Organizing the process to replace Kitec piping is a serious and expensive endeavour.
Recently, on March 21, 2019, an Ontario court considered the issue of fairness in an alleged tender process for a large contract to remove the Kitec piping.
The Facts
In Jermark v. Metropolitan, 2019 ONSC 1810, the Court grappled with the allegation that the condo corporation was unfair in selecting a contractor to proceed with the remediation.
In 2013, the corporation decided it had to replace the domestic and heating piping (that contained Kitec piping) in its Front Street West ten-story complex.
The Board decided that it would be best for both practical and economical reasons to have one contractor hired to complete the entire project of remedying the piping issue in the condominium units. This included replacement of the Kitec piping within each individual unit of the building. Jermark had a previous relationship with the condo corporation having done work for the building before. At the corporation’s request, Jermark inspected some units and there was a number of communications between the parties about the project. The contractor also presented a plan at a meeting with the individual condominium owners.
However, in order to realistically implement this “one supplier solution” given the numerous individual condo owners who were required to consent to the chosen contractor to do the work within their unit, the condo corporation needed to go to court to get a court order imposing the one-contractor solution.
During this whole process, the contractor believed it was going to be that single supplier contractor. Indeed, the condo corporation wanted the contractor to do the work on all the units.
However, at the end of the day, the contractor was excluded by a court order. At the court hearing, the judge ordered a tender process take place, and the condo corporation consented to exclude the contractor from that process.
The contractor then sued, and asked the court on a summary judgment motion to award it damages and declare that a contract was entered into between it and the condo corporation prior to the bidding process commencing.
The Decision
The judge did not award summary judgment, instead finding that the matter should proceed to trial because there was a key issue that needed to be flushed out at trial – i.e., the reason why the condo corporation seemed to shift from a sole-contractor solution to a bidding process that excluded that very contractor.
The Lesson
This case is a cautionary tale for condominium corporations and contractors – the Kitec problem is not a simple one, and it requires a considerable amount of organization and planning that is reduced to writing to protect everyone from protracted and expensive litigation.
Communications between Board members and prospective contractors should be clear, concise and summarized in subsequent correspondence. Any misunderstandings should be clarified immediately.
A judge in this case could not decide these key issues on the motion, ordering the matter to proceed to a trial that will no doubt be expensive, require that the litigation remain on status certificates and could ultimately lead to a large payout.
A smooth process of removing Kitec does not have to be a pipe dream.
This post was written by David Elmaleh. To learn more about David, click here.
