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Filings show Bombardier warned Metrolinx to ‘tread lightly’ in nixing transit contract

Bombardier Transportation threatened to sue for “very substantial damages” after claiming to have been caught unawares by Metrolinx’s move to cancel a $770-million transit contract for Toronto.

Fred Lum/The Globe and Mail

Bombardier Transportation threatened to sue for "very substantial damages" after claiming to have been caught unawares by Metrolinx's move to cancel a $770-million transit contract for Toronto.

New court filings paint a picture of the Quebec company scrambling to respond to the possibility of losing the contract to supply vehicles for the Eglinton Crosstown light rail transit and other projects. And they add weight to the company's allegation that Metrolinx is using the threat of cancellation to try to shift financial risk off its own books.

A pair of affidavits – supported by dozens of pages of newly revealed letters, e-mails and internal documents – was filed in advance of a court showdown next week between Bombardier and Metrolinx, the regional transit agency which is an arm of the Ontario government.

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"Be advised that you should tread lightly in this regard," Benoit Brossoit, president of the Americas for Bombardier Transportation, warned in a November letter to Metrolinx chief executive Bruce McCuaig, dated nine days after the agency issued last fall a formal notice of intent to kill the contract.

"Bombardier will not hesitate to commence litigation for amongst other things, declaratory relief and for the very substantial damages that will be caused to Bombardier."

Bombardier is going to court on Tuesday in an attempt to have the agency's notice of contract default invalidated and these documents are the latest in a flurry of legal salvoes and counterpunches.

A Metrolinx spokeswoman said that, given the pending court case, the agency preferred not to respond to specific allegations.

"Next week, we will make it clear to the courts that Bombardier defaulted on its contract obligations, and termination of the contract is appropriate if we believe they cannot honour their contract," Anne Marie Aikins said in a statement.

Metrolinx has said that the company has been consistently delayed in producing vehicles, alleging it has been unable to build even the first of them. Bombardier alleges that the timeline works to the advantage of Metrolinx, whose projects have been delayed. It claims the first vehicle is ready and the agency is trying to offload the chance of financial penalties if the Crosstown LRT doesn't open as scheduled.

To buttress its position, Bombardier appended to its court filing a letter from Mr. McCuaig, dating from May, 2016. In it, the Metrolinx CEO acknowledged there would be "very serious monetary and reputation damages to Metrolinx" if there were more vehicle delays, adding that it wanted "additional liquidated damages … for any failure to comply with the revised production schedule."

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Although both sides have said publicly they hope to continue to work together on this contract, the legal arguments have taken on an increasingly harsh tone.

That shift was also reflected in behind-the-scenes correspondence included with the court filings, although these do not appear to constitute a comprehensive record of the communications back and forth.

A May 17, 2016, letter from Mr. McCuaig to Mr. Brossoit was addressed formally, with the recipient's honorific and last name typed out, but his first name hand-written alongside. Later letters did not include this personal touch.

The warning that Metrolinx was issuing a notice of default – effectively starting the process of walking away – was delivered in a voicemail from Mr. McCuaig to Mr. Brossoit, the Bombardier executive alleged in his affidavit. And when Metrolinx issued its formal notice of intent to quit the deal, it wasn't mentioned until the fifth paragraph of a letter to Mr. Brossoit.

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