Ottawa LRT: 2nd notice of default filed against Rideau Transit Group

The two recent derailments on Ottawa’s light-rail transit system purportedly constitute a breach of contract by Rideau Transit Group, according to a letter sent from the city to the construction consortium.

Documents made public Tuesday show the city has issued a second notice of default to RTG, marking another escalation in the legal conflict between the city and the builder of its LRT system.

The notice of default and letter were released to the media Tuesday evening after Ottawa councillors were given an in-camera briefing on the city’s legal position in grievances against RTG during a meeting of the finance and economic development committee (FEDCO).

The closed-doors meeting lasted more than three hours and was shuttered to the public because it contained confidential information about the city’s legal strategies in disputes with RTG.

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After FEDCO returned just before 5 p.m., Kanata South Coun. Allan Hubley introduced a motion that was discussed in-camera and immediately passed by the committee.

The motion itself provided a few details about what was discussed and where the city is taking its dispute with RTG.

The motion marked the first time the public learned that a second notice of default was issued to the rail construction consortium on Sept. 24, this one in relation to the two recent derailments on Aug. 8 and Sept. 19.

RTG disputed this notice of default, according to Hubley’s motion.

“RTG failed to meet the basic performance and service level metrics set out in the (project agreement) arising out of the derailments and both events led to system unavailability and the erosion of system reliability,” read the memo from the city’s rail construction director Michael Morgan released after FEDCO.

That memo also revealed that the city has asked to replace a vehicle maintenance manager in light of the recent derailments. The city will also be increasing its degree of oversight on the system, with RTG meant to pay for associated costs.

An earlier notice of default was issued in March 2020, declaring that RTG was in violation of its contractual obligations after repeated service disruptions on the transit line. The city has yet to sign off on RTG’s efforts to fix issues identified in this initial notice.

After the latest notice of default, RTG submitted a plan on Oct. 3 to rectify the outstanding issues with the Confederation Line, which has remained out of service since the latest derailment.

But per the motion, the city apparently found the plan and schedule for returning to service “unsatisfactory under all of the conditions.”

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The city’s letter, signed by Morgan, also expressed doubts in the contractor’s competency: “RTG’s response to date has been disappointing since the September derailment, causing the city to seriously question both RTG’s commitment and frankly, its capability, to solve its current issues.”

Later in the letter, Morgan adds that “RTG does not appear to appreciate the gravity of the current situation given its refusal and/or inability to implement swift and appropriate actions with an adequate level of resourcing.”

While it does not move to end the city’s 30-year maintenance agreement with the consortium, the motion passed at FEDCO recommends that the council approve issuing a notice of dispute under the project agreement with RTG.

If approved by council, Morgan would start a conflict resolution process with the contractor, which could include asking the courts to “confirm the validity of the RTG defaults.”

No other information about a timeline for restoring the Confederation Line to service was given at FEDCO, which adjourned immediately after Hubley’s motion was passed. Early estimates given by RTG brass said the system could be down for weeks.

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Ottawa’s ongoing disputes with the LRT contractor pushed council to expand the envelope for legal resources by an additional $15 million earlier this year for a total budget of $115 million.

The city and RTG have filed legal claims against one another related to maintenance payments withheld from the consortium and a series of service disruptions on the Confederation Line. The city expects RTG to foot the bill for all downtime on the LRT system and associated costs for running replacement transit service.

City council will consider the FEDCO motion at its next meeting on Oct. 13.

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