to June 4, 2010.

[104] The Turbides were on vacation from May 6 to June 18, 2010 (nine
days after the prescribed closing period for the Labour Only RFT
under the GN Procedures Manual). They did not make arrangements
of any kind to monitor for bid opportunities in their absence.

[105] The plaintiff admits that the Labour Only RFT would not have come to
the p laintiff’s attention within the prescribed period, regardless of the
manner in which the Labour Only RFT was advertised. If the Labour
Only RFT had remained open for an additional six days, it nevertheless
would not have come to the plaintiff’s attention.

[106] In any event, even if the Labour Only RFT had come to the attention
of the plaintiff within the period prescribed by the GN Procedures
Manual, the plaintiff has admitted that it declined to bid on the Labour
and Materials RFT (which closed 40 days prior to the IHA issuing the
Labour Only RFT), because the Terms of Payment (which are
identical to the Terms of Payment contained in the Labour Only RFT)
were not financially feasible.

[107] The NHC submits that the plaintiff’s admission that the Terms of
Payment contained in the Labour and Materials RFT were not
financially feasible for it leads inexorably to the conclusion that:

• the plaintiff would not have accepted identical terms

40 days later; and

• the plaintiff’s claim as against the NHC in respect of

the Labour Only RFT cannot possibly succeed.

[108] In any event, even if the plaintiff had monitored for bids and changed
its mind about the one-time payment, it has admitted that it would not
 19

have submitted a winning bid.

[109] As a result, the NHC submits that there is no genuine issue requiring
a trial in respect of the plaintiff’s claim that the NHC is liable for any
non-compliance by the IHA for tenders that the plaintiff has admitted
would not have come to its attention within the closing period and for
which it would not have submitted a winning bid.
[110] The NHC is not a party to any of the contracts entered into by the
IHA and the CFHD for the M&I Units or any of the insurance policies
issued for the contracts.

[111] The NHC is not a party to any NNL contracts or the purchase orders
issued by NNL to the IHA.

[112] The NHC did not enter into any contract with the plaintiff in either
2009 or 2010, nor did the NHC issue any requests for tenders for the
M&I Units.

[113] All the work on the M&I Units was undertaken by a contractor
retained by the IHA and all decisions as to the manner of tendering
were made by the IHA without any involvement or oversight by the
NHC.

[114] The NHC submits there is no genuine issue requiring trial in respect
of the plaintiff’s claim that the IHA is an agent of the NHC, or that the
NHC delegates its power or authority to the IHA. Finally, there is no
issue concerning whether the NHC is liable for any acts or omissions
by the IHA or its employees, including Adams.

[115] In performing its roles and responsibilities under the Management

Agreement, the IHA is contractually bound to comply with all federal
and territorial legislation and policies, including the GN Procedures
Manual and the policies and guidelines issued in Appendix Three of
the Management Agreement.

[116] Like other independent contractors, the IHA has sole discretion—
independent of any direction, control, or oversight by the NHC—to
determine the manner in which it performs the work in fulfilling its
obligations under the Management Agreement.

[117] The NHC’s roles and responsibilities under the Management

Agreement are limited to providing the IHA with: (1) funding for the
delivery of the NHC’s housing programs in the community; (2) training
 20

and support opportunities to assist with program delivery; and (3) the
program policies and guidelines listed in Appendix Three.

[118] The IHA is responsible for the complete care of the Public Housing
Unit portfolio, including the units in Igloolik.

[119] The NHC does not direct, supervise, or oversee the day-to-day
delivery of its housing programs by the IHA. This includes decisions
as to whether, in what manner and for how long purchases of services
and/or materials by the IHA using NHC funds are put out to tender.

[120] The plaintiff has not adduced any evidence of any kind in support of
it claim that the IHA is an agent of the NHC, that the NHC delegates
its power or authority to the IHA or that NHC is liable for any act or
omission on the part of the defendants.

