City must go through arbitration if it wants compensation for alleged building issues with police HQ

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This article was published 07/05/2018 (2426 days ago), so information in it may no longer be current.

The City of Winnipeg is seeking financial compensation from two firms who helped design and build the police headquarters, due to alleged deficiencies with the building mostly discovered after construction was complete.

However, the city can’t sue the contractor or the designer, Caspian Projects Inc. and Adjeleian Allen Rubeli (AAR) Limited, due to a clause in their contracts which stipulates all parties must undergo mandatory arbitration should issues surrounding the project arise.

The contracts were signed in 2011 by previous city administration. Neither Mayor Brian Bowman nor chief administrative officer Doug McNeil would disclose Tuesday who signed the contracts nor which legal firm was contracted to do the paperwork.

The deals happened during the tenure of former mayor Sam Katz and could have been drafted under the watch of a few former or acting CAOs who served in 2010 and 2011, such as Glen Laubenstein, Alex Robinson or Phil Sheegl.

When reached by phone Tuesday, Katz said he had no knowledge of why the city would have opted for the arbitration route instead of allowing room for legal action. He couldn’t say who signed the contracts.

“I think the first thing that should be determined is who signed it, and then it would be interesting to ask the question. But I wouldn’t know anything about that. That comes as news to me,” Katz said.

The former mayor also said he has not been interviewed by RCMP for their Project Dalton investigation, which is looking into possibly fraudulent transactions and bribes surrounding construction of the Winnipeg Police Service’s new downtown headquarters. The investigation was launched in December 2014.

“I have not spoken to anybody at this stage in the game,” Katz said.

Sheegl could not be reached for comment Tuesday.

Previous reporting by the Free Press last year found Sheegl was accused of accepting a private $200,000 payment from Caspian when its was bidding on the project. Sheegl allegedly shared half the money with Katz under the guise of a business loan.

The allegations were laid out in RCMP documents detailing Project Dalton’s findings, none of which have been proven in court.

Bowman outlined the city’s plans for arbitration to reporters after an executive policy committee meeting Tuesday.

“The frustrating part about what we’ve learned is that the city contracted – previous administration I’ll point out – contracted out the ability to file a statement of claim and pursue legal action in a way that would be preferred right now,” said the mayor, who was first elected in 2014.

“What it demonstrates to me is how messed up this project and city hall was under the previous administration. It further demonstrates that the clean-up that we have been undertaking for the last few years needs to continue and we have more work to do.”

Current administration won’t say how much the City of Winnipeg is seeking in compensation from Caspian and AAR, though when asked repeatedly, McNeil told reporters it was a “significant amount of money.”

McNeil wouldn’t outline what the deficiencies in the police headquarters are, stating he “can’t disclose those details at this time because it’s arbitration,” and not a traditional lawsuit where parties file public statements of claim.

Past media reports have detailed problems with heating and ventilation systems, leaking pipes, structural and electrical issues, among other issues.

It’s unclear how long arbitration may take. Winnipeg-based Caspian and Ottawa-based AAR were served notices Tuesday morning and need to respond within “a few days,” McNeil said, though he wouldn’t specify deadlines.

Caspian did not return requests for comment. AAR president Garry Vopni said he had “no comment” on the arbitration request, but confirmed his company received a fax Tuesday from the City of Winnipeg.

Bowman continues to push for a public inquiry by the province into the questionable dealings surrounding the police headquarters, to complement the ongoing RCMP investigation. (An RCMP spokesperson said Tuesday there is no time frame for when their investigation will be completed.)

“Why a contract by a municipal government would restrict its ability to pursue legal action in court, as is the case with Caspian contract, I can’t explain it. It makes no sense to me,” Bowman said, adding it was the first time he heard of such an unusual move for a city project that was not a public-private partnership.

“In my view, it demonstrates the city’s interests and taxpayer interests weren’t paramount,” he said. “So that’s a question that I would like answered, as well. And I believe a public inquiry is the only way we’re really going to get to the bottom of that.”

Municipal Relations Minister Jeff Wharton said the province would not launch a public inquiry into the police headquarters project while it is under investigation by the RCMP. He did not rule out a public inquiry at a future date.

“Certainly, we want to respect the process,” Wharton said.

“Once the RCMP investigation is done, we are going to be there to ensure that the discussion doesn’t necessarily end at that point,” he said, without elaborating. “We need to ensure that taxpayers’ interests are well looked after.”

Coun. Jeff Browaty (North Kildonan) was serving on Katz’s executive policy committee when the headquarters construction contracts were awarded, but said he did not know about the arbitration clause. He said he learned the city was seeking arbitration thanks to a council-wide email sent Tuesday morning by the CAO.

“Certainly, it raises a lot of questions as to the scope and the severity of these outstanding deficiencies. Is it super-substantial material or is it some minor stuff on a project that comes up along the course of things?” Browaty said.

The councillor said he wants to know whether the alleged deficiencies are affecting the police service’s abilities to do its job. (The WPS did not respond to a request for comment on this topic Tuesday.)

— with files from Larry Kusch

jessica.botelho@freepress.mb.ca

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