Aird & Berlis Successfully Defends Against All Claims Pursued in Construction Adjudication Process

In March 2024, Aird & Berlis successfully represented a municipality and had two claims, which were brought before an Adjudicator in accordance with the Construction Act, R.S.O., 1990, c. C.30, by a claimant (the “Claimant” or “Contractor”) dismissed.

The claims arose in the context of a municipal infrastructure project following the Claimant’s successful bid of over $10 million for road reconstruction, underground services (the “Project”).

The first claim arose following the rupture of a sanitary lateral, which caused a backup and significant damage to a residential property. Following the rupture, the Contractor returned to site, daylighted the damaged lateral, and investigated and replaced the damaged section of pipe. The Contractor claimed against the municipality for its costs to repair the sanitary lateral.

The Contractor argued that i) its construction operations had not ruptured the lateral; ii) in any event, the municipality had not accurately located the sanitary lateral; and iii) in the alternative, the municipality was aware of a direct conflict between the new sewer and the lateral, and failed to include moving the lateral in the Project design in order to save costs, and was therefore unjustly enriched by the Contractor’s repair.

Aird & Berlis submitted and the Adjudicator agreed, that i) the pre-construction CCTV inspection report evidenced that the sanitary lateral was in good condition prior to construction activity, therefore, it is undeniable that the Contractor’s activities caused the rupture; ii) in accordance with the Contract, the Contractor is solely responsible for all damage and shall bear the full cost thereof; iii) the municipality is indemnified under the Contract; iv) the contract documents explicitly identify the coordinates of the sanitary lateral as “approximate”, and it was the Contractor's responsibility to verify all locations on the contract drawings; and v) since the sanitary lateral was replaced in the same location, it is clear that there was no direct conflict between the pipes.

The second claim arose for testing, haulage and disposal costs of excess soils in the landscape of changing regulations for excess soil disposal requirements. The Contractor claimed that when Ontario Regulation 406/19 On-Site and Excess Soil Management (O.Reg. 406/19) came into force when the Project was underway, it was required to meet stricter requirements than what were in place at the time of tender, and the Contractor should be compensated for such costs. The Contractor relied on a provision of the Contract that indicated that non-hazardous contaminated material with levels in excess of those in Ontario Regulation 153/04 (O.Reg. 153/04) shall be included in the unit price for specific items.

Aird & Berlis submitted that the Contract, when read as a whole, contemplates the changing regulations and imported the stricter excess soil requirements in accordance with O.Reg. 406/19. The change in law did not frustrate performance of the Contract. Rather, the change in the law was foreseen by the parties and the Contract contemplated the long-awaited change in the legislative regime.

Having determined that the Claimant had no valid argument on any issue submitted, the adjudication was dismissed.

Aird & Berlis represented the Respondent municipality with a team including Vedran Simkic, Danielle Muise and Jennifer Bilas.