City sues construction contractor Caspian, engineering firm over police headquarters

The City of Winnipeg is suing the construction and engineering firms that built the city's troubled police headquarters, alleging myriad mistakes in constructing the downtown project. 

The city's statement of claim was filed Wednesday at Manitoba's Court of Queen's Bench.

The city alleges it became aware of a number of defects and deficiencies once the $214-million project was complete.

The statement alleges a deteriorated structural slab and dislodged concrete is compromising the building's structural integrity. Water leakage, a busted concrete floor, drainage issues, inadequate air flow, insufficient asbestos abatement, a lack of temperature control and no catwalk on the fifth floor are among the dozens of shortcomings the city says exists in the facility, built within the shell of a former Canada Post warehouse on Graham Avenue in downtown Winnipeg.

Winnipeg chief administrative officer Doug McNeil estimated the cost of addressing all issues would be "north of $10 million."

"We only took possession a couple of years ago and these things have been popping up since we took possession," he told reporters.

The statement of claim was filed after the city tried to enter into arbitration with construction contractor Caspian Projects and engineering firm Adjeleian Allen Rubeli, or AAR, to recoup costs.

The allegations in the statement of claim have not been proven in court.

Legal action necessary

Mayor Brian Bowman said last week that AAR decided against arbitration. 

He also said at that point, the city couldn't sue Caspian because it signed a contract that required arbitration.

The city has since decided to pursue legal action to bring both firms together.

"Our legal strategy is changing," said McNeil, explaining that provincial case law supports the city's new legal tactics. "We issued a statement of claim today to litigate so we can get everybody in the same room." 

Since many of the building flaws cited in the statement of claim are "interrelated," McNeil said it makes sense to pursue legal proceedings with both firms.

"It doesn't make sense to have an arbitrator in one situation and a different arbitrator with another."

McNeil said some of the minor problems are already fixed.

Requests for comment from Caspian and AAR were not immediately returned Wednesday afternoon.

Project ballooned in cost

City council approved the purchase and renovation of the building in 2009, with a budget of $130 million. By the time the project was completed in 2016, it cost taxpayers almost $214 million, not including all financing charges.

Design and construction issues with the project, including holding rooms with false ceilings and vehicle ramps with insufficient headroom, were disclosed by city officials during the construction process. Additional problems, including ventilation issues and leaks, were identified by the city after it took possession of the building.

The procurement and construction of the police headquarters has been the subject of two external audits and remains under RCMP investigation.

In documents presented to a judge by the RCMP as part of Project Dalton, the 3½-year-old criminal investigation into the police headquarters, the Mounties alleged Caspian president Armik Babakhanians paid a secret commission to former Winnipeg chief administrative officer Phil Sheegl for showing favour to him in the award of a contract to transform the former Canada Post complex into the new home of the Winnipeg Police Service.

No charges have been laid in that investigation and none of the allegations have been proven in court.​