LRT builders countersuing City of Ottawa for $225M over delay dispute

The consortium that built the Confederation Line has hit the city with a $225-million countersuit, arguing that under its contract with the city, the builders are not responsible for the 15-month delay to finish the light rail line.

It's just the latest salvo in the escalating — and complex — legal battle between the City of Ottawa and the Rideau Transit Group (RTG) that designed, built and are maintaining the 12.5-kilometre light rail system.

According to the contract, the LRT was supposed to be handed over to the city on May 24, 2018, but that didn't happen until Aug. 31, 2019.

Last May, the city sued RTG for $131 million for so-called soft costs it says it incurred due to the 2016 Rideau Street sinkhole.

The city claimed those expenses were due to extra carrying costs, delayed opening expenses, consultant expenditures, wages and salaries of employees, financial costs and accounting expenses.

The city's also suing its insurance companies since they denied the city's claim for losses related to the sinkhole — a separate court case altogether. That suit is also seeking $131 million. 

RTG is arguing that the city is attempting a "double recovery" by suing both parties for the same alleged costs.

(To add more complexity, RTG is also suing the insurers for what it says are its own costs due to the sinkhole).

• ANALYSIS | How much more is Ottawa's LRT costing taxpayers?

Now, RTG is arguing that the court should dismiss the city's claim against it and is countersuing for $225 million in damages plus additional costs like interest.

'Excessive, exaggerated and remote'

According to the consortium's statement of defence and counterclaim to the Ontario Superior Court dated April 5, RTG said the "damages claimed by the city are excessive, exaggerated and remote."

And more to the point, said RTG, any costs the city may have incurred were either the city's own fault or not the responsibility of the companies, according to the statement.

RTG's arguments in the countersuit include:

• That any delays caused by the Rideau Street sinkhole are an "excusable delay" under the contract.
• That the city was 10 months late approving the design book for the French-made Alstom train, which in turn delayed the production of the trains.
• That the city did not accept RTG's application that the Confederation Line was substantially complete on April 29, 2019, incorrectly alleging that the trains were "deficient."

The suit quotes comments that former OC Transpo boss John Manconi made to council members on May 9, 2019 where he said, among other things, that there were "minor issues" remaining with the trains.

RTG argues that the city's entire claim related to delays, and that the contract — or project agreement — caps delay-related penalties at $1 million for each missed deadline.

The $225 million countersuit includes a claim for RTG to recoup the $31 million it says the city "unlawfully withheld" when it paid its final bill to RTG.

This particular legal battle between RTG and the city is specifically about disputes over the design and construction of the Confederation Line, the city's rail director Michael Morgan clarified in a memo to council Thursday evening.

The heated disagreement over how well the trains have worked since the Confederation Line opened in September 2019 and the maintenance problems since are an entirely separate fight.

• RTG absolutely knew when city planned to launch LRT, says rail director
• City launched LRT prematurely for political reasons, says RTG executive
• City takes next step in breaking 30-year contract with RTG

Councillors are scheduled to get a closed-door legal update at the finance and economic development committee next Friday April 29