U of M denies construction company’s allegations in lawsuit over unpaid costs at Churchill marine research facility

The University of Manitoba is denying it owes a construction firm another cent in response to a lawsuit the company filed over unpaid costs it claims to have incurred while building a first-of-its-kind marine research facility in Churchill.

The lawsuit, filed Aug. 30 in the Court of King’s Bench by lawyer James Mercury on behalf of Penn-co Construction, came just three days after the University of Manitoba celebrated the grand opening of its Churchill Marine Observatory.

The facility, which is near the Port of Churchill, was designed for researchers to help detect and mitigate oil spills in ice-covered waters. The observatory is also meant for studies on Arctic marine transportation and climate change.

Penn-co Construction, which won two bids to build the roughly $20.5-million observatory in two phases, is seeking about $2.6 million from the university in its lawsuit.

The lawsuit alleges inadequate design plans and the COVID-19 pandemic caused project expenses to balloon without additional compensation. Both phases were meant to be largely complete by July 2020.

In a statement of defence and counterclaim filed in September, the U of M’s lawyers Timothy Fry and Robert Walichnowski denied all allegations of wrongdoing.

The U of M argues Penn-co was not entitled to payment for any costs related to delays, per the contracts, unless the delays were caused by the university or its consultant on the project.

The university alleges Penn-co did not properly complete all its work as per its obligations and it was not entitled to an increase in the price of its contracts.

Further, the U of M denies that COVID-19 regulations increased Penn-co’s costs — or if it did, those increases are not the responsibility of the university.

“Penn-co failed to provide the consultant and/or the university with evidence that the imposition of laws, regulations, rules, standards and/or codes enacted by competent government authorities in response to the COVID-19 pandemic materially affected Penn-co’ performance or costs,” reads the U of M’s court filing.

Alternatively, the U of M argues, if Penn-co did suffer damages related to COVID-19, the university alleges the company failed to mitigate those damages, or that its claims for such damages are exaggerated or unreasonable.

Penn-co alleged the first phase design plans failed to account for the installation of an electrical control panel in the facility’s pool area, which the U of M claims was, in fact, either in the contract, or could be inferred from it.

In June 2020, when Penn-co was working on the project’s second phase, a directional drilling subcontractor “unexpectedly encountered large underground pockets of sand while drilling through bedrock at the project site, forcing a stoppage,” the lawsuit alleges.

Penn-co alleges the presence of the sand pockets was not identified in the provided geotechnical reports. The company said it asked for direction from the university but did not hear back for about two months, at which point it was told to proceed with a different drilling method.

The U of M said in its filings determining how to drill in the first place was Penn-co’s obligation — and that any increased costs are on the company. The U of M says Penn-co and its subcontractor refused to continue drilling after encountering difficulties, forcing the U of M to pay additional money for the work.

The university alleges it is Penn-co that is responsible for drilling delays, not the U of M.

Penn-co also alleged the university failed to obtain the proper work permits from Manitoba Conservation and the federal Department of Fisheries and Oceans before the second phase of the project began — resulting in further delays and costs.

The U of M instead argues the applicable regulations allowed for a self-assessment — which it hired engineers to conduct — with no further reviews from governments required.

“A review by the DFO was unnecessary,” reads the U of M’s court filing.

In its counterclaim, the U of M is seeking judgment in its favour, damages, interest and court costs.

It alleges Penn-co breached its duty of care and its obligations under the contracts. The U of M alleges Penn-co completed poor work on a number of parts of the observatory complex and has refused to remedy the issues.

[email protected]