By Doug Hallett
The city is on the hook for what could be many millions of dollars in damages after a judge ruled against the city in a lawsuit involving a contractor fired in 2008 from the project to build a new city hall.
“I don’t think this is an insured claim,” so the city can’t expect to get its insurance company to pay for the damages, deputy city solicitor Scott Worsfold said in an interview Monday.
The judge released his ruling Monday that the city is liable in the case, but he didn’t give any reasons for his ruling. The judge will explain his reasons later, but the city doesn’t know when, Worsfold said. In July 2006, Toronto-based Urbacon Buildings Group Corp. was awarded a $42-million contract as general contractor for the construction of a new city hall and for the conversion of the old city hall into a provincial offences courthouse. Following many delays in the city hall project, city hall fired Urbacon in September 2008.
Urbacon filed a $20-million breach-of-contract lawsuit against the city a few weeks later.
Once the judge gives his reasons for ruling in favour of Urbacon, the city will be in a position to decide what to do next, Worsfold said.
The case was split, he said, so the judge heard a trial only on the issue of liability, not on the matter of how much damages should be awarded.
Negotiations on a financial settlement would likely be held to avoid the need for a second trial to determine damages, but whether such negotiations “would be fruitful or not we don’t know,” Worsfold said.
A city hall news release Monday said $2.37 million, which was held back by the city on the Urbacon contract and later paid out to subcontractors who’d filed lien claims, “will be subtracted from Urbacon’s $20-million claim against the city.”
The city’s release said the judge ruled that the city “did not have the right to terminate the contractor hired to build City Hall and Guelph’s Provincial Offences Court, despite the city having done so with the best interests of Guelph taxpayers in mind.”
Before Urbacon’s contract was terminated by the city, “Urbacon had failed to meet two agreed-upon extensions to the substantial completion date for City Hall, and failed to provide updated construction schedules despite repeated requests,” it said.
“Today’s court decision is disappointing,” Ann Pappert, the city’s chief administrative officer, said in the release.
Pappert’s predecessor as CEO, Hans Loewig, was in charge of city hall when Urbacon was fired.
“The city decided on its course of action because construction delays were costing the city – and Guelph taxpayers – thousands of dollars,” Pappert said in the release.
“Based on the contractor’s performance, there were deep concerns about Urbacon’s ability and commitment to complete the second part of project: the renovation of Guelph’s Provincial Offences Court,” she said.
Urbacon’s $42-million contract included about $32.5 million for the new city hall and $9.5 million for the POA courthouse.
The city filed a $5-million counterclaim lawsuit against Urbacon in 2008, but the counterclaim was dismissed by the judge as part of Monday’s written ruling.
By Doug Hallett