Contractor wins claim against PSAEL for contract breach

Wednesday, November 13, 2019 - 12:45

A High Court judge says the time has come to review the operations of “unregulated runaway horses”, as another contractor has been successful in its multi-million dollar claim against a special purpose state enterprise.

Earlier this morning, Justice Frank Seepersad ruled in favour of Point Lisas Construction Ltd in its claim against the Palo Seco Agricultural Enterprises Ltd (PSAEL) for breach of contract. The quantum to be paid by PSAEL is still to be worked out, however, but it is expected to range between $15 million and $23 million.

Granting a summary judgment in the San Fernando High Court, Seepersad dismissed PSAEL's defence that it depends on funds from a particular state enterprise or state agency to pay for work contracted. The judge said:

“Special purpose state enterprises must pay their debts and ought not to rely on defences which merely attempt to delay payment. Where financial constraints operate, these entities should adopt an approach which seeks to enter into negotiations or mediation, in an attempt to either obtain a discount on the contract price or seek sufficient time to discharge its debt; but the filing of defences which lack merit should not be entertained.”

Stating that there are numerous matters involving hundreds of millions of dollars against such state bodies, the High Court Judge noted:

“It may be that the time has arrived for a review of the continued operation of these entities. One is not certain as to the intent which led to the formation of Special Purpose State Enterprises, but their modus operandi circumvents the legitimate authority of the Central Tenders Board and this already challenged economy—and its taxpayers—can ill afford unregulated runaway horses.”

In this matter, the construction firm was awarded a contract with PSAEL for design-build services in relation to the rehabilitation of the Moruga Road, from the St Mary's Junction to the sea, in July 2015. Having completed the work, the company was not fully paid and filed the claim seeking payment of $23,269,497.04.

Dismissing the PSAEL defence as fanciful, the judge found that it had no realistic prospect of success. However, the matter was adjourned to November 28 for the parties to agree to the quantum, as there was some uncertainty of the sum of the VAT-inclusive balance owed. The defendant also will have to pay costs.

PSAEL was represented by attorney Rennie Gosine while the contractor—Point Lisas Construction Ltd—was represented by Jagdeo Singh, Dinesh Rambally and Kiel Taklalsingh instructed by Jamie Maharaj.