[121] The evidence is that the IHA is an independent, autonomous, self-

governing body that is funded by and performs services for the NHC
pursuant its contractual obligations under the Management
Agreement.

ii. Plaintiff

[122] Notwithstanding being told not to incorporate a company to compete

for IHA/NHC work, Maurice incorporated Iglulik on April 15, 2010,
which just happened to be the last day to submit bids to do the M&I
Units work. Rather than being reprimanded, Maurice was permitted to
benefit.

[123] There is no rational explanation consistent with the NNI Policy for
underlining the one-time payment words in the Materials and Labour
RFT. Adams acknowledged that it was not how the plaintiff was paid
on past contracts. The only reasonable inference is that the IHA and
the NHC wanted to discourage the plaintiff from bidding. Rather than
deleting this clause, the IHA and the NHC solicited bids and awarded
contracts to Ikpiarjuk Services Ltd. and NNL.

[124] The decision to separate the contracts was discussed by Adams and
Sarpinak and may have been discussed with NHC employee Wayne
Price. Adams, however, had no part in the decision which was made
by the chain of command.
 21

[125] The fact that the plaintiff did not submit a bid on the Materials and
Labour RFT is not a rational explanation for not approaching it as well
on the materials only contract. The terms were much better because
50 per cent of the contract price was paid on the goods being
shipped, with the remainder paid on acceptance in Igloolik.

[126] The Labour Only RFT was advertised when the Turbides were away
from Igloolik and it was not advertised in any newspaper. Although
advertised as having the same conditions as the Materials and Labour
RFT, the Labour Only Contracts signed with CFHD provided that
CFHD would be paid in installments whereas the plaintiff had been
denied the same terms on the Labour & Materials RFT.

[127] It is difficult to believe that CFHD would even find out about the
project, let alone have the information to place a bid without some
inside information. The relationship between Dumas and Maurice and
the fact that Maurice worked on the job for CFHD support an
inference that Maurice was involved before the tenders even closed.
Nevertheless, the IHA could not provide any documentation to
demonstrate any attempt to obtain competitive bids or to encourage
local Inuit or Nunavut bids.

[128] The IHA gave CFHD preferential treatment compared to IHA’s harsh
and strict treatment of the plaintiff as evidenced by the following:

• no record of pre-closing communications with

CFHD;

• acceptance of a clearly deficient faxed bid which

did not have the scope of the work filled in;

• failure to apply the Full Disclosure policy;

• assistance by the IHA and Adams in performance

of the contract;

• overlooking of non-compliance with statutory

requirements such as workers’ compensation; and

• exemption of CFHD from the one-payment only

term of the RFT.
 22

[129] Although the plaintiff raised concerns about the relationship between
Maurice and Dumas and the tendering relationship, the IHA took no
action. Instead, the IHA awarded an additional contract to Iglulik—
whose shareholders were Maurice and Dumas—despite the fact that
Iglulik did not have a business licence.

[130] The preferential treatment of CFHD and Iglulik deprived the plaintiff
of the opportunity to earn a profit and discouraged it from bidding on
additional IHA and NHC jobs.

[131] As held in Boychuk, the NHC had the ability to ensure that Adams
and the IHA handled the tendering process in a fair and transparent
manner by refusing further funding to the IHA. Instead, the NHC
condoned and supported the preferential treatment of CFHD and
Iglulik, contrary to common law, tendering law and the NNI Policy.

[132] In summary, the facts suggest that all the defendants worked
together to procure goods and services for the public in Nunavut in a
manner that was contrary to the GCR and the NNI Policy. There are
genuine issues to be tried in a public trial where all the parties have
the opportunity to fully present their case and have the benefit of trial
tools such as cross-examination.

