A Manitoba construction company is suing the province’s largest university, claiming it is owed millions in unpaid costs associated with building a first-of-its-kind marine research facility.
The lawsuit, filed Aug. 30 in the Court of King’s Bench, came just three days after the University of Manitoba celebrated the grand opening of the Churchill Marine Observatory.
Penn-co Construction is seeking roughly $2.6 million from the university, claiming inadequate design plans and the COVID-19 pandemic caused project expenses to balloon without additional compensation.
“There is no lawful basis for the university’s retention of the benefit of the additional work without proper payment of the same,” the lawsuit says. “Penn-co says that the university has been unjustly enriched to the detriment of Penn-co.”
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The Churchill Marine Observatory officially opened Aug. 27. Penn-co Construction is seeking $2.6 million in a lawsuit against the University of Manitoba.
Although it has not yet responded to the lawsuit, the university said it is reviewing the claim and intends to file a countersuit against the Manitoba-based construction firm.
“It is the university’s position that all legitimate and eligible costs to Penn-co have been paid. In addition, the university has a significant claim against Penn-co for deficient work that will be set out in our statement of defence and counterclaim,” a spokesperson said in an emailed statement.
The observatory, located near the Port of Churchill, is Manitoba’s first marine research facility. Designed to help detect and mitigate oil spills, it will also support studies on Arctic marine transportation and climate change.
The suit says the project was to be completed in two phases with the contracts for each phase going up for tender in January and June of 2017, respectively.
Penn-co won both bids to build the facility at a collective cost of around $20.5 million.
The first phase included the construction of a logistics base, laboratory space and a pair of outdoor research pools at a cost of around $14.7 million. The second phase (which included a pipeline, water intake, discharge lines, pumphouse and a utilidor connected to the research facility) was to cost $5.8 million, the claim says.
Subject to adjustments in contract time, both phases were to be largely completed by July 2020, the document says.
The university hired Winnipeg-based architecture firm Prairie Architects Inc. as a consultant throughout construction. The firm was tasked with developing the project designs and to “provide administration” in an “impartial and fair manner,” the lawsuit says.
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The marine research facility helps detect oil spills and studies climate change.
Trouble began in March 2020, the claim reads, when the provincial government introduced social distancing and sanitation regulations amid the pandemic. As a result, the company says it incurred nearly $404,000 in costs related to additional cleaning, reduced efficiency, project delays and accommodations.
The university disputed the expense, the lawsuit says.
Penn-co also claims the Phase 1 design plans failed to account for the installation of an electrical control panel in the facility’s pool area at a cost of $43,000.
In June 2020, when Penn-co was working on the project’s second phase, a directional drilling subcontractor “unexpectedly encountered large underground pockets of sand while drilling through bedrock at the project site, forcing a stoppage,” the lawsuit says.
Penn-co alleges the presence of the sand pockets was not identified in the provided geotechnical reports. It claims it was given design plans that “failed to properly, fully and accurately” describe the environment and, “to the contrary, represented that there was only durable and competent bedrock below.”
The company said it asked for direction from the university but did not hear back for around two months, at which point it was told to proceed with a different drilling method. As a result, it incurred additional costs for equipment, labour, accommodations, and schedule delays that forced portions of the work to be completed during the winter.
Penn-co claims it is owed nearly $2 million, plus interest, as a result.
“Architectural or engineering aspects of the project were not the responsibility of Penn-co and Penn-co assumed no responsibility for the performance of the project’s consultant or providing professional design advice,” the lawsuit says.
“Following a period of prolonged and unexplained delay, the university made partial payment on account of the change … but without justification or reasonable explanation, refused to pay the full balance.”
Finally, Penn-co alleges the university failed to obtain the proper work permits from Manitoba Conservation and the Department of Fisheries and Oceans before the second phase of the project began — resulting in further delays and costs of around $167,000.
The lawyer representing Penn-co declined to comment, citing the pending litigation.
tyler.searle@freepress.mb.ca
Tyler Searle
Reporter
Tyler Searle is a multimedia producer who writes for the Free Press‘s city desk. A graduate of Red River College Polytechnic’s creative communications program, he wrote for the Stonewall Teulon Tribune, Selkirk Record and Express Weekly News before joining the paper in 2022. Read more about Tyler.
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