MLA-owned firm gets judicial review of Nunavut minister’s decision

Nunavut’s Department of Community Government and Services should not have granted permission this past summer for a gravel contract that the Hamlet of Cape Dorset performed for a private business, Justice Sue Cooper said in a written judgement issued Nov. 17.

Cooper issued the ruling in response to an application filed in court this past July by Polar Supplies Ltd. against the Hamlet of Cape Dorset and Nunavut’s CGS department.

Polar Supplies Ltd. is owned 100-percent by Fred Schell, the MLA for South Baffin and minister of Human Resources.

Since Jan. 1, 2010, Schell’s business has been managed within a blind trust headed by Yellowknife lawyer Garth Wallbridge.

This past spring, the Hamlet of Cape Dorset hauled and spread gravel for Huit Huit Tours Ltd., which is building a hotel in Cape Dorset that will compete directly with the Kingait Inn, owned by Polar Supplies.

Huit Huit Tours, along with the hamlet, are still embroiled in court actions launched against them in 2010 by Polar Supplies Ltd.

For that reason, the hamlet sought permission from the CGS department to do the gravel work themselves.

Under the Hamlets Act, municipal governments must get approval from the CGS minister before doing contract work that could be done by a private business.

The department at first denied the hamlet’s request, saying on June 6, 2011 that the 2010 court actions are not “reason to exempt the Hamlet to compete with Polar Supplies.”

But on June 24, 2011, Huit Huit Tours wrote directly to deputy minister of CGS, saying the prices that Polar Supplies charges for excavating and hauling gravel are “unconscionable.”

The company said in an email that Polar Supplies charges $80 per square metre to excavate and haul gravel and $350 an hour in spreading charges.

In comparison, the hamlet charges $45 per square metres and Kudlik Construction in Iqaluit charges $26.50 per square metre.

Huit Huit Tours also told the department they “lack confidence” that Polar Supplies would deliver the gravel on time because of past experiences where gravel was not delivered, because of the litigation between the two companies, and because the gravel is for a hotel that would compete directly with Polar Supplies.

The CGS department then reversed its earlier decision and gave the hamlet ministerial approval to do the work for Huit Huit Tours.

But after a court hearing this past July 12, when she looked at how CGS made that decision, based on evidence supplied by lawyers from Polar Supplies and the two governments, Cooper quashed the CGS decision.

Cooper said in her judgment that Polar Supplies was given no notice of the hamlet’s request and that the GN did not state why it was in the public interest for the hamlet to do the work.

She also said the GN’s permission was granted in response to the second request from Huit Huit Tours, not the hamlet. The Hamlets Act states that only municipal corporations may seek such municipal approval.

However, by the time the issue was heard in court, almost all of the gravel work on the Huit Huit hotel and been completed.

Schell’s blind trust arrangement means he cannot be involved in the management of Polar Supplies Ltd. or gain any knowledge of the company’s activities.

The lawsuits that Polar Supplies launched against the Hamlet of Cape Dorset in 2010 contain allegations that the hamlet competed against them unfairly for various contracts.

The 2010 lawsuit against Huit Huit Tours is related to dog control issues.

None of those allegations have been proven in court, and the disputes remain unsettled.

As for Polar Supplies, the company will remain under bankruptcy protection until September 2012.