Post on 27-Mar-2018
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THE REPUBLIC OF TRINIDAD AND TOBAGO
IN THE HIGH COURT OF JUSTICE
Claim No. CV2013-04806
Between
WATTS ELECTRICAL CONTRACTORS COMPANY LIMITED
Claimant
AND
THE STAR HOTEL LIMITED
Defendant
Before The Honourable Mr. Justice Frank Seepersad
Appearances:
1. Mr. R. Rajcoomar and J. Rajcoomar, instructed by Alisa Khan for the Claimant
2. Mr. N. Ramnanan for the Defendant
Date of delivery: 4th July, 2016
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DECISION
1. Before the Court for its determination is the claim and counterclaim advanced by the
Claimant and the Defendant respectively.
2. By its claim form filed 22nd January 2013, the Claimant sought the following reliefs:
i. Payment due for works done in the sum of $1,123,333.58;
ii. Damages for breach of contract;
iii. Interest at the rate of .75% per month pursuant to Part 11.8 of the Appendix to the
Agreement and Section 25 of the Supreme Court of Judicature Act chap. 4:01;
iv. Costs;
v. Such further and/or other relief as the Honourable Court may deem fit.
3. By its Amended Defence and Counterclaim the Defendant sought the following reliefs:
i. Damages for breach of contract to be assessed based on the total cost of
completion less the contractually agreed sum.
ii. Liquidated damages for delay occasioned by the Claimant’s breach to be assessed
and/or alternatively in the sum of $450,000.00
iii. Damages to be assessed for defective works.
iv. Repayment of advance payment mobilization in the sum of $240,000.00
v. Interest pursuant to section 25 of the Supreme Court of Judicature Act Chap. 4:01
vi. Costs
vii. Such further and/or other relief as the Court deem just in the circumstances.
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Factual background
a. The Parties entered into a contract for the execution of the Works set out in the
invitation to tender on or around 26th July, 2007.
b. The Parties thereafter executed a contract, which incorporated the FIDIC Short
Form of Contract.
c. The cost of works was $7,000,000.00 exclusive of VAT, however, with respect to
the valuation of works, the contract provided for the re-measurement of the works
with tender bill of quantities.
d. The time for completion was stated as being 12 months.
e. Shortly thereafter, on or around 26th July 2007, the Claimant commenced
execution of the Works.
f. The Works continued beyond the contractual period for completion and well into
2009.
g. The Claimant contended that certain sums were expended by it in performing the
Works beyond the contractual period and these sums were referred to as
preliminaries. There is a dispute between the parties as to whether these
payments were to be borne by the Claimant or by the Defendant.
h. During the period of execution of the Works, the Claimant submitted seven
Valuations to Defendant’s Project Manager. These seven Valuations of the Works
were paid after they were reviewed by the Defendant’s Mechanical and Electrical
Consultant Engineer and the Defendant’s Quantity Surveyor.
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i. On or around 30th July, 2009, the Claimant submitted Valuation No. 8 which was
certified by the Defendant’s Quantity Surveyor in the sum of $94,997.22. The
Defendant paid $80,000.00 of this certified sum and the balance of $14,997.22
was never paid to the Claimant.
j. The Claimant further submitted a claim for $223,563.76 + VAT for the
preliminaries on or about 27th October, 2009 and contended that these
Preliminaries represented expenses which were incurred by it in executing the
Works beyond July, 2008.
k. On or around 28th October, 2009, the Claimant submitted Valuation No. 9 and the
sum of $617,500.00 was certified by the Defendant’s Quantity Surveyor; but this
sum was not paid by the Defendant.
l. By letter dated 6th November, 2009, the Claimant wrote to the Defendant and
indicated inter alia that the Claimant intended to stop their employees from
reporting to work from 9th November, 2009 due to nonpayment of the outstanding
valuations.
m. The Claimant subsequently ceased Works and there is a dispute as to the date that
the works were stopped.
n. On or around 23rd December, 2009, another electrical contractor, R2K
Engineering Ltd, was retained to continue the Works.
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o. The Defendant subsequently hired a firm to measure the Works, which had
already been certified by its former Quantity Surveyor.
p. Based on this valuation, the Defendant has claimed that it overpaid the Claimant
for the Works performed up to the stoppage of the Works.
4. The Claimant’s claim therefore relates to:
i. Payment of Valuations 8 and 9;
ii. Payment of the retention withheld by the Defendant;
iii. Payment of expenses incurred in carrying out the works beyond the 1-year
contractual period (“the Preliminaries”) due to the delay in completion being
attributable to the Defendant; and
iv. Loss of Profits on the balance of the contract.
5. The Defendant contends that it is not liable to pay the preliminaries because the delay in
completion was attributable to the Claimant and that it was not liable to pay Valuations 8
and 9 on the ground that these valuations were rubberstamped and it had in fact overpaid
the Claimant. The Defendant’s counterclaim is for the cost incurred for the completion
of the works after the Claimant wrongfully terminated the contract and for the cost
associated with the repairing of defective works that was allegedly executed by the
Claimant, as well as for the sums allegedly overpaid.
