Contractor solely responsible for police HQ settlement

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This article was published 08/02/2024 (577 days ago), so information in it may no longer be current.

The City of Winnipeg has dismissed its claims against dozens of defendants from whom it had sought compensation for cost overruns in the construction of the Winnipeg Police Service downtown headquarters.

Last March, city council voted to accept a settlement that would result in the defendants paying the city at least $21.5 million.

Court records show King’s Bench Justice Glenn Joyal issued a judgment on Dec. 15 dismissing the city’s claims against all defendants, except for contractor Caspian Construction Inc. and 11 other Caspian-related defendants, including owner Armik Babakhanians.

Court records show Joyal also dismissed a number of cross-claims between defendants.

Details of the judgments could not be confirmed Thursday as they were not readily accessible.

The Free Press contacted the city for comment but was not given a reply before dedline.

The headquarters building at 245 Smith St. opened in June 2016 at a cost of about $214 million, $80 million above its original price tag.

An external audit found the project was severely mismanaged. The RCMP conducted a lengthy investigation into fraud and forgery allegations, but no charges were laid.

In 2018, the city filed a statement of claim to seek damages for alleged construction deficiencies from Caspian Projects and structural engineering consultant Adjeleian Allen Rubeli Ltd.

The statement alleged both companies were “negligent” in their work on the downtown WPS headquarters.

In 2020, the city launched a civil suit against Caspian, AAR and dozens of other defendants, alleging a fraudulent scheme had inflated the price of the project.

Had the city not reached a settlement, the case would have gone to trial this year.

Under settlement terms reached last March, the city would receive $21.5 million if payment was made in full within 12 months; $22.5 million if paid within 24 months; or $23.5 million if paid within 36 months.

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If payment was not made within 36 months, the city would ask the court to order the defendants to pay $28 million.

Fraud allegations against former city CAO Phil Sheegl were severed from the civil suit.

In 2022, Joyal ruled Sheegl had accepted a $327,000 bribe from Armik Babakhanians and ordered him to repay it to the city.

Joyal’s ruling included an order he repay $250,000 in severance he received from the city as well as $100,000 in punitive costs.

dean.pritchard@freepress.mb.ca

Dean Pritchard
Courts reporter

Dean Pritchard is courts reporter for the Free Press. He has covered the justice system since 1999, working for the Brandon Sun and Winnipeg Sun before joining the Free Press in 2019. Read more about Dean.

Every piece of reporting Dean produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.