The Ophir reservoir filled a small valley above Rossland. Photo: Mike Thomas/urbankworkbench.com

Rossland ordered to pay contractor in Ophir reservoir lawsuit

Maglio’s wins $200,000 settlement, but judge slams both sides

A BC Supreme Court judge has ordered the City of Rossland to pay a contractor $200,000 for building the city a reservoir a decade ago.

Justice Mark McEwan ruled earlier this month the city has to pay Maglio Installations Ltd. for work done on the Ophir Reservoir when it was constructed between 2006-08.

Maglio was seeking damages for “delay in executing the contract for which the city was responsible… unpaid contributions to overheads and profits associated with changes in the work … unpaid fees for extra work” as well as interest on outstanding amounts, and for “lost opportunity,” the court ruling indicates.

The dam was started in the fall of 2006, but numerous work delays and unexpected problems plagued the project.

The judge’s ruling details ongoing problems with the project, right from the outset. Maglios was the low bidder on the project at $2.96 million, cheaper than the next bidder by more than $1.8 million dollars, the judge noted.

Read the judge’s decision here.

But even that low bid “was more than the city could spend, and, as it turned out less than required to complete the job properly,” McEwan wrote in his decision.

From water seeping into the construction area, to changes to the infrastructure, to delays in getting approvals for changes made by both parties, the project was marked by delays and miscommunication.

One particular problem delayed construction by nearly two months.

“This was blamed by Maglio on the city. This is unfair, and the delay is difficult to assess as to the fault of one party over the other,” the judge ruled. “The city could have been more insistent on time limits. Maglio could have been more explicit about what they expected and about the time it would take to reasonably complete the job.”

The judge chastised both the city and Maglios for the way they both managed and executed the project on numerous issues. Maglio claimed the city had breached its obligations under the contract, while the city said Maglio didn’t comply with all the provisions of the contract.

“There is much that is unsatisfactory in the behaviour of both parties,” McEwan ruled. While some of the problems are relatively clear, “the rest of the issues are difficult to extricate. There are arguments on both sides of many of them.”

“The problem is that there was never enough money and Mr. Runzer dealt with the problems by deferral,” the judge ruled, referring to the city’s project manager. This was never going to work because the project did not have the money to complete it reasonably, he said.

“The balance of the claims can only be estimated. Doing the best I can considering, the loss of the 2007 season and Maglio’s cost management I find that the city owes Maglio Installations Ltd. $200,000,” the judge ruled. On top of that is interest dating back to 2008.

Still, Rossland’s mayor says she’s happy with the ruling.

“I am very pleased with how it went,” said Kathy Moore. “The initial claim was for about $1.2 million, if I recall, and the [judgement] is for $200,000. But some of that includes money we were holding back anyway, so we would have had to pay that out — I think it was close to $80,000.”

As for the judge’s criticism of the city, Moore says the city is a different organization from the one that started the project 10 years ago.

“There were mistakes made on both sides and everyone has learned from it,” she says. “At the time we were way less organized and professional than we are now. There’s a world of difference. The last two projects we have done in this term were on-time and on-budget on everything.”

Despite the problems during construction, the Ophir dam and reservoir has operated as expected since the project was completed in 2008.

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