6. The issues that fell to be determined by the Court were as follows:
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i. What was the cause for the delay that resulted in the time for the completion of
the works extending beyond the one-year period fixed under the contract;
ii. Whether multiple variations and additions to the Works were requested by the
Defendant;
iii. Whether Valuations 8 and 9 were rubberstamped as alleged;
iv. Whether the Claimant abandoned the Works on 9th November, 2009 and
demobilized thereafter as alleged by the Defendant or whether the Claimant
continued working until mid-December, 2009 and whether the service of the
Claimant was effectively terminated when the Defendant hired R2K Engineering;
v. Whether the alleged additional expenditure by the Defendant on electrical works
was spent on completing the original scope of works that was required to be
performed by the Claimant and/or on remedying the defects in the Claimant’s
work.
The Law
7. The Court had to consider inter alia the law as it relates to the following areas:
i. The manner in which the contract between the parties had to be construed.
ii. The law in relation to Breach of Contract with respect to non-payment, Retention
Money, Variations, Preliminaries.
iii. The issue of Limitation.
The Law in relation to the Construction of Contracts
8. In Civil Appeal 214 of 2009 S & D Construction Limited v Caribbean Insulation
Services Limited CV No. 2007/00303, Moosai J, (as he then was) in the context of a
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lease agreement, considered the rights and reliefs that were available to the parties by
considering the principles hereinafter laid out:
“47. In construing a contract, the instrument must speak for itself, but the
words used must be understood to bear the meaning which they would
convey to a reasonable person having all the background knowledge
which would reasonably have been available to the parties in the
situation in which they were at the time of the contract.23 It is this
objective meaning which is referred to as the intention of the parties. In
the most recent decision emanating from the UK Supreme Court, Arnold
v Britton, [2015] UKSC 36 Lord Neuberger provided the following
guidance on the interpretation of contractual provisions:
“[14] Over the past 45 years, the House of Lords and Supreme Court
have discussed the correct approach to be adopted to the
interpretation, or construction, of contracts in a number of cases
starting with Prenn v Simmonds [1971] 3 All ER 237, [1971] 1
WLR 1381 and culminating in Rainy Sky SA v Kookmin Bank
[2011] UKSC 50, [2012] 1 All ER 1137, [2011] 1 WLR 2900.
[15] When interpreting a written contract, the court is concerned to
identify the intention of the parties by reference to “what a
reasonable person having all the background knowledge which
would have been available to the parties would have understood
them to be using the language in the contract to mean”, to quote
Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009]
UKHL 38, [2009] 1 AC 1101, para 14, [2009] 4 All ER 677. And it
does so by focussing on the meaning of the relevant words, in this
case cl 3(2) of each of the 25 leases, in their documentary, factual
and commercial context. That meaning has to be assessed in the
light of:
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(i) the natural and ordinary meaning of the clause,
(ii) any other relevant provisions of the lease,
(iii) the overall purpose of the clause and the lease,
(iv) the facts and circumstances known or assumed by the parties at the
time that the document was executed, and
(v) commercial common sense, but
(vi) disregarding subjective evidence of any party’s intentions.”
9. The Court should, therefore, when tasked with the responsibility of ascertaining the
contractual intent of the parties, apply an objective test and address its mind as to what a
reasonable person, duly informed with the requisite background knowledge, would have
understood the contractual language to mean. Consequently, the subjective interpretation
of provisions in the contract by the parties should not guide the Court in its determination
as to the contractual intent.
Breach of contract
10. In CJ Elvin Building Services v Noble and Noble [2003] EWHC 837 (TCC), the
Claimant, a contractor, commenced proceedings against the Defendants after the
Defendants stopped payments during the course of the execution of the Works. The
issues in dispute were the value of the works carried out and completed, the employer’s
allegation of defective work, and the occurrence of an accepted repudiation by the
Claimant in stopping the works on account of nonpayment. The Court held:
“90. Although it is not alleged by the Claimant that the Defendants
repudiated the contract let alone that the Claimant accepted any such
repudiation, it is my view that the Defendants were in repudiatory
breach of the contract. They were in breach of what to the Claimant
was a most important term of the contract, namely that reasonable sums
due should be paid at reasonable intervals. Not only were the
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Defendants in breach of contract by late October 2001 for not paying,
they were threatening (in breach of contract) not to pay any further
sums until the works were completed. Although the Claimant was
financially able to complete the works, it is undoubtedly the case that the
Claimant’s suspension was brought about directly as a result of the
Defendants’ breach of contract in failing to pay. In those
circumstances, the Claimant was entitled to suspend the work. It
certainly cannot be said that the suspension triggered as it was by the
Defendants’ own breach was itself repudiatory. The Defendants cannot
rely upon its own breach to justify a contention that the Claimant was
itself in repudiatory breach.
