Sludge hauler’s $2.5M lawsuit against Town of Orangeville ‘vexatious’: Defence

By Chris Halliday Orangeville Banner Feb 16, 2011 

The second punch in the dispute over a lagoon purchase agreement has the Town of Orangeville calling its opponent’s case without merit.  

Claiming the town’s termination of a $7 million lagoon purchase on Sept. 28 was “unlawful and ineffective,” The Region of Huronia Environmental Services Ltd. (ROHES) filed a lawsuit in late October, seeking either to enforce the deal or recover damages of up to $2.5 million for breach of agreement. 

According to the Town of Orangeville’s statement of defence and counterclaim filed into the Ontario Superior Court of Justice on Jan. 31, ROHES is not entitled to one cent, and still owes the municipality its $250,000 deposit back. 

“The town asserts that the plaintiffs have not suffered the damages alleged, and pleads that, in fact, the plaintiffs have suffered no damages,” Orangeville’s statement of defence claims. “The town also pleads that the plaintiffs’ claims are spurious and vexatious, and therefore asks that the plaintiffs’ action be dismissed with costs on a full indemnity basis.”

ROHES, which disposed of liquid biosolids from the town’s Water Pollution Control Plant (WPCP) for the last eight years, manages nine membrane-lined storage lagoons in the County of Simcoe. It stores sludge there during winter and inclement weather, when applying it to agricultural land is not feasible. In early August, the town agreed to purchase a lagoon from ROHES, under the condition it could terminate the deal at its “sole discretion” if it was not satisfied after doing some due diligence.

“The town wished to continue investigating other options, without committing itself to purchasing the property,” the town argues. “This (termination) term or provision was specifically requested because, as the plaintiffs understood, the town was continuing with its due diligence process.”

ROHES, however, is claiming the town followed a course of conduct “designed to avoid its obligations,” arguing Orangeville “acted in bad faith, had no intention of completing the agreement.”

One day after awarding a five-year biosolids collection and disposal contract to Entec Waste Management Inc. on Sept. 27, instead of ROHES, the town walked away from the lagoon purchase, citing the deal was not economically viable.

The town argues council’s decision was made “in accordance with the termination provision” of the lagoon purchase agreement, while ROHES insists Entec was selected “in order to manufacture a basis for termination of the agreement.”

“The defendant created the circumstances it now relies on in order to terminate the agreement,” the ROHES lawsuit states. “The discretion exercised by the defendant in deciding to terminate the agreement was based on factors extraneous to the economic viability of the property being purchased, including a tender award to another party for sewage services and disposal.”

The WPCP generates about 25,000 cubic metres of biosolids every year (24,777 cubic metres in 2009), which ROHES disposed of by applying to farmland, as well as storing it in the winter, at a price of $30.15 per cubic metre in 2010. During the past eight years, town staff has described the service received from ROHES as “excellent.” 

Liquid biosolids at the sewage plant are now being handled differently in the winter though, as Entec is dewatering them and disposing of the dehydrated cake at a composting facility — rather than holding sewage in storage lagoons as ROHES did. 

During summers, the process will remain the same — Entec will haul away liquid biosolids for land application in the same fashion ROHES has done in the past.

Before selecting Entec, council was advised by town staff the cost would be about $3,400 less annually than the ROHES bid. Moments before losing the tender, however, ROHES attempted to re-calculate its original proposal, and argues, it was the low bidder.

On Sept. 28, town lawyer William Stutz terminated the lagoon purchase with ROHES, as well as requested the town’s  $250,000 deposit be given back.

In its counterclaim, the town demands ROHES return the deposit, plus pay legal costs associated with the lawsuit.

“The plaintiffs have no entitlement to the town’s $250,000 deposit,” Orangeville’s counterclaim argues. “The town pleads that it acted lawfully, appropriately, properly, reasonably, fairly and in good faith in negotiating, signing and terminating the agreement.”