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Eglinton Crosstown: Crosslinx wins court ruling that COVID-19 is an “emergency” for construction scheduling and costs

File image of construction on the Eglinton Crosstown project

Ontario Construction News staff writer

An Ontario Superior Court judge’s May 17 ruling that Crosslinx Transit Solutions can extend the “substantial completion” deadline for the $5.5 billion Eglinton Crosstown Light Rail Transit (LRT) project because of COVID-19 clarifies the pandemic reflects an “emergency” for construction scheduling and costs.

Justice Markus Koehnen ruled against Infrastructure Ontario (IO) and Metrolinx, who had argued that the matters should only be litigated after the substantial completion actually occurred. The consortium building the project brought the case to court last fall, with three days of hearings in February.

Justice Koehnen’s ruling

Crosslinx, a consortium of Aecon, EllisDon, SNC-Lavalin and Dragados, won the contract well before provisions of the new Ontario Construction Act went into effect – meaning lien claims and notices must follow the earlier Construction Lien Act. Construction started in 2011, long before the COVID-19 pandemic started tearing around the world last year.

In a commentary on the decision published on May 25, lawyers from McMillan observed the decision “raises three important points parties should consider in assessing the contractural obligations in a P3 project:

  1. “While all parties to P3 contracts are sophisticated entities with independent legal advice, the words of the agreement need to be read with the project process in mind – namely, the “partnership” part of a P3 means that collaboration should play a role in addressing new issues and disputes.
  2. “Once-in-a-lifetime events like a global pandemic should not be seen as a ‘normal’ risk allocated to a party through general risk language.
  3. “While the logic of deferring disputes until Substantial Completion may make sense for certain types of matters, deferring disputes about rights related to Substantial Completion itself should be dealt with as they arise.”

Metrolinx and IO, the provincial agency overseeing transit expansion in the GTA, had refused to declare COVID-19 an emergency and argued Crosslinx was responsible for extra costs during the crisis, The Toronto Star reported. The agencies also wanted to be able to enforce financial penalties against the company for missing the opening date spelled out in the LRT contract.

“The judge had harsh words for Metrolinx and Infrastructure Ontario in his 25-page ruling, writing that the agencies’ attempts amid the pandemic to penalize Crosslinx for missing the construction deadline gave the company incentive ‘to cut corners and imperil public health and safety,’ The Star reported.

In his decision, the judge ruled that while Metrolinx claims safety is its top priority, its interpretation of the LRT contract was “neither a fair nor reasonable approach,” and would have reduced its “ostensible concern about worker safety to nothing but window dressing.”

CrossLinx spokesperson Kristin Jenkins said in a statement that the consortium is satisfied with the decision. “Proactively and diligently protecting our workforce and the community from COVID-19 means we have incurred additional costs and delays,” she wrote.

“Not only does today’s ruling confirm these very real impacts of COVID-19, but it also provides the path for Crosslinx, Metrolinx and Infrastructure Ontario to fairly resolve these issues so that the project can be completed as quickly as possible.”

In a joint statement, Metrolinx and IO said they were still considering the implications of Monday’s ruling.

“However, our goal has always been, and remains, to get the Crosstown project completed and open for the people of Toronto as soon as possible,” the statement said. “Our priority in all of our projects is the health and safety of workers and the public.”

Former Ontario General Contractors Association (OGCA) president Clive Thurston says he expects IO and Metrolinx will appeal the decision. “My bet is they will appeal it,” he wrote to OCN on May 31. “At the moment I just want to see what happens but my sources are telling me that they will appeal.”

The Crosstown had faced problems long before COVID-19. In February 2020, Metrolinx acknowledged it wouldn’t open by its contractual completion date of September 2021, despite a $237-million payout to Crosslinx that was supposed to keep the project on track, The Star reported.

The company declined to tell the newspaper how much it will press the province for in compensation for COVID-19 costs, but last October it estimated the crisis had it had incurred $134 million as a result of workplace safety measures, supply chain problems, and increased absenteeism, and it expected that number to rise.

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