91. Reliance has been placed by the Defendants on an unreported case,
D.R. Bradley (Cable Jointing) Ltd v. Jefco Mechanical Services Ltd
(1998), referred to in the footnote in Chitty on Contracts, 28th Edition,
para. 37-199. I have been unable to find or obtain a copy of this case. I
am not convinced that the learned editors’ statement in the book (“non-
payment by the employer is not generally a breach which will entitle the
contractor to treat the contract as at an end”) is correct or, at least,
unconditionally correct. Failure or refusal to pay sums due under a
building contract can amount and often does amount to repudiatory
conduct on the part of the employer. This will obviously depend upon
the terms of any construction contract. Many construction contracts
have termination clauses which, invariably, permit the Contractor to
terminate under the provisions of the contract on the grounds of non-
payment by the Employer. The obligation to pay on the part of the
construction contract employer is one of the most important
obligations which the Employer has. A refusal to honour payment
obligations, at least insofar as it relates to a relatively sizeable
sum of money due or the threat not to pay further sums due in
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accordance with the contract must be capable of being
repudiatory….”
11. In Hudson’s Building and Engineering Contracts 12th Ed at paragraph 8-017 it is
stated that:
“Mere breach of a payment obligation does not constitute a common law
repudiation. Principles to consider whether the circumstances of the
nonpayment show an intention not to be bound: “the principle to be
applied in these cases is whether the non-delivery or the non-payment
amounts to an abandonment of the contract or refusal to perform it on
the part of the person making the default…”
Retention sums
12. The nature of retention money is explained by the authors of Emden’s Construction
Law as follows:
“6.135 Express terms usually provide for the employer to retain a
percentage of interim valuations, as security for the due performance of
the contractor's obligations. Commonly, one half of the retention is
released at practical completion and the remainder at the end of the
defects liability period.”
Variations
13. Hudson’s Building and Engineering Contracts 12th Edition at paragraph 5-027
states the position in relation to variations in the following terms:
“Differences between as built quantities and those stated in bills … frequently
come about without any alteration in the work being called for by the…
Employer because of errors in taking off (sic) quantities from the drawings
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first this all because of unpredictable or because of the inherently
unpredictable or provisional extent of the particular work in question. “
14. In relation to additional works, in a re-measurement contract, the extract from Hudson’s
further states that:
“The difference between a lump sum contract and a measured contract in this
situation lies in the fact that, in the former case, both parties carry the risk of
these types’ differences and the price will not alter, whereas in the latter the
contract sum will be adjusted, up or down, to take account of the differences.”
15. In Emden’s Construction Law at paragraph 8, the author cited the decision of Patman
and Fotheringham Ltd v Pilditch (1904) 2 Hudson's BC (4th edition) 368 where the
following proposition was stated:
“8.60 The bills of quantities may be incorporated into the contract so as to
operate as part of the contractual definition of the work to be carried
out. In such a case, the contractor is entitled to additional payment if the
work is more extensive than described in the bills. Thus where the
contract specified that work was to be done for a lump sum 'according to
the plans, invitation to tender, specification and bills of quantities', it
was held that the effect of these words was to incorporate the terms of
the bills as part of the contract. Accordingly the contractor was entitled
to extra payment when he had to do more work than that mentioned in
the bills.”
16. The Court of Appeal of England and Wales has reaffirmed the principle in the decision of
Globe Motors Inc. v TRW Lucas [2016] EWCA Civ. 396 and held that a contract
containing no oral variation clause can still be varied orally. The Court stated at
paragraphs (104 & 107) as follows:
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“[104] In the World Online Telecom case the appeal was against the refusal of
Mitting J to give summary judgment to World Online Telecom.
Dismissing the appeal, Sedley LJ stated (at [11] – [12]) that the question
whether parties could override a clause in an agreement in writing
excluding any unwritten variations of the contract was, as a matter of
English law, sufficiently unsettled to be unsuitable for summary
determination, and that the successful respondent's skeleton argument
deployed textbook and judicial support for a flexible approach. He also
stated (at [10]) that “[i]n a case like the present the parties have made
their own law by contracting, and can in principle unmake or remake
it”. Mr. Downes noted that the United Bank case was not referred to.
The World Online Telecom case is nevertheless positive support for the
effectiveness of an oral variation or one by conduct despite such a
clause, and with fuller reasoning than that in the United Bank case.
