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Laing O'Rourke JV settled £68m claims on problem Canada job

The Laing O’Rourke JV behind a multi-billion-pound hospital in Canada has now reached settlements on claims totalling CAD$118m (£68m) with subcontractors on the problem project.

Construction News has learned that the Construction Santé Montreal (CSM) JV has reached 20 settlements with 13 firms over CAD$118m-worth of claims.

However, the JV still faces claims totalling CAD$82m (£47m) from firms that have yet to agree settlements, as reported by CN on Monday.

CSM, which includes Laing O’Rourke and Spanish contractor OHL, oversaw the delivery of phase one of the CAD$2.1bn Centre Hospitalier de l’Université de Montréal.

Subcontractor claims amounting to CAD$55m (£32m) were settled this month, including two claims of CAD$36m (£21m) from contractor EBC and four worth more than CAD$10m (£6m) combined from supplier Les Entreprise De Refrigeration.

The claims take the form of ‘hypotheque legale’ – the mechanism used by subcontractors in Canada to protect payments owed to them.

Under the system, subcontractors are handed a mortgage on the property they have helped to build, which will act as security for the repayment.

The hypotheque legale settlement will not necessarily reflect the total claim made, and will likely be a percentage of what has been claimed for.

Laing O’Rourke would not provide details of the settlements agreed.

A Laing O’Rourke spokesman said: “Any discussions on individual contractual situations are a matter of commercial confidentiality and all material provisions have been made.

“The risks on this project have been substantively reduced and CSM, with local tier one delivery partner Pomerleau, is progressing well with the concluding phase of the [hospital] project.”

The claims stretch from 18 May 2016, – a CAD$5m claim now settled with Oldcastle Precast – up until the most recent claim of just CAD$12,000 lodged this month from Demolition firm Bauline.

The largest claim to be settled by the firm so far was for CAD$36m (£21m), which was lodged by Groupe SCV.

Despite agreeing settlements on the majority of claims, the JV still faces claims totalling CAD$82m (£47m) from firms that are still to be settled.

This includes one claim totalling CAD$56m (£32m) with local M&E contractor Reko.

In 2011, the CSM JV between O’Rourke and OHL signed a deal to build the CAD$2.1bn (£1.2bn in today’s prices) hospital under a 38-year concession PPP contract.

The first phase of the project was completed in March 2017, 11 months later than initially scheduled.

Work on the second phase has now begun, with the CSM JV having handed local contractor Pomerleau a £235m contract to act as main contractor for phase two.

 

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