Owed extra cash

Contractor says it got stiffed by the province on a school contract

Steve Bartlett sbartlett@thetelegram.com
Published on March 24, 2012
The original contract for the abatement and demolition of St. Teresa's school has resulted in a court battle. Transportation and Works has just awarded a new tender so a new contractor can complete the work. - Photo by Keith Gosse/The Telegram

Call it the liening tower of St. Teresa. Liens totalling more than $1 million have been laid because of the halted demolition of the Mundy Pond Road school.

Companies place liens on properties to protect their investments or money considered owed.

Star Realty, which had the contract for the abatement of hazardous materials and the demolition of St. Teresa's, says the province and/or Eastern School District owes it $955,000 for materials, labour and services.

One of its subcontractors, Envirotech Solutions, states it's owed $173,431 from either Star Realty, the province or the school board.

According to court documents, Star Realty claims it discovered that additional work was required at the site, but the province wouldn't co-operate in changing the contract or paying an appropriate amount for the extra work.

The company's statement of claim notes the province terminated the contract around Nov. 18, 2011.

When The Telegram visited the Supreme Court registry earlier this week, the province had yet to file a response to Star Realty's or Envirotech's claims.

Terrence Penney, owner of Star Realty, says the dispute stems from the unexpected discovery of a huge amount of asbestos at St. Teresa's. He notes the asbestos was contained and wasn't a threat to former students and staff of the school, which closed in February 2011.

Penney says the Department of Transportation and Works, which oversees work at provincial buildings, didn't want to pay the extra $500,000 or so it would cost to clean up.

Instead, he says the department offered various other amounts of money.

Still, he says his company proceeded with the job.

Penney claims that after 95 per cent of the hazardous material had been abated and one-third of the building had been demolished, government shut the job down.

He's convinced a bureaucrat with Transportation and Works didn't like him. He charges that the official told him Star Realty had done two or three jobs for government recently and had been paid extra money on every job.

"It was a personal attack. That's all it ever was," he contends.

Adding to Penney's belief the matter was personal is that the official graded Star Realty with zeroes on an evaluation, and that means the company is not allowed to bid on government contracts for a year.

Penney says he appealed the evaluation, but his protest eventually ended up in the hands of the same bureaucrat and the zeroes stood.

"Yeah, you know I'm frustrated," he says.

A spokesman for Transportation and Works says the province doesn't speak on matters before the courts.

He did confirm the department cancelled its contract with Star Realty and has just awarded another tender so a new contractor can complete the job.

Penney said bureaucrats or Occupational, Health and Safety officials have never had an issue with Star Realty in the 15 years the company has been doing government contracts.

Service Newfoundland - which oversees Occupational, Health and Safety monitoring in the province - wouldn't comment on the dispute.

However, a spokesman said a number of inspections were conducted during the St. Teresa's project and there were no outstanding issues from an enforcement perspective.

The Eastern School District referred comment to Transportation and Works.

Penney say his company did receive progress payments for some of the work, but its cash flow has been affected by the shutdown.

He awaits the court's decision.

St. Teresa's will eventually be replaced with a new K-6 school.

sbartlett@thetelegram.com Twitter: @SteveBartlett_