Moreover, as a result of the Court of Appeal's decision in the World
Online Telecom case there was a trial in the Commercial Court. At the
conclusion of that trial, Steel J held that, notwithstanding the clause, the
conditions in the contract in that case had been varied by the oral
agreement:
[107] There are, moreover, other decisions which support the approach taken
by Sedley LJ in the World Online Telecom case and favoured by Gloster
LJ and Stuart-Smith J in Energy Venture and Virulite. For example, in
Liebe v Molloy (1906) 4 CLR 347 the High Court of Australia
considered a building contract containing a clause that extra items
should not be paid for unless ordered in writing. Griffith CJ, delivering
the judgment of the Court, stated (at 354) that notwithstanding the
clause, the conduct of the parties may mean that an implied contract to
pay for the extra items is to be inferred. This is a question of fact. Thus,
an oral agreement or the conduct of the parties to a contract containing
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such a clause may give rise to a separate and independent contract
which, in substance, has the effect of varying the written contract.”
Preliminaries
17. Hudson’s (supra) states at paragraph 6-075:
“Site or other job related overheads include the nonproductive costs which
a contractor will view as necessary expenditure to carry out the works.
These costs will include such items as supervision and on-site
accommodation and will include elements of plant such as craneage and
transport. It is obvious that, if these costs are time– related, any delay to
the project will be likely to increase the costs to the contractor of
undertaking the work and should be reimbursed to the extent that the
employer has caused the overall delay to the project.”
Limitation period
18. A limitation defence has to be pleaded and in this jurisdiction the Limitations of
Certain Actions Act Chapter 7:09, section 3(1)(a) provides that a claim founded
in contract should be proceeded with within four years from the date of the accrual
of the cause of action. The legislation provides that where a Defendant has
acknowledged the existence of the debt, the limitation period can be calculated from
the date of such an acknowledgement.
19. In Langrish v. Watts (1903) 1KB at pages 640-641 the English Court of Appeal
stated as follows:
“But the learned judge proceeded to deal with the case from another point of
view. He was of opinion that the effect of the correspondence was that there
was an invitation by the defendant to the plaintiff to have the account gone
into between them, and a promise by the defendant to pay what, on that being
done, might prove to be the amount due from him. That is an invitation
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which a man may give, and a promise which he may make, although he may
previously in the correspondence have denied his indebtedness to the amount
claimed, and have suggested that certain specific payments have been made
by him on account of the original debt. The effect of the correspondence as a
whole may, notwithstanding those statements, be that he makes a fresh
promise, if an account be taken, to pay what is found to be due from him on
that account. This case appears to me to be on the border line, but I am not
prepared to say that the construction so put by Bruce J. upon the Defendant's
letters was wrong. The cases of Prance v. Sympson (1), Sidwell v. Mason (2),
and Skeet v. Lindsay (3) are ample authority to shew that such a promise,
that is to say a promise to pay the balance which may be ascertained to be
due in respect of the original debt upon an account being taken, is a
sufficient promise to take a case out of the Statute of Limitations.”
Analysis of the evidence in relation to the issues to be determined
20. In his witness statement, Phillip Watts, on behalf of the Claimant, at paragraph 15,
stated as follows:
a. “The final layout drawing and all plans for the electrical layout for the
rooms of the building were never provided.
b. Constantly and without warning unilaterally changing the requirements
for electrical installations for example by changing the location of plug
outlets and lighting fixtures.
c. Did not provide the electrical final layout plan and outlay in relation to
the proposed architectural layout.
d. Varying and adding to the electrical installation set out in the original
contract which resulted in an increase in the total loading by adding more
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plugs, lights in hotel rooms and I did more rooms of the hotel including
four Penthouse suites.
e. Did not supply working drawings for the new lighting layouts.
f. Failed to commence block work on the first and second floors of the hotel.
By the end of 2008, local work on the first and second floors of the hotel
was not yet been completed (sic). This block work was already completed
in 2009.
g. Failing to pay several of the subcontractors, which led to the withdrawal
of the said subcontractors for non-payment of fees resulting in a decrease
of productivity of the civil works and delays. These subcontractors would
Josh Dhanesar, Belmar Construction Limited on a contract (sic) only
known to me as Bobby. These contractors eventually abandoned the job.”
21. In opposition to the contentions advanced by Mr. Watts, Mr. Ricardo Nanan, at
paragraph 44 of his witness statement, stated that the delay was wholly attributable
to the Claimant and he stated that:
a) “We duly provided or required plans and schematics prior to
commencement of the works.
b) There were no changes/additions/variations to the electrical insulation
as set out in the original contract in any event the variation procedure
pursuant to the contractor is not invoked.
c) There was never any new lighting layout as alleged by the claimant.
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d) The block work was substantially completed of the material time and
whatever was incomplete could not materially affect the progress of the
works. In fact at the time the claimant had not even completed works on
the ground floor and outside the building which could not have been
affected by any alleged failure to complete block work.
e) At all material times works were being done on the site by the
respective contractors.
f) There were no variations requested as alleged and as stated above the
variation procedure pursuant to the contract was not followed.”
