State ordered to pay for work on Fyzabad 'Heroes Park'

THE PALO Seco Agricultural Enterprises Ltd and the Attorney General have been ordered to pay to a contractor a little under $1 million as unpaid sums for work done for a "Heroes Park" and museum in Fyzabad.

Justice Frank Seepersad made the order on Wednesday by at a virtual hearing.

In its lawsuit, Ramsaray Brothers General Contracting Company Ltd claimed it entered into a written contract for preparatory landscaping work on project for $1.5 million.

The company was paid $947,203.25 and said the remainder was outstanding.

The lawsuit said the PSAEL abruptly terminated the project without notice and told the company it would not pay any more.

Ramsaray Brothers Contracting said it has tried since September 30, 2015 to settle its outstanding claim amicably, but the PSAEL refused to make any payment. A pre-action protocol letter was sent in March 2018 and at a meeting in June that year, the state-owed special-purpose company purportedly did not dispute the outstanding payment and debt.

The contractor also said because the PSAEL refused to pay, it had to use its commercial overdraft facility, incurring interest from September 30, 2015.

In January 2019, PSAEL filed its defence and attorneys for the special-purpose company wrote to the Office of the AG for an indication of its position on admission of liability or an application to be joined as a party in the lawsuit.

On February 18, 2019, the AG was included in the claim as the second defendant.

In its defence, PSAEL pleaded that it agreed to act on behalf of the Ministry of Labour by virtue of a memorandum of understanding, and it was of the view that the ministry was responsible for settling all payments owed to the contractor for work on the project.

The PSAEL also pleaded that the contractor completed 66.5 per cent of the contracted work, admitting also that work on the project stopped on September 30, 2015.

The AG’s defence denied PSAEL had acted on behalf of the Labour Ministry.

In his ruling, Seepersad said the court found “as a fact” the contractor had a contract with PSAEL to work on the project and not only did the State benefit from the work, it was evident that the PSAEL and the ministry had a partnership to establish the park.

However, he said, because he was bound by the Court of Appeal in its decision relating to its interpretation of the Central Tenders Board Act (CTBA) – which he found unduly restrictive – he was constrained to conclude the PSAEL might not have acted as the agent of the State.

It was the AG’s argument that the CTBA did not permit any agency, other than the Central Tenders Board, to be an agent of the State for the purpose of entering a contract such as the one between the contractor and the PSAEL.

Seepersad said the strictures of the Court of Appeal’s interpretation of the CTBA can, prima facie, encourage exploitation by the State of innocent providers of services or labour in a contractual arrangement with a state-owned special-purpose company.

“The secrecy with which this arrangement unfolded and the absence of transparency as to the 'real contracting parties' in the arrangement with the claimant must be condemned. The continued use of wholly-owned state-formed special-interest companies to execute projects for and on behalf of the Government has no place in a society which respects the tenets of good governance and which values accountability, transparency and proper procurement practices.”

He also said the position adopted by the AG was regrettable, notwithstanding the purport and effect of the CTB.

“It appears that the project was halted after there was a change of government and the position reflected in Hansard failed to indicate whether regard was had to the substantial taxpayer funds which were spent on the project.

“Unfortunately, because of the absence of a national plan for sustainable or infrastructural development, with disturbing regularity, projects commenced by predecessor administrations are left uncompleted and the taxpayer is made to suffer,” he added.

He said although PSAEL acted on the ministry’s directives, it could not escape liability. On the issue of unjust enrichment, he said the contractor showed the State received a recoverable benefit with calculable value.

“On the evidence it is clear that the respondent has been enriched by the receipt of a benefit; that the benefit was at the applicant’s expense and that it would be unjust to allow the respondent to retain that benefit.”

The PSAEL and the AG were ordered to pay $853,926.75 owed on the contract; pre-judgment interest in the sum of $64,044.51; interest on the judgment sum until payment; and costs.

The contractor was represented by attorneys Anand Beharrylal, QC, Alvin Pariagsingh and Zeik Ashraph. Rennie Gosine appeared for the PSAEL and Duncan Byam for the AG.