City of Powell River is facing a civil claim for cancellation of a contract related to the consolidated wastewater treatment plant.
At the October 28 finance committee, during a progress report to councillors on the treatment plant, manager of engineering services Nagi Rizk said the mediation process for determining final contract costs and material purchase costs for termination of the marine outfall contract with Caribou Mountain Construction (CMC) has been terminated.
“As you are well aware, we were served a notice of civil claim, and that’s basically all we know at this time,” said Rizk.
In a report to the finance committee, Rizk indicated the claim is being handled by the city’s legal counsel.
Finance committee chair councillor George Doubt brought up the topic of the civil claim from CMC for the outfall construction and said his question is whether there is financial risk to the city.
“In a notice of claim, it may be that the judge decides there is no claim and there is no liability,” said Doubt. “The other hand is, they may side with the contractor and say there is some payment that needs to be made. Is there a financial risk to the city of that civil claim? Would that be covered by a municipal insurance agency, or could it end up being a cost to the city at the end of the day?”
Rizk said the key word is risk and the answer is yes, there is a risk.
“However, we have professional lawyers engaged and that is the extent of my comments on that,” said Rizk. “To be honest with you, I don’t know what the outcome of this will be.”
Doubt said he thinks it is a potential risk and wants to see it listed under project risk management and litigation in future reports so councillors are reminded the risk exists and that it is being dealt with to the best of the city’s ability.
Rizk said Doubt’s request was noted.
Mayor Dave Formosa said based on Doubt’s comments, matters were before the courts, which restricted what could be said. Formosa said there is the risk related to the lawsuit, but the city also had the opportunity of a counterclaim, whereby the city deflects the issue onto professionals who did work for the city that caused the problem.
“The city has an opportunity for a counterclaim on the lawsuit that has been brought up here,” said Formosa. “Is that correct?”
Director of infrastructure Tor Birtig said there is the possibility of a counterclaim.
Formosa said it’s one that is being pursued “quite vigorously” if need be.
Birtig said that was correct.
When asked by the Peak about the nature of the civil suit, Rizk said
CMC is seeking monetary compensation for delayed claims and could not add any more comment.
Birtig said the decision to terminate the CMC contract was not directed by Fisheries and Oceans Canada. He said the design the city had put forward with the ministry, in conversation with them, required a letter of authorization, which caused the city to terminate the contract for convenience at that point.