22. During the course of the trial, the Court permitted Mr. Watts to amplify matters which were
set out in his witness statement, and he further stated that:
a. Initially the hotel was to have 3 floors, a ground and 2 levels above.
b. When the Claimant entered onto the site to commence the hotel was at the
foundation stages.
c. The electrical works are dependent on the civil works and unless the civil
works are completed, the electrical works could not be 100% completed.
d. The process for installation involved placing floor conduits in the foundation
and in the walls followed by 2nd fix involving sub circuit wiring and finally a
3rd fix which involved installation of plugs, lights and switches.
e. The electrical fixtures installed were taken on credit from other suppliers.
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f. After the 1 year contractual period had expired, the floor slab for the 1st floor
was still being installed and the block work on the ground floor was still
ongoing.
g. The additional works the Defendant requested went beyond the initial scope of
works and included:
i. The installation of lights on the perimeter wall.
ii. The addition of rooms to the ground floor, the first floor, as well as
penthouses, which had to be wired.
iii. Electrical to a guard booth and traffic bar.
v. Work in the kitchen and bar area for which no designs were initially
submitted.
h. The Claimant stated that these additions to the works were requested by
Ricardo Nanan, Patricia Nanan and then Project Manager Ashmeed Piralli.
23. During cross examination, the witness also stated that:
i. At the time the initial contractual period had expired, Mrs. Nanan met with him
and asked him to continue working and that he agreed to continue working based
on assurances advanced by the Defendant that expenses incurred due to the
extension of work beyond the 1 year period would be paid; and
ii. Prior to the undertaking of the additional works, he provided quotations and the
Defendant agreed to them.
24. During the course of his cross examination, Mr. Nanan, on behalf of the Defendant,
maintained that there were never any variations to the original scope of works and he insisted
that no delays were occasioned by the Defendant. The witness did admit that there were
problems with other contractors and he accepted that R2K Engineering was hired to complete
the work that should have been done by the Claimant. The witness accepted that, in
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accordance with the contract, delays occasioned by the owner which resulted in the inability
of the contractor to complete the contracted works within the agreed contractual period,
would lead to a circumstance where the owner would be liable to pay for the contractor’s
expenses.
25. Mr. Nanan testified that the block work was substantially completed in July, 2008 and he
accepted that he had requested a quote for a Vincard system but said that the Claimant
abandoned the job before the system was implemented. He also accepted that a request had
been made to change the types of switches that had to be installed.
26. In response to questions posed by the Court, Mr. Nanan admitted that the 2nd floor of the
structure was still incomplete and that the public had no access to same. He also accepted
that under the contract the Claimant had to engage in works on the said 2nd floor. Mr. Nanan
also accepted that the initial period for construction of the hotel was one year but as at the
date of his evidence, some nine years after work had commenced, the hotel was still not
complete.
27. He admitted that there had been a request for a change in the types of switches which were
being installed and accepted that valuations 1-7 were paid in full and agreed that they were
paid without protest The witness was shown a letter from the Quantity Surveyor, Willi
Roopchand, dated 14th September, 2009 which stated that Valuation 8 was primarily for
variation works and he accepted that this valuation was paid almost in full and without any
queries as to the matters of variation claimed.
28. The Court considered the evidence adduced by Mr. Tasram Maharaj who was the
representative of Mechanical and Electrical Engineers Limited, which was the company that
was retained by the Defendant to design the electrical system and to oversee the installation.
29. This witness testified that the project had ‘evolved’ and accepted that there were changes to
the original design. A major change, according to the witness, was the addition of the wings
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to the lower floor and he also testified that there were changes to the architectural layouts.
Mr. Maharaj confirmed that additional rooms were built and the Claimant was requested to
work on same and that these additional works were valued by using the agreed tender rates
as contained in the original tender.
30. Mr. Maharaj further testified that he played a reduced role in the project after December,
2009 and that there were design changes to the electrical system after Mr. Watts left the
project.
31. In response to questions posed by the Court, Mr. Maharaj testified that block works were
still ongoing as at January, 2010.
32. The Court found Mr. Maharaj to be an extremely helpful witness; his responses were
forthright and he engendered in the Court the feeling that he was a witness of truth. The
Court was acutely aware that it had before it two diametrically opposed versions as
advanced by Mr. Watts and Mr. Nanan and therefore tested the veracity of their evidence as
against the objective evidence adduced by Mr. Maharaj. The Court then considered all the
evidence before it with a view of determining which version was more probable in the
circumstances. Having engaged this exercise, the Court found that it was inherently
improbable that the block work was completed within the time period as advanced by Mr.
Nanan, given that the 2nd floor of the hotel is still incomplete.
33. The Court found as a fact that there was substantial delay in the construction of the hotel
which was attributed to the Defendant and this resulted in the Claimant’s inability to
complete the contracted works within the one year period stipulated under the contract. The
Court also found that there were multiple variations and additions to the scope of work that
had to be undertaken by the Claimant and the Claimant had to inter alia do electrical work
upon the additional rooms that were constructed. Although variations were effected, they
were not reduced into writing but the Claimant undertook them. The contract did not
expressly state that as condition precedent variations had to be reduced into writing. The
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Court found that the position in relation to the variations advanced by the Claimant was
inherently more probable than the position advanced by the Defendant and noted that the
Defendant did in fact pay a substantial part of the valuation No. 8 which dealt primarily with
variation works.
