(Trinidad Guardian) The Estate Management and Business Development Company Limited (EMBD) will have to pay over $83 million in outstanding fees to Junior Sammy Contractors Limited.
Delivering a judgment yesterday morning, five Law Lords of the United Kingdom-based Privy Council dismissed EMBD’s final appeal against Junior Sammy Contractors over the debt.
Lord Ben Stephens, who wrote the judgment, ruled that former High Court Judge and current Appeal Court Judge Mira Dean-Armorer and the Court of Appeal could not be faulted for granting Junior Sammy a default judgment and ordering the compensation.
According to the evidence in the case, the legal dispute concerns a contract for the Caroni Savannah Residential Development undertaken by EMBD, which manages lands formerly held by Caroni (1975) Limited.
EMBD awarded the contract to another company in 2010 but it (the contract) was eventually terminated, as the company failed to perform or complete the work.
Junior Sammy Contractors submitted a $231 million tender for the project and was awarded the contract to complete the development.
It sued EMBD after it only paid seven of the 13 interim payment certificates (IPCs), which were approved by the independent engineering company appointed by EMBD to act as its agent.
In its defence, EMBD requested the disclosure of supporting documentation, as it alleged that there was fraud in the certification of the work.
EMBD also claimed that Junior Sammy could not pursue legal action, as it had assigned the outstanding payments, which are the subject of the lawsuit, to Ansa Merchant Bank when it borrowed $40 million to offset the delay in payments.
In resolving the appeal, Lord Stephens and his colleagues agreed with the local courts that the debt was not absolutely assigned to the bank, although it appeared so in the documents related to the financing arrangement.
“Thus far, there is a powerful case, on the true construction of the documents, that the Contractor and the Merchant Bank intended to pass all the rights of the Contractor in the debt to the Merchant Bank,” Lord Stephens said.
“However, a detailed analysis of the documents reveals that in reality, the transaction was a loan with an equitable assignment of the debt in order to secure repayment of the loan,” he added.
He pointed out the contractor was left with the sole discretion to commence proceedings to recoup the debt.
“The Contractor does not have to obtain the Merchant Bank’s permission to commence proceedings,” he said.
Dealing with EMBD’s request for additional information, the board ruled that its claims of fraud were fanciful and speculative.
“None of the reasons was supported by an expert witness. The board concludes that there is no substance in any of them,” Lord Stephens said.
“The application for specific disclosure is a fishing expedition which amounts to no more than a hope that something might turn up,” he added.
In a media conference to announce the outcome, Junior Sammy’s lawyer, Ramesh Lawrence Maharaj, SC, said he was pleased, as it (the case) set an important legal precedent.
“This judgment is important not only because it vindicates the reputation of my client. It is important because Government and State-owned companies use this kind of contract to, in effect, get contractors to do construction and infrastructure,” Maharaj said.
He noted that the Government and State companies could save significant legal costs if they follow the guidance provided.
“I am sure you would agree with me that those expenses could be saved to benefit the people of T&T,” Maharaj said.
Maharaj revealed that his client would be funding a conference next year, in which he and a team of British lawyers who worked on the case will lecture on standard form contracts and the unique type of contract that was the subject of the case.
The conference is expected to be held in December or January with contractors, and government and State company officials will be invited to attend.
“The purpose of that conference would be for contractors and employers to know their rights under the contracts they operate under, for contractors to enforce their rights and for government and State-owned companies to know their obligations,” Maharaj said.
Oropouche East MP Dr Roodal Moonilal also weighed in on the case in a media release yesterday evening.
Moonilal, who is facing a multimillion civil lawsuit brought against him, several other contractors, and former EMBD officials over alleged bid rigging in another project, criticised EMBD for challenging Junior Sammy’s case.
“The taxpayer paid millions of dollars for this rum shop argument devoid of evidence,” he said. (See other story)
Earlier this month, the Privy Council refused some of the contractors in Moonilal’s case permission to appeal the dismissal of their preliminary and procedural challenge to it. It ruled that the appeal did not raise an arguable point of law or a point of general public importance.
That case will now go on trial before Justice Frank Seepersad.
In yesterday’s matter, EMBD was represented by Jonathan Acton Davis, KC, Colin Kangaloo, SC, and Jennifer Jones, KC.
David Thomas, KC, and Robert Strang appeared alongside Maharaj for Junior Sammy.