$20M lawsuit against city

The company that won one of the largest development contracts in Brampton’s history has put the city on notice it plans to launch a $20 million lawsuit.

Dominus Construction, the developer awarded the contract to build the city hall expansion in 2011, has filed a notice of action against Brampton for breach of contract. The action stems from a council decision to halt construction on phase two of a multi-phase downtown redevelopment plan worth half a billion dollars.

The company is seeking $20 million for breach of contract or the city’s “unjust enrichment” at the expense of Dominus.

Alternatively, the notice seeks $1.5 million compensation for the work it did to secure the option on 20 George St. N., a parcel of land in downtown Brampton that would have housed a 10-storey building featuring a 130,000-square-foot library.

Among its list of grievances, Dominus claims the decision not to proceed with the Southwest Quadrant Renewal (SWQ) plan “deprived” them of profits and has “damaged” its reputation.

The notice was filed with the courts on Sept. 14 and Dominus has 30 days to file a statement of claim detailing what it is seeking. A spokesperson told The Guardian the city is aware of the notice and a “response will be made in the courts when the city is called upon to file a statement of defence.”

Brampton taxpayers are already locked in a $28.5 million legal battle with developer Inzola Group. That company, headed by former Brampton Citizen of the Year John Cutruzzola, alleges it was “unfairly disqualified” from bidding on the city hall expansion contract in 2010. The city denies the claims, which have not been proven in court. Dominus has not been accused of any wrongdoing.

Adding to the city’s legal woes, Dominus, which narrowly won the historic development deal in 2011, with the support of former mayor Susan Fennell, is arguing loss of profit, and is claiming the city’s acquisition of Phase Two additional lands “has materially increased the development potential and thus the value of the adjacent parcel of land that the defendant already owned.”

Council awarded Dominus the $205 million contract for the first installment of SWQ and named the company, part of a development consortium, as the “preferred proponent” for phase two, according to court documents.

Dominus claims the city exercised the option to acquire the George Street lands in 2014, triggering its obligation to proceed with the second stage of the Southwest Quadrant plan.

“However, after acquiring the Phase Two additional lands the defendant denied its obligation to proceed with Phase Two and refused to honour its obligation to the plaintiffs as the preferred proponent under the Phase Two Option,” the notice of action reads.

The legal action is the latest headache for the city on a project that has been the centre of controversy.

The project was pitched as a long-term partnership between the city and Dominus. The original deal saw Dominus maintaining ownership of the existing administrative space for 25 years while the city pays $8.2 million annually to lease the space.

In 2014, after the city had entered into its 25-year partnership with the builder, Dominus sold its rights over the project to Fengate LP.

Since then, the expansion has been subjected to flooding, has been hit by trucks on numerous occasions and plagued by building delays.

Almost $1 million in penalties that could have been charged to Dominus for the late occupancy date were excused.

On top of that, how the city handled the awarding of the contract has prompted investigations, including one by the Ontario Ombudsman’s Office into Brampton’s procurement practices.

Although the Request for Proposal required the winning proponent to assemble additional lands on its own, testimony given in the Inzola lawsuit suggests Dominus secured 20 George St. N with the city’s help, contrary to the rules.