Echelon Financial Holdings is on the receiving end of a lawsuit filed by the Yukon government, which claims that the insurer failed in its role to help complete an arena construction project.
The territorial government filed a $17.3 million lawsuit against Echelon and contractor Scott Design Build for failing to complete the arena in Carmacks, Yukon.
The contractor signed a nearly $14.6-million construction contract with the Yukon government in 2018 for the 2,500-square-metre facility, which was initially meant to be completed by November 2020. The total cost of the project had been set at $16.5 million, with $10.5 million coming from the federal Small Communities Fund.
But according to a statement of claim filed to the Yukon Supreme Court on February 12, the government alleged that the contractor “did not perform the work as required by the contractual terms, specifications, and standards.”
The Yukon government is seeking $10 million in damages from Scott Design Build.
Echelon Financial Holdings held a performance bond on the project for almost $7.3 million. The lawsuit alleged that the insurer was obligated to fix Scott Design Build’s work, find another contractor, or cover for the cost of the bond should the contractor be declared in default.
The government declared Scott Design Build in default of the contract in 2020 after work on the arena project failed to resume in the spring following a planned winter shutdown, but Echelon allegedly failed to pay for the bond’s cost.
CBC News reported that the allegations have not yet been tested in court. As of February 16, neither Scott Design Build nor Echelon had filed statements of defence.