34. On the facts, therefore, the Court found that after the expiration of the one year contract
period, the Claimant continued working based on verbal requests and assurances advanced
by the Defendant and the Claimant executed additional works as requested by the
Defendant.
35. The Court considered the contract and examined the clauses that dealt with payments and
applied the principles laid down in S& D Construction (supra) to assist in its formulation
as to the contractual intent. Having embarked on this exercise, the Court found that a
proper construction of clause 11.3, provided that:
a. The Claimant was entitled to be paid interim payments on Works measured by the
Claimant and re-measured by the Defendant’s agents.
b. Where the Defendant intended to pay less than the sum claimed by the Claimant
in an interim valuation, it was required to provide reasons for paying less.
c. The sum due, less any amount not certified by the Employer’s agents had to be
paid within 28 days of submission of the interim bill.
d. The provision did not enable the Defendant to refuse to make interim payments
indefinitely.
e. The Court also found that the sentence ‘The Employer shall not be bound by
any sum previously considered by him to be due to the contractor” was
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inserted so as to specifically avoid the argument that the Employer having paid
the sums was thereafter debarred from disputing the quantum so paid.
36. The main reason advanced by the Defendant for the nonpayment in relation to valuations 8
and 9 was that the same was merely rubberstamped by Mr. Willi Roopchand and the
Defendant’s case was that the sums contained therein were not truly reflective of the value
of the works undertaken by the Claimant.
37. Mr. Tasram Maharaj testified as to the process that governed the valuation of works and he
stated that the Claimant would first submit a claim for works that was completed. Secondly
the work would be visually inspected so as to determine whether there was compliance with
the designs and the company, Mechanical and Electrical Engineering Limited, would
thereafter prepare a valuation. This valuation would then be forwarded to the quantity
surveyor who would prepare payment certificates for onward submission to the Defendant.
38. Mr. Maharaj was asked to explain Valuations 8 and 9, and he stated that the tender sum
column contained the estimate from the tender and the valuation sum contained the estimate
based on the inspection of the works completed. He testified that if these figures matched
the particular item of the works was completed. If however the valuation sum was less, it
meant that the works for that particular item were not duly completed. Mr. Maharaj also
indicated that if items were brought on site but were not installed, the Employer would be
liable of the cost of the said items.
39. In cross examination it was put to the witness that he had wholly accepted the Claimants
claims without assessing them and he responded by saying:
“We can’t do that. Remember we have our professional liabilities and all of
these things… We will always visit the site once a claim is there. We will
not just accept the claims as they are. We would go through the claims by
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inspection on the site to ensure and to certify that these claims are actually
correct.”
40. During the cross examination of Mr. Nanan, Counsel for the Claimant was able to establish
that both Valuations 8 and 9 were substantially reduced when Mr. Roopchand generated the
certificates after Mr. Maharaj had conducted inspections. Valuation 8 was initially for
$176,702.58 but the certificate was for $94,997.22. Valuation 9 was initially for
$617,500.00 but the certificate was for $580, 392.14.
41. Having considered the evidence, the Court found that the Defendant’s contention of “rubber
stamping” in relation to Valuations 8 and 9 was unfounded and devoid of merit.
42. On the evidence, there was no dispute that a balance remained unpaid under Valuation
8 and sums owed under Valuation 9, as well as request for preliminaries were also not
paid by the Defendant. In cross examination, Mr. Nanan was taken to clause 11.3
initialed Interim payments which provided:
“11.3 Within 28 days of delivery of each statement, the employer shall pay to
the contractor the amount shown in the contractor statement last
retention and the rate stated in the appendix, and less any amount for
which the employer has specified his reasons for disagreement. The
employer shall not be bound by any sum previously considered by him to
be due to the claimant.”
43. Mr. Nanan accepted that nothing within the clause entitled the Defendant to withhold
payment indefinitely or at all, other than in respect of specific items for which reasons for
the disagreement had been given. The witness also accepted that no such reasons were
ever advanced to the Claimant.
44. Mr. Nanan was also referred to clause 15.1. This clause outlined the contractual procedure
for the determination of disputes. Disputes in relations to valuations had to be referred to
an independent adjudicator and the process required the participation by both parties and
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could not be undertaken simultaneously with the execution of works and the decision of the
adjudicator would settle any such dispute. The contract provided that the adjudicator
should be jointly appointed and should have the requisite expertise to adjudicate on the
matter. Mr. Nanan accepted that the issue re the said valuations had not been referred to an
independent adjudicator in or around August, 2009 when Valuation 8 was payable but he
suggested that the subsequent appointment of Mr. Cannutte Edd Spencer was done so as to
comply with Clause 15.1.
