Laurentian University’s board of governors voted back in December to begin legal proceedings against Cy Rheault Construction Ltd., the Timmins-based contractor responsible for the university’s campus modernization project.
The motion, which passed in camera at the Dec. 22, 2021 LU board of governors meeting, said the university declared in 2019 that Cy Rheault had defaulted on its obligations to Laurentian.
Sudbury.com does not have any information about the reasons behind Laurentian’s move to begin legal proceedings other than the motion passed by the LU board of governors, about which we will go into more details below.
The motion was included in the minutes published as part of the board information package for the more recent Feb. 11, 2022 LU board of governors meeting.
We reached out to Laurentian for comment on the matter, but a spokesperson said in an email “we will not be able to address the questions that you have submitted on the topic of Cy Rheault, as we are not able to comment on legal matters.”
Sudbury.com also reached out to Cy Rheault Construction, but the company declined comment.
The board package said that Mitch Grossell, counsel with the firm Thornton Grout Finnigan (this firm has been Laurentian’s legal counsel as it has undergone insolvency restructuring under the Companies Creditors Arrangement Act, (CCAA) provided a “fulsome explanation” of the matter prior to the motion being read at the Dec. 22 in-camera meeting.
The motion was then moved by board of governors member Peter Xavier and seconded by Brian Montgomery, and later carried.
The preamble to the motion said that Laurentian entered into a written contract with Cy Rheault construction Oct. 14, 2014 to supply construction labour and materials for Phase 2 and 3 of the campus modernization project.
It goes onto say that Laurentian declared Cy Rheault “in default of duly performing its obligations under the contract” as of Oct. 1, 2019, and “subsequently made a claim in respect of Performance Bond No. 90030109 issued by Travelers Insurance Company of Canada, as surety.”
The motion does not go into details as to what this alleged default of the contract entails.
As Laurentian has gone through the CCAA process, Cy Rheault, the motion said, filed a pre-filing claim against Laurentian in the amount of roughly $2.7 million.
The claim refers to amounts owing under the contract with respect to, among other things, the campus modernization project.
The motion said the university had “not previously commenced an action or proceeding against Cy Rheault with respect to the defaults.”
It added that it is “in the best interests of the university and its stakeholders for the university to commence a claim against Cy Rheault.”
This is the case, the motion said, to “preserve a right of set-off with respect to the aspects of the Cy Rheault claim that relate to the project” (referring to the campus modernization project).
The “right of set-off” basically means Laurentian wishes to preserve its right to possibly reduce the amount it owes Cy Rheault by the amount LU claims Cy Rheault owes the university due to the contractor’s alleged default on its obligations.
— Sudbury.com
