A mediator has been recruited to settle a lawsuit between the City of Moose Jaw and G. Ungar Construction that the contractor initiated over an alleged “unlawful breach of contract” by the city.
The Theodore, Sask.-based company launched the lawsuit by issuing a statement of claim in Moose Jaw Court of Queen’s Bench on Nov. 8, 2018. The municipality then issued its statement of defence on Dec. 31, 2018. None of the statements in either claim has been proven in court.
Since the matter has not been settled, mandatory mediation was scheduled, with the first meeting to begin Dec. 5, Craig Hemingway, communications manager for the City of Moose Jaw, told the Moose Jaw Express in an email.
“The process will likely extend well into 2020, and the city cannot comment on any ongoing legal matters. When the matter is resolved, it will be made public,” he added.
Financial compensation
In its statement of claim, Ungar Construction alleges the City of Moose Jaw owes it $2,469,684 in unpaid contract fees, plus GST, PST, and interest.
In its statement of defence, the municipality alleges the value of the revised contract was $4,334,941, of which Ungar was entitled to $3,237,672.32 and earned $2,597,759.09 before it was fired. Therefore, the remaining contract balance is allegedly $640,003.23. Since the municipality incurred “liquidated damages,” nine damage claims from property owners and contract breaches of $610,033.91, its statement of defence suggests it really owes Ungar $29,969.32.
Ungar Construction
The municipality sought bids from contractors in March 2017 to complete phase 2 of the cast iron water main replacement program, Ungar’s statement of claim says. The project included, among other things, installing 2.7 kilometres of water mains of different sizes along with associated fittings, valves and hydrants.
The start date was May 1, 2017 with a completion date of Nov. 30, 2017, the statement said. Ungar was allegedly prepared to start on May 1, but the municipality supposedly changed the start date.
“Ungar did diligently, and in an appropriate manner undertake, the required construction, as well as additional requested work,” the statement added.
Ungar allegedly provided progress invoices as work progressed, with some invoices allegedly paid with holdbacks and other invoices not paid at all, the statement continued.
“Failure to pay this amount (of $2.46 million) is an unlawful breach of contract by the city,” the statement said, adding around May 11, 2018, the municipality “wrongfully, unilaterally, took over the contract. This was an unlawful breach of contract by the city.”
According to the statement of claim, Ungar demanded that the municipality pay the amount, but the City of Moose Jaw allegedly refused or neglected to pay and now owes the unpaid money.
Ungar Construction worked through the winter and into the spring of 2018 — contrary to instructions from city hall — before it was fired, past news stories said.
City of Moose Jaw
In its statement of defence, the municipality said it denied every allegation in Ungar’s statement of claim. The municipality explained the original tender was supposed to close on April 18, 2017, but was extended one week to April 25. Ungar allegedly submitted its bid on April 25, 2017.
The municipality supposedly notified Ungar of its successful bid on May 11, 2017, pending the satisfaction of certain conditions such as submitting copies of its insurance policies and obtaining a business licence, as required in the tender.
“… the city explicitly denies that Ungar was prepared to start the project on May 1, 2017,” the statement of defence said. “It had not satisfied the conditions required by the contract before work could commence.”
Ungar allegedly delayed providing its labour and material payment bond form, performance bond and certificate of insurance until May 29, 2017, as the tender agreement required. Ungar had allegedly not yet received its business licence by that date, either.
Due to these delays, the municipality signed the contract with Ungar on June 7, 2017, said the statement of defence. At no time beforehand did Ungar allegedly object to the completion date of Nov. 30, 2017. Furthermore, all the work schedules Ungar allegedly submitted before that date indicated it could complete the work on time.
“… the city denies the assertion of Ungar that it diligently, and in an appropriate manner, undertook the work required by the contract, as well as additional work,” the defence statement continued.
When the municipality allegedly expressed its concern in August 2017 about Ungar’s ability to complete the work by the deadline and requested revised schedules and plans, Ungar supposedly said it would use additional crews and equipment to complete the work by Nov. 30, 2017.
As Ungar was doing the work, and after the municipality took over the contract on May 15, 2018, the municipality discovered Ungar had allegedly committed 31 contract breaches.
Contract breaches
Some of the alleged contract breaches include:
- Failing to excavate trenches safely and comply with regulations of Occupational Health and Safety;
- Closing the parking lane and sidewalk on High Street and Caribou Street without receiving approval;
- Damaging private property and damaging a sanitary sewer connection on Fairford Street West that caused it to be non-functional;
- Failing to provide prompt documentation of compaction testing, or for testing of asphalt and concrete, and using unsuitable material for backfill and failing to compact backfill properly;
- Shutting off water service without notice and failing to provide a continuous, uninterrupted water supply to affected homeowners.
“… the city denies that it wrongfully and unlawfully breached the contract with Ungar,” the statement said. “As a result of the breaches and the delay of Ungar in completing the work, the city was entitled to and did exercise its rights under the contract to step into the shoes of Ungar (on May 15, 2018) in performing the contract and completing the work.”
