Since January, three construction companies have independently sued U of T, collectively demanding more than $9.2 million in damages from the university.
These companies — EllisDon, BDA Inc., and Terraprobe Inc. — claim that U of T didn’t fully compensate them for work completed on various projects in UTSG. As of the time of publication, the three cases remain ongoing.
At a public Planning and Budget Committee meeting on September 17, U of T Vice-President, Operations and Real Estate Partnerships Scott Mabury did not disclose the amounts the university had budgeted for these projects to the companies it hired. Additionally, the university did not fully disclose the extent of the court cases to the committee.
He also informed the committee that the university hopes to settle these disputes but tends to resist paying additional costs associated with delays. “The debate comes down to: wait a minute, are we over [time] because of something we could have done, or is this something [the companies] didn’t do?”, Mabury said.
Cost contention
Tamer El-Diraby — a professor in U of T’s Department of Civil and Mineral Engineering — who specializes in construction project management, explained in an interview with The Varsity that disputes between owners and contractors over how to adjust costs happen frequently.
El-Diraby said that “litigation is not as common [as changes and disagreements], because people know everybody will be losing.” Litigation consumes time, can delay projects, and forces both parties to deal with lawyers and court fees. However, these types of cases still happen often, according to Benchmark Legal Offices.
From 2019–23, the Ontario Superior Court of Justice (OSCJ) database — which displays the court’s active and completed cases — showed that only two construction-related companies filed civil cases against U of T: NRK Mechanical Ltd. in 2020 and JR Certus Construction Co. Ltd. in 2021. However, between January and May 2024, three construction companies filed civil cases in the same court, naming U of T as the primary defendant — the party that is being sued.
On January 12, Canadian engineering and environmental consulting company Terraprobe filed a case against U of T for $52,875.51. According to OSCJ court files obtained by The Varsity, Terraprobe claims that it entered into multiple contracts with U of T from 2016 to 2021, agreeing to work on projects including the university’s Landmark Project at King’s College Circle. Terraprobe argued that for each contract, U of T and Terraprobe agreed that Terraprobe would submit invoices for completed work, and U of T would pay within 30 days. Terraprobe claims that U of T failed to fully pay these invoices.
On May 23, EllisDon — the largest construction company in Canada and the builder of the iconic Rogers Centre — also filed a case against the university, arguing that U of T owes the company more than $7.5 million.
EllisDon served as the construction manager for the Schwartz Reisman Innovation Campus: an AI-focused start-up space on College Street. According to El-Diraby, construction managers plan projects, adapt to changes, and are often involved in hiring subcontractors.
According to OSCJ court files obtained by The Varsity, EllisDon was awarded the Schwartz Reisman contract in 2019. In 2021, the architects who consulted on the project issued a change order — a notice altering the construction contract — that increased the total contract value from $142,138,904.42 to $154,111,753.44 and extended the planned time by 165 working days. Contract values encompass the total cost of labour, materials, and other necessary elements to the construction process.
However, EllisDon claims that it faced multiple delays during construction, including problems obtaining the necessary materials, union strikes, and changes to building and ventilation inspectors. According to EllisDon’s submission to the court, the project ultimately took 308 calendar days longer to complete than originally agreed upon “due to the actions and/or inactions of the University.”
EllisDon also claims that it requested U of T to extend the contract timeline and adjust the payment amount. Later, it sought a mediator to resolve disagreements about said costs. However, EllisDon alleges that U of T didn’t acknowledge the requests for increased funding or to modify the contract.
In total, EllisDon claims that the delays amounted to $7,372,954.27. In the September 17 meeting, Mabury presented a slide to the Planning and Budget Committee stating that the university was negotiating only $6.4 million in delays.
When asked about the discrepancy, a spokesperson for the university wrote, “It would be inappropriate for the university to comment on matters that are before the courts.”
Caught in the middle
U of T also became entangled in two cases involving renovations for the 121-year-old Centre for Culture and Technology building, located at 39 Queen’s Park Crescent.
According to court documents obtained by The Varsity, U of T signed a $3.5 million contract with Toronto-based construction company BDA Inc. in December 2022, in which the company agreed to act as the construction manager for the renovations. BDA Inc. subcontracted with electrical contracting firm Interborough Electric Incorporated to complete electrical installations, promising to pay the firm $953,017.67.
On February 26, Interborough Electric Incorporated sued both U of T and BDA Inc. for more than $1.4 million, claiming that they failed to fully compensate the firm for its work. Interborough also argued that BDA Inc. “breached the terms of the contract by causing delays and improperly terminating the contract.” However, on April 15, Interborough dropped U of T from the case.
In its response filed to the court on May 7, BDA Inc. argued that there was “no executed contract” between them and Interborough, and that the delays were outside of BDA Inc.’s control. The company claims that to receive additional funding in light of the delays, it had to submit requests to the university. The response also claimed that the university still had time to review those requests at the time of filing. The case remains ongoing.
BDA Inc. opened its own case against U of T on April 9 for $1.57 million. In court documents, the company argued that it finished the renovations on January 24. However, BDA Inc. claims that U of T still owes the company for both the work originally included in the contract and for additional work requested by the university during construction.
“10 cents on the dollar”
Partway through his presentation to the Planning and Budget committee, Mabury told the committee that the final total project costs “are not known by the contractors” and paused the discussion. A slide presented by Mabury revealed that U of T had committed $163.57 million toward construction on the Schwartz Reisman Innovation Campus — $9.46 million more than the total cost agreed upon in the updated contract between EllisDon and the university.
In a governing council Business Board meeting the following week, Mabury presented a similar set of slides, with the total project costs removed.
El-Diraby noted that many owners won’t share their estimates of the project costs with contractors. “Some owners would say, ‘If I let you know what the estimate is and the actual cost is below my estimate, then you will bid and tell me that I’m going to build it as you estimated it,’ ” he explained.
However, Mabury did reveal that the university typically settles these types of cases. “We resist paying the additional and usually settle at about 10 cents on the dollar,” he told the Planning and Budget Committee.
In a slide about the Schwartz Reisman Innovation Campus presented to the committee, U of T claimed that it expects mediation with EllisDon later this year. When The Varsity asked Terraprobe whether it had received a settlement offer from the university, a lawyer for the company declined to comment given the active litigation. However, BDA Inc.’s lawyer for the two cases involving 39 Queen’s Park wrote in an email to The Varsity that BDA Inc. is “in the middle of good faith negotiations with the University of Toronto.”
Terraprobe President Billy Singh wrote to The Varsity that the company is currently in discussions with the university, which asked Terraprobe for “further details on [its] invoices.” “We have not reached a stage where we can discuss the settlement details,” he wrote.
When asked whether court cases against an owner could impact their ability to hire construction companies in the future, El-Diraby said that it depends on the owner’s reputation and size. “If the owner is doing that very frequently, good contractors will either not go do the job for that owner or add a premium to make sure that they do not go into a dispute.”
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