Ottawa LRT dispute heats up as more documents filed

Workers with Alstom and RTG watch as an LRT car moves along the Confederation Line on Oct. 27, 2021, near the spot where a train derailed on Sept. 19. (Jeremie Charron/CTV News Ottawa)

The City of Ottawa is firing back at the consortium that built and maintains the Confederation Line LRT, disputing allegations that the city decided to launch the problem-plagued system prematurely.

In a sworn affidavit filed in court Monday, the city’s Director of Rail Construction Michael Morgan argues that the sworn claims earlier this month by the CEO of the Rideau Transit Group (RTG) Nicholas Truchon are "inflammatory and speculative."

"RTG’s assertion that the City unilaterally opened the system on September 14, 2019 without consulting RTG is demonstrably false," Morgan wrote in the affidavit obtained by CTV News Ottawa. "In fact, RTG itself was leading the effort to open the system to the public in many respects."

Truchon filed an affidavit on March 1 in an attempt to stay the proceedings into a notice of default, in which he argued, among other things, that the city did not consult with RTG prior to launching service on the Confederation Line on Sept. 14, 2019.

"[T]he City decided unilaterally to offer full service to the public on Sept. 14, 2019, only two weeks after the Revenue Service Availability Date was achieved on Aug. 31, 2019. The City did not consult either RTG or the Construction Contractor before taking this decision," Truchon wrote, adding that there was "intense political pressure to bring the system into service when it approached completion."

Morgan’s response argued that Truchon’s allegations were not only false, but also irrelevant to the ongoing legal dispute over whether RTG is in default because of two derailments on the line last summer.

Morgan responded by pointing out that Truchon was not involved in the lead-up to the launch of the system. He became the CEO of RTG in July 2020, following the resignation of Peter Lauch, who oversaw the system's launch and its many troubles in 2019 and early 2020. Prior to that, he was the chief financial officer on the Samuel-de-Champlain Bridge public-private partnership in Montreal.

He also states, as Truchon did in his affidavit on March 1, that RTG provided notice of revenue service availability in August 2019.

"[T]he Revenue Service Commencement Date was August 31, 2019 and the City could have launched service that day," Morgan wrote. "To be clear on this point, the Notice by RTG that the System had achieved Revenue Service Availability was a representation by RTG that the System was ready for use by the residents of Ottawa and operation by OC Transpo."

He said the city chose to run some additional exercises prior to the official launch on Sept. 14, but the city could have legally launched the system any time from Aug. 31 onward.

Furthermore, Morgan argues that these statements have nothing to do with the notice of default filed by the city in response to the derailments on the Confederation Line on Aug. 8 and Sept. 19, 2021, the latter of which kept the system offline for 54 days.

"The City’s Application deals solely with whether RTG has exceeded the contractual threshold of Failure Points for the period of August to November 2021 such that there is a Project Co Event of Default," he said. "The Truchon Affidavit addresses many topics that are irrelevant to the Application or the Motion to Stay the Application."

CITY TRYING TO LOOK 'TOUGH,' RTG ARGUES

In a separate affidavit by Truchon filed on March 14, he argues that the city's actions, including withholding payments and issuing a notice of default, have created an adversarial relationship between the public and private members of the public-private partnership between the city and RTG.

"The two derailments that occurred in August and September 2021 were unfortunate events. In my view however, the City chose to use the derailments (and particularly the second derailment) to attempt to exert leverage over RTG and extract concessions on matters unrelated to a safe return to service, which resulted in delay to a return to service," Truchon argued. "This was part of a broader pattern engaged in by the City since Revenue Service began to administer the Project Agreement and its payment terms in an extreme and punitive fashion. I believe the City has done so to in order to be seen by the public as being 'tough' on RTG."

Truchon says the city's has forgotten the third "P" in public-private partnership.

"The City has forgotten that public-private partnerships are exactly that: partnerships between the private and public sectors to deliver vital infrastructure to the public. When these types of agreements become politicized and polarized, as here, and public authorities begin to see the Payment Mechanisms in these agreements as revenue centres, the results will be poorer outcomes for all involved."

Truchon argued that the issues which arose on the system in its early months of service were part of the "bedding-in" process for a large and complex system and that the city took an "extreme interpretation" of the contract in order to maximize penalties to RTG.

In a statement to CTV News Ottawa, RTG spokesperson Helen Bobat said RTG is committed to working together with the city to find solutions to problems that arise on the LRT.

"Rideau Transit Group General Partnership's position on the City’s litigation is on the public record. Our overriding objective has always been to work with the City to provide its citizens with safe, reliable light rail service. And, as our Court filings demonstrate, we believe achieving that objective requires that together, the City and RTG, operate in a true spirit of partnership. Rideau Transit Group will continue to operate in this spirit of partnership," Bobat wrote.

Bobat said, beyond that, RTG did not have anything else to add "given that the matter is currently before the courts."

The City of Ottawa would not comment on the March 14 filing by Truchon, other than to say it submitted its own filing on Monday about the ongoing dispute.

"The City of Ottawa submitted a comprehensive affidavit yesterday, March 14. As this matter is currently before the court, the City of Ottawa is not providing any further comments at this time," said Richard Holder, the city's acting director of rail construction.

FINDING OF DEFAULT WOULD HAVE ‘IRREPARABLE CONSEQUENCES'

Truchon further argued against finding RTG in default, saying it could lead to severe consequences.

"A finding of default is very serious as it may permit the City to terminate the Project Agreement or to replace RTM as the Maintenance Contractor," he cautioned. "While termination of the Project Agreement will result in extreme financial consequences, including hundreds of millions of dollars in damages, for RTG and its subcontractors over the remaining Maintenance Term (excluding payments to RTG by the City in respect of termination), a finding of default may also have other negative impacts on RTG (which could essentially cease to exist), as well as to RTG’s parent companies and to the public, that are not quantifiable but would be significant."

None of the allegations have been proven in court.

While some city councillors have made moves to investigate the risks and cost to the city of terminating the 30-year contract with RTG, there has not yet been any clear attempt by the city to do so. 

The system is the subject of a public inquiry, launched by the Ontario government in November to look into the "commercial and technical circumstances that led to the breakdown and derailment of Stage 1", following the two derailments in August and September.

City Council voted to have the Auditor General also examine the Stage 1 process, but Nathalie Gougeon suspended her investigation given its similar scope to the provincial inquiry.