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Crown corp. sued for $6M

Manitoba Housing clashed with contractor over project delays

M & L in big contract dispute with MB Housing over a big renovation project.


M & L in big contract dispute with MB Housing over a big renovation project.

A Winnipeg contractor has been fired from a $14.7-million project only months before it was to be completed and is suing the provincial housing Crown corporation responsible for close to $6 million.

Last week, Manitoba Housing and Renewal Corp. locked M & L General Contracting Ltd. off the site of a two-year-old renovation project on Isabel Street, between Pacific Avenue and Ross Avenue, that is to become a 60-unit apartment building for new immigrants and refugees in Winnipeg.

Later that same day, M & L’s lawyers received a letter saying the company — which is ranked the 97th fastest-growing company in the country by Profit Magazine — has been fired.

M & L filed a statement of claim and a lien on the building seeking damages from MHRC including $2.7 million in delay claims. It subsequently filed an amended claim seeking an additional $900,000 in punitive damages.

When the project, with funding from the federal and provincial governments, was first announced in December 2012, it was to have been completed by December 2013.

M & L was awarded the contract in October 2012 and its CEO, Reece Tomlinson, said in an interview there were delays in getting a building permit right away because of issues related to the design drawings that M & L was not party to in any way.

Tomlinson said, "Typically when you are awarded a construction project, particularly if there is a tender, the construction drawings are normally ready or very close to ready. It makes no sense to award the contract and then wait for months for the design."

But he said because of changes required to the drawings, the building permit was not issued until July 2013.

He said M & L regularly updated MHRC about delays, but for several months Tomlinson said M & L was keeping the project going and paying subcontractors out of its own pocket.

"We had not been paid since February and we were not in position to pay subs unless we get paid," he said. "This has consistently happened to the point where it was unsustainable for us and financially detrimental to the organization."

In its statement of claim, M & L stated it provided MHRC with revised schedules seven times between November 2013 and September 2013. The last one included a forecast completion date of September 2014, which Tomlinson said was still doable.

But he said now his company has been removed from the job, he believes it will add many more months — and perhaps millions of dollars more in costs — to the project.

"We really wanted to sit down with Housing (MHRC) and we tried on many occasions," Tomlinson said, noting his company has done more than a dozen public-sector housing projects in the province in the past three years. "We don’t understand why this has happened. It does not really make a lot of sense."

A senior MHRC official declined to be interviewed for this story, but MHRC statement said: "For some time Manitoba Housing and Renewal Corporation has had concerns over the progress of the work on the project. Therefore, Manitoba Housing and Renewal Corporation terminated the contract and took control of the project. It is unfortunate the project is delayed as a result of these issues. However, as it is a matter before the courts, it would not be appropriate to discuss the issues further."

During an interview, Tomlinson pointed to two binders that were several inches thick that he said detailed the delay claim it had presented to MHRC last October before it filed the statement of claim.

"We tried to be professional," Tomlinson said. "But all we received was a two-page letter saying we were wrong with no explanation why."

He said the industry average for costs of delays is about one per cent per month for things such as insurance, bonding, labour, equipment rentals and hydro.

He said M & L was offered a settlement, prior to the company filing its statement of claim, but it was not sufficient.

"We could not accept the offer for a number of reasons," Tomlinson said.

The Immigrant and Refugee Community Organization of Manitoba will manage the building when it is completed. The renovated 80,000 square-foot building, which was originally constructed in 1979, will feature 12 one-bedroom, 24 two-bedroom and 25 three-bedroom units that will house families from two to 10 family members.

Dorota Blumczynska, executive director of IRCOM, said it is not IRCOM’s project until it is completed and she is not aware of the details of the development of the building.

"Manitoba Housing has been an incredible partner for IRCOM. and I know that it is acting in the best interest of the community and taxpayers I know that ultimately when the project is done it will be excellent," Blumczynska said.

Tom Turner, the lawyer representing M & L said, "They (MHRC) have purported to declare that M & L is in default of their obligations under the contract but M & L’s position is they were complying with everything but for the fact that Housing (MHRC) was not doing certain things including making progress payments. Therefore M & L was in no position to continue funding the project out their own pocket."

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