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Judge denies company's injunction request

Northern News Services
Published Monday, April 11, 2011

KINNGAIT/CAPE DORSET - A Nunavut court has turned down a request by a Cape Dorset company for a court order to stop the hamlet from taking on work that could be done by private firms.

In the March 22 decision, Justice Earl Johnson ruled Polar Supplies had not proved it would suffer irreparable harm if the hamlet continued, but suggested the hamlet could avoid another injunction application by formally agreeing not to compete in the private sector.

Polar Supplies is owned by former hamlet mayor and current Cape Dorset MLA Fred Schell, though the business has been operating under a blind trust since his election to the Nunavut legislature in 2008.

The Cape Dorset-based company said it filed for bankruptcy protection on June 17, 2010. It said a slower than usual construction season in 2010 and an expected slow season for 2011 - due to the hamlet's involvement in work that the company said it should be able to bid on - will lead to its bankruptcy.

"I am satisfied that the (company) will be harmed if Cape Dorset acts in a similar fashion in 2011 as it did in 2010," wrote Johnson in his decision. "I am also satisfied that the Plaintiff's bankruptcy would amount to irreparable harm."

However, Johnson ruled "the current evidence before me is not strong enough to satisfy me that the anticipated actions will cause the (company's) bankruptcy."

In three ongoing civil suits, Polar Supplies alleges the hamlet used its equipment and staff to provide services that directly competed with the company in 2009 and 2010, such as providing garbage removal services to Kudlik Construction during the construction of Peter Pitseolak High School, delivering sea crates, and providing bus services.

"Private enterprise contractors like Polar Supplies often rely upon government contracts to survive," stated Garth Wallbridge, trustee for Schell's business assets. "The Hamlet of Cape Dorset is unlawfully performing work and competing in the private sector contrary to the Hamlets Act. They are using heavy equipment purchased with taxpayer's money, and employees paid for by the taxpayer, to compete against private enterprise. Nowhere in Canada is this allowed."

In certain situations, a hamlet can seek ministerial approval from the Government of Nunavut through the territorial Hamlets Act in order to provide services that would result in the hamlet competing against private businesses for work.

"When deciding whether to grant approval, the minister is required ... to consider the impact of the proposed work on local economic development as well as existing and anticipated private sector business activity in the municipality," stated Johnson.

The judge stated in the decision that this legislation is not clear and he did not fault current Cape Dorset SAO Olayuk Akesuk, a former MLA, for the activities of the hamlet prior to his employment, or for his own decisions, which the judge chalked up to inexperience.

"He was also somewhat confused about the dividing line between the public and private sectors and the process to obtain ministerial approval," stated the decision. "This is not surprising, given the gaps in the legislation and the lack of direction on how the process is intended to work. I am satisfied that he was on a learning curve and was acting in good faith."

The judge stated the root of the problem appears to be a lack of clarity on when hamlets are required to seek approval from the territorial government, and the lack of a mechanism for a private contractor to file a complaint to the government over allegations of work by a municipality in the private sector.

"The major problem ... is the lack of a formal, transparent system to implement the apparent intentions of the Hamlets Act," stated Johnson.

-with files from

Andrew Livingstone

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