City to seek out-of-court settlement with RTG over light rail contract

Ottawa's city council has directed its head of transit services to negotiate a settlement with Rideau Transit Group (RTG) in a long-running dispute over whether the light rail builder has lived up to the terms of its contract.

The direction came after council spent five hours behind closed doors Wednesday getting a legal update about the fight over Stage 1 of LRT.

The city had previously filed two notices of default against RTG: one in March 2020, roughly half a year after the problem-plagued Confederation Line launched, and a second in September 2021 following a pair of derailments. 

Those two derailments were among the motivating factors that led to the decision to launch a public inquiry into the LRT network.

Mayor Mark Sutcliffe told reporters after the meeting that he couldn't give any details about the settlement and that there would be more information available within the next couple of days.

"All we can say about this today is that council approved a settlement agreement based on the terms that were disclosed in-camera. They're confidential terms," he said.

"I think the feeling of council is that it is in the best interests of taxpayers and residents of Ottawa, and OC Transpo passengers, that this is our best path forward."

In November, the Ottawa Light Rail Transit Public Inquiry submitted its final report with 103 recommendations.

One of those was that RTG and the city should resolve outstanding disputes and repair their relationship.

When asked if this is a move by council to better relations with RTG, the mayor said again that he can't provide details about the agreement, but said, "the short answer to the question is, 'yes'."

More than a year ago, the city went to court asking a judge to rule that RTG had not met the contract's obligations.

A hearing with a judge had been scheduled for three non-consecutive days starting Feb 14. RTG and the city also have a case conference scheduled for Friday, which could affect the hearing dates.

Had a court ruled RTG was in fact in default, it could have paved the way for the city to end its 30-year maintenance contract — one that's worth more than $1 billion. 

But on Wednesday, council asked transit services general manager Renée Amilcar, in consultation with other high-ranking city officials, to instead forge a settlement with the consortium.

Council did not share any other details from their closed session.

RTG had previously argued, among other things, that the city was going to court to distract attention from the LRT inquiry.

Unclear if lawsuits are part of settlement

In May 2021, the city sued RTG for $131 million for so-called soft costs it says it incurred due to the 2016 Rideau Street sinkhole.

Then in April 2022, RTG 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.

Sutcliffe would not confirm if the settlement discussed Wednesday is only about the notices of default, or if it also relates to the lawsuits.