Metrolinx, IO appeal court decision that sided with Eglinton Crosstown P3 team
By David KennedyInfrastructure Law P3s
Crown agencies Infrastructure Ontario and Metrolinx have appealed a recent court decision they say could have “broad repercussions” on COVID-19-related construction claims.
The ruling last month is tied to the latest of several disputes between the two government agencies and the P3 team responsible for building the Eglinton Crosstown light rail transit system. Last fall, Crosslinx Transit Solutions — made up of ACS-Dragados, Aecon Group Inc., EllisDon Corp. and SNC-Lavalin Inc. — sued Infrastructure Ontario for what it said was the agency’s failure to declare the pandemic an emergency or acknowledge the impact the health crisis had had on construction crews working on the multibillion-dollar project.
Siding with the Crosslinx team in a decision May 17, Ontario Superior Court Justice Markus Koehnen clarified the pandemic is an emergency under the project agreement; that the construction team was required to take “additional or overriding procedures” to protect workers and the public; and that IO and Metrolinx are contractually required to invoke a procedure referred to as “Variation Enquiry” that could result in the project timeline being extended.
“To deny the applicants the benefit of the Variation Enquiry process in the circumstances of this case would be applying the provisions of the contract in a way that is contrary to their underlying purpose,” Koehnen says in the decision.
The ruling could provide the Crosslinx team with more time to reach substantial completion on the 19-kilometre light rail line. Metrolinx said last February the transit project had been delayed and was not expected to open before late 2022. It blamed the construction team for the delays.
The fallout from the court decision could reach beyond the Crosstown project. Lawyers at McMillan LLP say the ruling challenges the “hardline view” of risk allocation the public sector has taken in P3 contracts.
“Private sector participants in the P3 market no doubt see the decision as a vindication of arguments they have been making for some time,” Julie Han, Jason Annibale, Timothy Murphy and Ahsan Mirza wrote in a bulletin May 25.
Any wider implications for the construction industry will hinge on the appeal. IO and Metrolinx submitted appeal materials to the court June 1.
“As public agencies entrusted with taxpayer dollars it is our responsibility to ensure that any costs paid for by the public are properly substantiated before payments are made,” said IO president and CEO Michael Lindsay along with Metrolinx president and CEO Phil Verster, in a joint statement.
“We are committed to work with all of our contract partners to discuss the challenges and costs that have occurred over the past 15 months — recognizing that neither the province, nor its partners, caused the pandemic.”