City sues RTG for $131M over late Confederation Line

The City of Ottawa is suing the builders of the Confederation Line for $131 million, the second lawsuit it has launched in the past week related to the east-west LRT construction.

Independent certifier found city not at fault over delays, but wasn't entitled to huge cost compensations

The city launched a $131-million lawsuit against Rideau Transit Group on Tuesday, in addition to the $361-million suit it launched last week against its own insurance companies in relation to the 2016 Rideau Street sinkhole. (Jonathan Dupaul/CBC)

The City of Ottawa is suing the builders of the Confederation Line for $131 million, the second lawsuit it has launched in the past week related to the east-west LRT construction.

In a statement of claim filed in Ontario Superior Court on Tuesday, the city argues that Rideau Transit Group (RTG) failed to meet certain terms of the contract, including missing its two key completion dates of May 7, 2018, and May 24, 2018. Instead, the Confederation Line was handed over 15 months late, in August 2019. 

Now the city claims it's out $131 million for "carrying costs, delayed opening expenses, consultant expenditures, wages and salaries of employees, financial costs and accounting expenses," even though an independent certifier disagreed.

It's just the latest revelation of how much more the construction of the light rail project could potentially cost the city than the original $2.1-billion price tag. 

Last week, the city filed a $361-million suit against its own insurance companies in relation to the Rideau Street sinkhole in June 2016. That lawsuit includes the exact costs that the city is claiming in its suit against RTG and also revealed that RTG has a $230-million claim against the city.

"These kinds of suits and counter-suits — unfortunately whether you like it or not — are par for the course," Mayor Jim Watson told reporters Tuesday. "You get into multi-billion-dollar contracts and you're going to have disputes between contractors, subcontractors, the customer, ourselves and our taxpayers." 

In August 2019, the city held back $59 million from its final payment to RTG, money that was supposed to cover the city's costs of the delay. That appears to have been a drop in the bucket.

That's also the case for the $1 million the city docked RTG for each of the four times it missed a contract deadline. According to the 12-page statement of claim, those payments were "intended to be a genuine pre-estimate of the costs associated with the preparation work that the city would undertake for the anticipated commencement of service" and  "were not intended to compensate the City for costs it incurred as a result of the approximately 15-month delay."

Independent certifier didn't agree with city costs

According to the statement of claim, RTG launched eight disputes related to the LRT issues, including over the sinkhole and the design of the Alstom light rail vehicles. The document doesn't provide any explicit details about those two issues, but suggests the sinkhole and the train issues are the key reasons behind the city's $131 million claim.

Before all these disputes went to court, the two sides participated in a confidential resolution process laid out in the contract. That process included an independent certifier who agreed with the city on major questions, including that the city was not responsible for the sinkhole or RTG's delays due to the Alstom train issues.

Delays and other problems with the Alstom Citadis Spirit trains are some of the key issues in the city's lawsuit against Rideau Transit Group. (City of Ottawa)

However, the independent certifier seems not to have bought the argument that the 15-month delay cost the city $131 million. 

"The Independent Certifier failed to address the City's counterclaim for costs incurred as a result of RTG's delay," says the statement of claim. "The city disputes the Independent Certifier's determination in this regard and seeks the damages described herein as a result of RTG's breach of contract."

On a smaller note — and a glimpse into how complex and detailed this contract battle is — there was also an issue over using wood from Ottawa ash trees in LRT station ceilings.

The city claims RTG was responsible for treating the local wood with fire retardant, but that the treatment process was performed improperly and ruined the wood. So the city agreed to let RTG use Douglas fir instead, but the two sides are arguing over who should pay for the wood.

In this instance, the independent certifier agreed with RTG, saying the city was responsible for the so-called "Ash Wood Direct Costs."