Ottawa files defence against $175 million suit launched by Siemens Canada, PCL Constructors

Companies claim damages for cancelled light-rail transit project

(October 3, 2007 by Korky Koroluk, Daily Commercial News and Construction Record) -- The City of Ottawa says it acted in good faith throughout the contractual process involving a cancelled light-rail project, and because it did, a claim filed against the city should be dismissed.

The statement of defence filed last week says the $175-million suit launched by Siemens Canada and PCL Constructors is without merit because “the plaintiffs have suffered no damages from any acts or omission of the city.” The two firms filed their statement of claim four months ago.

In its defence, the city points a finger directly at the federal government, saying the promised federal contribution of $200 million hadn’t arrived by the contract deadline, leading to cancellation of the contract.

The dual-track rail line was to be constructed from the University of Ottawa west across the downtown core, south past the airport, then west again to the rapidly-growing suburb of Barrhaven. It would have been 29 km long, with 23 stations.

The light rail vehicles would have been provided by Siemens Canada, the lead member of the consortium that would have designed and built the line, then maintained it for 15 years. PCL Constructors Canada Inc. was also part of the consortium, along with Dufferin Construction, which was to have done the heavy civil work, which included a couple of bridges and twinning an existing tunnel under a small lake.

Although the contract was for $786.2 million, ancillary work necessary to the project brought the total price to something close to $880 million, the biggest construction project in the city’s history.

The contract was signed about a year ago.

One of the conditions was that the federal and provincial governments each contribute $200 million to the project. The provincial money was received, but in the middle of last fall’s civic election, John Baird, then president of the treasury board, announced that the federal share would be withheld until the incoming council also approved the project.

That new council, led by new mayor Larry O’Brien, approved a slightly shortened version of the rail line, but the federal government said that represented a change in scope, adding that the project would have to be re-examined before the money could be sent.

When the money hadn’t arrived by the contract’s deadline, council cancelled the project.

In its defence, the city says it took all possible action to obtain the federal contribution on time, and when that effort failed, it followed, exactly, the terms of the contract with the companies when canceling the project.

The Siemens/PCL suit is the first of two pending as a result of the cancellation.

The second, by St. Lawrence Cement, parent company of Dufferin Construction Company, claims $103.7 million in damages.

The company’s statement notes that the city had imposed a tight construction schedule, and as a result, Dufferin had to do work for which it has not yet been compensated. It also says Dufferin had to turn down other large jobs so it could do the work the city wanted.

The city has not yet filed a statement of defence in response to the St. Lawrence Cement claim.

None of the statements or allegations made in either case have been tested in court.

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