Post by Max on May 22, 2007 11:14:07 GMT -3
Former contractor seeks $5 million in damages after walking away from project
Denis St. Pierre
Local News - Tuesday, May 22, 2007 @ 09:00
A multimillion-dollar lawsuit appears to reinforce lingering speculation over rising costs and delays with the City of Greater Sudbury's sewer tunnel project.
The lawsuit, filed only days ago in the Ontario Superior Court of Justice, seeks about $5 million in damages from the city and two private companies hired by the municipality for the tunnel project. There has been widespread speculation and concern for months, including among city councillors, of time delays and cost overruns with the $31-million sewer tunnel project.
In recent weeks, however, city council and municipal administrators have said they are confident the tunnel project will be completed on budget and on time, in about 17 months.
Those recent pronouncements from the city did not sit well with Milad Mansour, president of the Mansour Group of Companies. Mansour confirmed last month that one of his companies that was involved in the sewer tunnel project recently had to walk away from the job.
When city officials declared last month there were no problems with the tunnel project, Mansour begged to differ, citing huge cost increases and delays occurring over a period of several months.
Mansour's concerns have now been made public in the lawsuit filed by one of his group's companies - CM and D Drilling and Tunnelling Inc.
A copy of the lawsuit obtained by The Star shows CM and D is seeking millions in damages from the city, as well as from McNally Construction Inc. of Hamilton and from Golder Associates Ltd. of Sudbury.
McNally Construction is the general contractor hired by the city to lead the tunnel project. Golder is an engineering firm retained by the city for the project.
None of the claims and allegations made by CM and D in its lawsuit have been proved in court, nor have the defendants had a chance to file statements of defence.
At the heart of the CM and D lawsuit is a claim that it was misled by a crucial technical report provided by the city before contracts were awarded for the tunnel project in 2005.
When a tender for the tunnel project was issued, the city provided potential bidders with a geotechnical baseline report (GBR) that was prepared for the municipality by Golder Associates, the lawsuit states.
"At all times, the city and Golder knew or ought to have known that CM and D, as a bidder on the project, would rely on the GBR and other information regarding the geologic conditions of the proposed sewer tunnel sites in bidding on the project."
After the city selected McNally Construction as its general contractor for the tunnel project, McNally struck an agreement in September 2005 with CM and D as the principal subcontractor.
The CM and D contract was worth $13.2 million and required the Sudbury company "to provide all material, labour, tools and equipment necessary for excavation of 6.5 kilometres of rock tunnel," the lawsuit states.
CM and D would later discover that the geotechnical baseline report provided by the city and its consultant did not suitably reflect the conditions that would be encountered during the tunnel excavation, the suit alleges.
"CM and D's quote was based primarily on the data contained in the GBR regarding the rock conditions and water seepage rates anticipated at the project work sites.
"Rock conditions and water seepage rates were known or ought to have been known by each of the city and Golder to be key elements affecting plan design and productivity in a tunnelling project. CM and D's reliance on the GBR in bidding on the project was reasonable in all the circumstances."
As the months passed, CM and D was forced into absorbing huge cost increases, the lawsuit states. Repeated attempts to negotiate a fairer agreement with McNally and the city failed, forcing CM and D to walk away in February of this year or face "financial ruin," according to the suit.
On Jan. 23, 2007, CM and D "made a handover proposal to McNally, by which McNally would assume CM and D's obligations under the subcontract without disrupting the project," the lawsuit states.
But McNally refused the offer, it claims.
"Facing financial ruin, CM and D had no option but to accept McNally's repudiation of the subcontract and suspended work on Feb. 15 ... By that time, the additional costs incurred by CM and D in connection with the changed project site conditions exceeded $2.4 million."
CM and D is seeking the lion's share of its damages - more than $4.3 million - against McNally Construction. It is seeking $3.15 million "as the balance due from the supply of materials and labour to (McNally)," unspecified damages "for breach of contract," $673,177 in damages "for conversion of personal property" and another $500,000 "in relation to a letter of credit unlawfully presented by McNally for payment."
CM and D's lawsuit also seeks $500,000 in punitive damages and an unspecified amount of "compensation for breach of fiduciary duty" from the city and McNally. The suit also claims unspecified "damages for negligence," from the city, McNally and Golder.