45. In relation to the series of events that unfolded prior to the hiring of R2K, the Claimant’s
evidence was as follows:
a. By its letter dated 6th November, 2009, it threatened to suspend works on 9th
November, 2009. However, it did not suspend works on 9th November, 2009, having
engaged in discussions with the Defendant.
b. Work continued on the site until the middle of December, 2009, when all works on
the project stopped for Christmas.
c. On 4th January, 2010, Mr. Watts returned to the site with the intention of continuing
the work, provided that payment of the outstanding amounts was made and at a
meeting with Mr. Piralli and Mrs. Nanan, he was advised that the he would not be
paid the outstanding sums.
d. Mr. Watts subsequently learnt from 3rd parties that a contractor R2K Engineering had
been hired to complete the contract.
46. On this issue, the Defendant’s evidence was that:
a. The Claimant ceased working on 9th November, 2009 and removed its container and
demobilized from the site after 26th November, 2009.
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47. In relation to the removal of the container in November 2009, Mr. Watts testified that the
container was removed not as an act of demobilization but to effect repairs to same. He said
that the contents of the container were removed and stored in a room at the Defendant’s
hotel under the supervision of the project manager.
48. Clause 12.1 of the contract provided as follows:
“12.1 If the contractor abandons the works, refuses or fails to comply
with an instruction of the employer, or fails to proceed expeditiously and
without delay, despite a written complaint, in breach of the contract, the
employer may give notice referring to this sub clause and stating the
default.
If the contractor has not taken all practicable steps to remedy the default
within 14 days after the contractor’s receipt of the employer’s notice, the
employer may by a second notice be given within a further 21 days,
terminate the contract …”
49. If therefore, the Claimant had abandoned the job as advanced by the Defendant, the
procedure mentioned at Clause 12.1 should have been engaged and there is no evidence
before this Court to establish that the Defendant followed the procedure so outlined under
Clause 12.1
50. The Court considered the expert report of Mr. Cannutte Edd Spencer and noted that the
Report stated that:
“The client has indicated that the contractor, as of the 18th December,
2009, has not returned to the site to further progress his
works/obligations under the contract.”
51. In cross examination, Mr. Cannutte Edd Spencer confirmed that his instructions from the
Defendant was that Mr. Watts had stopped work on 18th December, 2009.
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52. The Defendant also placed before the Court log attendance records and these were tendered
as a court exhibit. There was no evidence as to who recorded the logs and no logs for the
period 11th November, 2009 to 7th January, 2010 were produced. The Court therefore found
that the logs provided no assistance in its determination of the issue as to when the Claimant
actually stopped working.
53. The Court noted that on the Defendant’s case there was a conflict as to whether the Claimant
stopped work on the 18th December, 2009 or in November 2009. Having reviewed all the
evidence, the Court found that the more plausible and probable position was the position
advanced by the Claimant and the Court therefore found as a fact that the Claimant
continued to work until all the works were stopped for Christmas and when Mr. Watts
returned to the site on the 4th January 2010 he met with Mr. Piralli and Mr. Nanan and was
subsequently informed that R2K had been hired.
54. Mr. Spencer was retained by the Defendant to measure the work done as at the 18th
December, 2009. Mr. Spencer stated that the Defendant instructed him and that he did not
have the previous measurements made by Mr. Maharaj. Mr. Nanan testified that he had
invited Mr. Watts via telephone to participate in the re-measurement exercise by Mr.
Spencer but that Mr. Watts declined to do so. Mr. Spencer’s report however stated that ‘all
attempts to contact the contractor were futile’. In cross examination the witness stated that
his statements were made based on information that he had received from the Defendant.
55. The Court, in the circumstances, found that the Claimant was not involved in the re-
measurement exercise and therefore the procedure adopted by the Defendant in relation to
Mr. Spencer’s report did not comply with the procedure outlined at Clause 15.1 of the
contract.
56. The Court further noted that Mr. Spencer is a Quality Surveyor and the work that was
undertaken by the Claimant was electrical in nature. Having considered the opinion
advance by Mr. Roopchand the Court formed the view that someone with the requisite
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knowledge in the field of electrical installation and/or engineering would have been better
suited to conduct the re-measurement exercise. The lack of compliance with Clause 15.1
notwithstanding, the Court questioned the ability of Mr. Spencer to have undertaken the
exercise, which he did. This Court was not satisfied that the person who Mr. Spencer said
accompanied him was necessarily qualified to measure the works. The methodology
adopted was not properly explained and the Court further found that the prerequisites, as
outlined under Part 33 of the Civil Proceedings Rules 1998 (as amended), was not
established. The Court therefore found that the opinions expressed in the said report were
unreliable and the Court found no assistance from same.