C. Analysis

[133] As I noted earlier on the Burn Unit analysis, Boychuk is the authority
for the principle that the NHC may be legally responsible for the
actions of housing associations even though there is a formal
Management Agreement in place that attempts to create a corporate
separation between them. In Boychuk at paragraph 12, an NWT
Housing Corporation employee admitted in cross-examination that the
relationship went beyond the four corners of the management
agreement and included:

“relaying local concerns to the Corporation about contract

work done for the Corporation by contractors such as the
plaintiff, or as to problems experienced in the community with
the contractor.”

[134] De Weerdt J. concluded that these informal contacts and

communications were sufficient to create an agency relationship
 23

despite the wording of the management agreement.

[135] The NHC arguments (summarized at paragraphs 99 to 101 of its

Pre-Hearing Brief) concerning the NHC’s lack of involvement in any
contracts and the independent contractor status of the IHA may have
some validity. However, I am satisfied that there is sufficient contrary
evidence to suggest that the NHC was actively involved in working
with the IHA on the tendering process leading up to the award of the
Labour Only Contracts and Material Only Contracts.

[136] The IHA was clearly having some problems with Sarpinak’s illness
and Adams admitted he was effectively the person on the ground
making the decisions. While he may have had the skills to manage
the Burn Unit work, he did not have the skills to handle the technical
requirements of tendering and relied on the advice he received from
the NHC. Allurut admitted in his examination that he consulted with
the NHC about the tendering process.

[137] I do not have the benefit of the cross-examination of the witnesses

that took place in Boychuk to make findings similar to those made by
de Weerdt J. about the agency relationship between the NHC and the
IHA. However, I am satisfied that there is a genuine issue requiring a
trial on this issue. Cross-examination is required to provide a full
understanding of the role of the NHC in the tendering process.

[138] The plaintiff has advanced many arguments that there were serious
irregularities in the tendering process. One of them was the
deficiencies in advertising of the Labour Only RFT and the lack of any
advertising or tendering for the Materials Only RFT.

[139] The NHC acknowledged that the Labour Only RFT was not in
compliance with the GCR because it was not advertised for 15 days.
It argued that it would not have made any difference in the ultimate
result because the Turbides were out of town and were responsible
for failing to have anyone monitoring the local billboards or
newspapers. However, there is some evidence that the RFT was not
advertised in any newspapers and may not have been posted to local
billboards. As a result, it may have been futile to have anyone
monitoring for tender calls.

[140] The NHC then argued that even if the plaintiff had bid, it would not
have been the lowest bidder. However, there are many considerations
that go into deciding which party is awarded the contract, including
 24

the application of the NNI Policy.

[141] The NHC did not attempt to defend or explain the many other
apparent irregularities in the administration of the tendering by the
IHA, such as the acceptance of a faxed bid which was not in a sealed
envelope and did not have the scope of the work filled in. In addition,
the IHA may have overlooked non-compliance with statutory
requirements such as workers’ compensation and changed the
payment terms to include progress payments.

[142] Finally, there is no explanation for the lack of an RFT for the Material
Only Contracts.

[143] All of these factual tendering issues require a full trial with cross-
examination to flesh out the facts to enable the Trial Judge to reach
the proper legal conclusions.

[144] Although the NNI Policy provides an appeal process that was not
utilized by the plaintiff, the Statement of Claim does plead the breach
of common law concerning tendering that may provide a cause of
action.

[145] The application for summary judgment on the M&I Units is

dismissed.

V. CONCLUSION

[146] The application for summary judgment on the Burn Unit is granted.

[147] The application for summary judgment on the M&I Units is

dismissed.

[148] Since the plaintiff was substantially successful, I award it costs under
item 35(a), column 6. As I stated in Nunavut v Nunavut Teachers,
2010 NUCJ 18, 2010 CarswellNun 15, the tariff is very outdated.
Taking inflation into account, I will quadruple item 35(a) for a total of
$2,200 plus disbursements.

Dated at the City of Iqaluit this 13th day of February, 2018

___________________
Justice E. Johnson
Nunavut Court of Justice