$616 million Highway 427 opening stalled in substantial completion dispute

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Ontario Construction News staff writer

The provincial government and a consortium building the $616 million Highway 427 project near Toronto are embroiled in a legal dispute over whether the project should be considered to be substantially complete.

The Canadian Broadcasting Corp. (CBC) reports that Infrastructure Ontario (IO) is concerned that the road isn’t safe because of water potentially pooling on the highway. It has refused to issue a Substantial Completion Certificate until remedial work is completed.

In turn, the LINK427 consortium building the highway has sued the government, saying in its Statement of Claim that the government is stalling the opening of the extension so it can delay paying the consortium more than $144 million it is owed.

LINK427, which includes ACS Infrastructure Canada Inc, Brennan Infrastructures Inc. and Bot Construction Group, began work on the highway extension in 2018.

The project has two parts: an eight-lane, 6.6-km extension from Highway 7 north to Major MacKenzie Drive; and the widening of the existing 4 km stretch of Highway 427 south of Highway 7 to Finch Avenue.

CBC says the lawsuit indicates the consortium and the province are embroiled in other battles involving unspecified amounts of money for extra work done on the project but not paid for. The process to resolve those disputes can’t begin until after the highway extension is opened and the province makes the $144-million final contract payment to LINK427.

On the surface, the extension appears complete: the lanes are painted, road signs are up. Bridges and off-ramps have been built. Traffic lights are installed, CBC says.

LINK427 says in its lawsuit that an independent, third-party road safety audit (RSA) had deemed it safe for public use in February.

However, the money can’t be released until the highway extension also receives a Substantial Completion Certificate from another independent, third-party consultant, CBC reported. “This case is about the government abusing its powers to force (LINK427) to undertake costly last-minute upgrades to a major highway without compensation,” LINK427 claims in its lawsuit.

The unpaid money is putting contractors in financial peril and “preventing the people of Ontario from using a ready-for-use highway,” LINK427 alleges.

The consortium is seeking a court order forcing the province to pay up and open the highway extension.

LINK427 says in the lawsuit that the province is also demanding $10,000 a day in penalties for every day the highway has remained closed since its targeted completion date of Sept. 30, 2020.  However, LINK427 says delays were caused in part by the province’s pandemic restrictions in the spring of 2020.

In an emailed statement to CBC News, Jim Faught, LINK427’s communications director, said: “A Substantial Completion Certificate is required before the highway can be open. Infrastructure Ontario (and the) Ministry of Transportation have not issued the Substantial Completion Certificate for the Highway 427 expansion project at this time.”

The province says it has concerns about water potentially pooling on the highway.

“Specifically, the roadway was not built to the specifications in the contract. This results in highway surface drainage and related safety concerns,” said Ian McConachie, IO’s manager of media relations and issues.

“As LINK427 has not yet satisfied certain key obligations under the contract, it is not entitled to receive payment due upon completion of its construction obligations.”

In its lawsuit, LINK427 says an independent certifier was hired to determine if the extension has met the substantial completion threshold so the $144 million can be paid out.

The certifier “adopted the Government’s position, failed to undertake any independent analysis, and refused to certify Substantial Completion,” according to the lawsuit.

McConachie said in an email to the broadcaster that, while the province claims there are safety concerns along the widened portion as well, it has allowed it to open with restrictions.

“The Province has worked with LINK427 to facilitate the opening of that section by placing conditions such as reduced speed and additional salting in below-zero conditions that would allow that portion of the road to open.

“We hope LINK427 will take advantage of the decreased traffic volumes to complete this repair.”

CBC says Infrastructure Ontario declined to provide more details about its safety concerns, but the LINK427 lawsuit suggests they revolve primarily around what’s called a crossfall — the slope gradient on the road that makes it slightly higher in the middle, allowing water to drain off to the sides.

The lawsuit claims the province is complaining the crossfall isn’t an exact two per cent sloping grade.

LINK427’s lawsuit alleges it didn’t have to be, saying “the Parties had not contemplated, or agreed to such requirements at the time the Project Agreement was signed,” according to the court documents.

The consortium alleges the government is trying to force it “into new requirements without contractual obligation, justification and/or for an ulterior motive or otherwise improper purpose.”

Despite the ongoing legal issues, the province says it hopes the highway extension will open this summer.

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