57. In relation to the remedial costs associated with the Claimant’s alleged defective work, Mr.
Nanan, at paragraphs 37 and 38, of his witness statement, set out the matters and
documentation upon which he relied.
58. In cross examination he maintained that all of the payments set out in paragraph 38 were
solely incurred in completing the works that were left incomplete by the Claimant and he
maintained that none of the payments set out therein were in relation to any additions or for
work that deviated from the original scope of works. He also maintained that there were
absolutely no changes to the scope of the project from its commencement in 2007.
59. The Court had the benefit of the evidence of contractors who all worked on the site after the
Claimant, these included R2K, Lyndon Lackram, Maytech Engineering, F&P and Benjamin
Skinner.
60. With respect to R2K Engineering, this general contractor only undertook a portion of
electrical works and the evidence did not establish on a balance of probabilities that $1.5
million was paid for electrical works as advanced by Mr. Nanan.
61. With respect to Lyndon Lackram, only a portion of the works for which he was engaged
related to electrical work and there was no confirmation that $173,000.00 was paid for
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electrical works. The Court also noted that the scope of works included the installation of
the Vincard system, which did not form part of the Claimant’s scope of works.
62. In relation to Maytech Engineering, the evidence established that the works done by this
contractor formed part of the re-design work and included the installation of additional
plugs, lights and switches, which were also not included in the Claimant’s scope of work. .
63. Mr. Nanan suggested in cross examination that F&P did a report on the defects and the
matters which needed to be rectified, but that it did not undertake any works. This defects
report was dated 29th October, 2010 and was prepared months after the Claimant had left the
project and after 2 contractors had undertaken their own works.
64. Finally in relation to the works done by Benjamin Skinner, hand written pages were placed
before the Court but the Court was unable to decipher same.
65. Having reviewed the Defendant’s evidence in support of its counter claim, the Court was
unable to distinguish between the sums allegedly spent on remedial works from what was
actually spent on additional work engaged by the respective contractors. The Court was
also unable to ascertain what amounts were actually paid to contractors for electrical works
and what alleged defects were actually corrected. The Court was therefore unable to find as
a fact that the Claimant’s work was defective and had to be remedied.
66. The Defendant failed to prove the actual quantum that was alleged to have been spent by
way of remedial works so as to remedy alleged defects in the works undertaken by the
Claimant and the Court was therefore constrained to dismiss the Defendant’s counterclaim.
67. Although the Court found that the Defendant wrongly terminated the Claimant’s contract.
The Court found that the Claimant failed to adduce sufficient evidence so as to assist the
Court in quantifying the extent of the loss suffered. In its closing submission the Claimant
asked the Court to order the Defendant to pay loss of profits pursuant to 12.4 (c) of the
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contract but this clause did not apply to the circumstance of the instant case and the witness
statements contained no information as to the costs associated with the project and therefore
the Court was unable to make any award for damages for loss of profits as the Court could
not determine the quantum of profit under the contract.
68. In the circumstances, the Court found that the sum claimed of $1,123,333.58 is owed to the
Claimant and that the Defendant breached the provisions of contract when it failed to pay
the Claimant within the time stipulated under the contract. Further the Defendant repudiated
the contract when it hired R2K Engineering.
69. In the circumstances, and for the reason that have been outlined, the Court found that the
Defendant, by its delay, rendered it impossible for the Claimant to complete the works
within the contracted stipulated period and the Defendant also requested the Claimant to
undertake additional work that was not within the scope of works under the contract.
Valuations 8 and 9 were in relation to same and they were not rubber stamped but
represented the actual value of the works engaged. The Defendant failed or refused to pay to
the Claimant moneys that were legitimately owed to it. This nonpayment notwithstanding,
the Claimant did not abandon the job and when Mr. Watts returned in January 2010, the
company’s service was effectively terminated as a result of the Defendant’s retention of
R2K. Further the Defendant was unable to establish on a balance of probabilities that the
work undertaken by the Claimant was defective or that moneys were expended by it on
remedial works as alleged.
70. Accordingly the counterclaim is dismissed and the Court finds that the sum of $1,123,333.58
claimed by the Claimant is due and owing and hereby orders as follows:
a. The Defendant is to pay to the Claimant $1,123,333.58.
b. The Defendant is to pay interest on the quantum due under Valuations 8 & 9 at a rate
of 0.75% per month from the date of filing on the 22nd June 2013 to the date of this
judgment;
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c. The Defendant is to pay interest on the sums due as preliminaries at a rate of 1% per
annum from the date of filing on the 22nd June 2013 to the date of this judgment;
d. The Defendant is to pay to the Claimant costs on the Claim based on the quantum
awarded on a prescribed costs basis.
e. The Defendant is to pay to the Claimant cost on the Counterclaim calculated on the
prescribed costs basis on the quantum of $786,255.00.
f. There shall be a stay of execution of 42 days.
……………………………………..
FRANK SEEPERSAD
JUDGE