Denis St. Pierre
Local News - Tuesday, May 22, 2007 @ 09:00
A multimillion-dollar lawsuit appears to reinforce lingering speculation over rising costs and delays with the City of Greater Sudbury's sewer tunnel project.
The lawsuit, filed only days ago in the Ontario Superior Court of Justice, seeks about $5 million in damages from the city and two private companies hired by the municipality for the tunnel project. There has been widespread speculation and concern for months, including among city councillors, of time delays and cost overruns with the $31-million sewer tunnel project.
In recent weeks, however, city council and municipal administrators have said they are confident the tunnel project will be completed on budget and on time, in about 17 months.
Those recent pronouncements from the city did not sit well with Milad Mansour, president of the Mansour Group of Companies. Mansour confirmed last month that one of his companies that was involved in the sewer tunnel project recently had to walk away from the job.
When city officials declared last month there were no problems with the tunnel project, Mansour begged to differ, citing huge cost increases and delays occurring over a period of several months.
Mansour's concerns have now been made public in the lawsuit filed by one of his group's companies - CM and D Drilling and Tunnelling Inc.
A copy of the lawsuit obtained by The Star shows CM and D is seeking millions in damages from the city, as well as from McNally Construction Inc. of Hamilton and from Golder Associates Ltd. of Sudbury.
McNally Construction is the general contractor hired by the city to lead the tunnel project. Golder is an engineering firm retained by the city for the project.
None of the claims and allegations made by CM and D in its lawsuit have been proved in court, nor have the defendants had a chance to file statements of defence.
At the heart of the CM and D lawsuit is a claim that it was misled by a crucial technical report provided by the city before contracts were awarded for the tunnel project in 2005.
When a tender for the tunnel project was issued, the city provided potential bidders with a geotechnical baseline report (GBR) that was prepared for the municipality by Golder Associates, the lawsuit states.
"At all times, the city and Golder knew or ought to have known that CM and D, as a bidder on the project, would rely on the GBR and other information regarding the geologic conditions of the proposed sewer tunnel sites in bidding on the project."
After the city selected McNally Construction as its general contractor for the tunnel project, McNally struck an agreement in September 2005 with CM and D as the principal subcontractor.
The CM and D contract was worth $13.2 million and required the Sudbury company "to provide all material, labour, tools and equipment necessary for excavation of 6.5 kilometres of rock tunnel," the lawsuit states.
CM and D would later discover that the geotechnical baseline report provided by the city and its consultant did not suitably reflect the conditions that would be encountered during the tunnel excavation, the suit alleges.
"CM and D's quote was based primarily on the data contained in the GBR regarding the rock conditions and water seepage rates anticipated at the project work sites.
"Rock conditions and water seepage rates were known or ought to have been known by each of the city and Golder to be key elements affecting plan design and productivity in a tunnelling project. CM and D's reliance on the GBR in bidding on the project was reasonable in all the circumstances."
As the months passed, CM and D was forced into absorbing huge cost increases, the lawsuit states. Repeated attempts to negotiate a fairer agreement with McNally and the city failed, forcing CM and D to walk away in February of this year or face "financial ruin," according to the suit.
On Jan. 23, 2007, CM and D "made a handover proposal to McNally, by which McNally would assume CM and D's obligations under the subcontract without disrupting the project," the lawsuit states.
But McNally refused the offer, it claims.
"Facing financial ruin, CM and D had no option but to accept McNally's repudiation of the subcontract and suspended work on Feb. 15 ... By that time, the additional costs incurred by CM and D in connection with the changed project site conditions exceeded $2.4 million."
CM and D is seeking the lion's share of its damages - more than $4.3 million - against McNally Construction. It is seeking $3.15 million "as the balance due from the supply of materials and labour to (McNally)," unspecified damages "for breach of contract," $673,177 in damages "for conversion of personal property" and another $500,000 "in relation to a letter of credit unlawfully presented by McNally for payment."
CM and D's lawsuit also seeks $500,000 in punitive damages and an unspecified amount of "compensation for breach of fiduciary duty" from the city and McNally. The suit also claims unspecified "damages for negligence," from the city, McNally and Golder.