Derek Achong

Se­nior Re­porter

derek.achong@guardian.co.tt

A con­tract­ing com­pa­ny has lost its le­gal bat­tle with the Wa­ter and Sew­er­age Au­thor­i­ty (WASA) over out­stand­ing com­pen­sa­tion for two con­tracts for wa­ter treat­ment plants that were ter­mi­nat­ed al­most two decades ago.

De­liv­er­ing a judg­ment yes­ter­day, five Law Lords of the Unit­ed King­dom-based Privy Coun­cil dis­missed Wa­ter­works Lim­it­ed’s fi­nal ap­peal against the pub­lic util­i­ty.

The le­gal dis­pute stemmed from two de­sign and build con­tracts for wa­ter treat­ment plants in Matu­ra and Yarra.

Around the time the con­tracts were signed in 2007, the com­pa­ny was in­formed by the au­thor­i­ty of var­i­ous is­sues at the pro­posed sites of both projects.

The au­thor­i­ty in­di­cat­ed that it need­ed to ac­quire land from a pri­vate in­di­vid­ual for the Yarra plant and that the Matu­ra plant might need to be shift­ed from the lo­ca­tion ini­tial­ly ear­marked for it. It al­so in­di­cat­ed that Cer­tifi­cates of En­vi­ron­men­tal Clear­ance (CECs) from the En­vi­ron­men­tal Man­age­ment Au­thor­i­ty (EMA) would need to be ob­tained for both projects.

The com­pa­ny en­gaged MAAK Tech­nolo­gies Group Inc, a Cana­di­an com­pa­ny, to pro­vide de­sign and con­struc­tion su­per­vi­sion ser­vices for the projects.

MAAK is­sued quo­ta­tions for equip­ment for both plants, which it es­ti­mat­ed to cost $15,396,761 for the Matu­ra plant and $11,926,474.88 for the Yarra plant. The com­pa­ny ac­cept­ed the quo­ta­tions and is­sued pur­chase or­ders for both.

In 2009, WASA in­formed the com­pa­ny of its in­ten­tion to ter­mi­nate the con­tracts that had not pro­gressed past the de­sign phase, large­ly based on its de­lays.

The com­pa­ny sub­mit­ted fi­nan­cial claims un­der each con­tract, which in­clud­ed 30 per cent can­cel­la­tion charges for the equip­ment sup­ply con­tracts with MAAK.

While the en­gi­neer agreed to by the par­ties ap­proved some claims, he re­ject­ed oth­ers, in­clud­ing for the third-par­ty com­pen­sa­tion charges.

Af­ter the com­pa­ny was sued by a lender, it filed a law­suit against WASA seek­ing the ad­di­tion­al com­pen­sa­tion.

Its case was up­held by High Court Judge Trevor Jones, who ruled that the com­pa­ny in­curred the sig­nif­i­cant li­a­bil­i­ty on the ex­pec­ta­tion that it would have been al­lowed to com­plete the con­tracts.

In June 2020, Ap­peal Court judges Al­lan Men­don­ca, Gre­go­ry Smith, and Pe­ter Ra­jku­mar up­held WASA’s ap­peal.

The judges found that the com­pa­ny’s move to ac­quire the equip­ment was pre­ma­ture and un­rea­son­able.

They al­so found that their col­league was wrong to find that the pre­lim­i­nary de­signs on which the quo­ta­tions were based were suf­fi­cient­ly de­tailed to al­low the equip­ment to be iden­ti­fied and or­dered.

In his judg­ment, Lord George Leg­gatt ruled that the Ap­peal Court was right to over­turn the judge’s de­ci­sion. 

He agreed that the com­pa­ny rushed to pur­chase the equip­ment.

“A pru­dent con­trac­tor would not gen­er­al­ly com­mit it­self to pur­chas­ing equip­ment be­fore it is need­ed (tak­ing in­to ac­count de­liv­ery times) and be­fore the de­signs to which the equip­ment must con­form have been fi­nalised,” Lord Leg­gatt said.

He al­so point­ed out that while the pur­chase or­ders were is­sued, MAAK did not take any steps to pre­pare or ship the equip­ment be­fore the con­tracts were can­celled.

Stat­ing that the on­ly ben­e­fit the com­pa­ny re­ceived for en­ter­ing in­to the MAAK con­tracts was pro­tec­tion from po­ten­tial price in­creas­es, Lord Leg­gatt said, “In these cir­cum­stances, there was noth­ing to dis­place, or which was ca­pa­ble of dis­plac­ing, the in­fer­ence that it was un­rea­son­able for the con­trac­tor to en­ter in­to the MAAK con­tracts when it did.”

He al­so crit­i­cised the com­pa­ny for agree­ing to the can­cel­la­tion charges with min­i­mum per­for­mance from MAAK.

“In short, this was a very bad bar­gain for the con­trac­tor to have made,” he said.

The com­pa­ny was rep­re­sent­ed by Rowan Pen­ning­ton-Ben­ton and Nicholas Leah. WASA was rep­re­sent­ed by Ian Ben­jamin, SC, and Raphael Ajod­hia.