Judges unable to decide on EMBD cartel claim appeal; matter referred fo full court

TWO Appeal Court judges have not been able to arrive at an agreed position in an appeal in which they have been asked to determine if a High Court judge was wrong to dismiss the preliminary applications of five contractors asking for more details of claims against them which paved the path for a multi-million-dollar trial alleging bid-rigging, bribery and collusion just before the 2015 general election.

Justices of Appeal Mira Dean-Armorer and Ronnie Boodoosingh notified parties in the appeal of their difficulties in arriving at a unanimous decision in the procedural appeal even after considering the evidence and submissions and engaging in discussions.

They said since the matter was one of general importance and will affect persons other than the parties, they were relying on provisions of the civil proceedings rules which would allow them to direct that the appeal should be heard by a full panel of three judges.

In their notice, they said the matter will be put on the next available cause list for hearing before the full court.

In January, the appeal was filed and submissions were heard at a virtual hearing.

In August 2020, Justice James Aboud dismissed preliminary applications of the five contractors – TN Ramnauth, NAMALCO, Kallco, Motilal Ramhit and Company and Fides – which sought to have the Estate Management Business Development Company (EMBD) particularise the facts against them so that they could fairly mount their defence, or strike out the claims against them.

Before him was EMBD’s lawsuit against former housing minister Dr Roodal Moonilal, as well as a consolidated case in which three companies have sued the state-owned EMBD over unpaid contracts for upgrading and rehabilitating certain Caroni access roads and two contracts for rehabilitation works, totalling over $300 million.

The EMBD claims the work done was defective and overpriced. In a counter-suit, the state entity is seeking to recoup money paid to the contractors.

The EMBD’s claim against Moonilal also includes former EMBD chief executive Gary Parmassar; former divisional manager at EMBD Madhoo Balroop; Andrew Walker; and companies Fides Ltd, Namalco Construction and LCB Contractors.

In his ruling, Aboud found the allegations against the contractors were “sufficiently pleaded,” also holding that there was compelling evidence of collusion in what the EMBD advanced in its 1,556 plus-page statement of case. He said the contractors “ought to fully understand” the allegations to allow them to plead their defences.

Aboud has since been made an Appeal Court judge, so the case was assigned to Justice Frank Seepersad who has to await the outcome of the appeal to determine if the claim proceeds.

Maharaj: High Court erred

The contractors argued that the EMBD could not simply allege collusion, and it would be wrong for the court to rule that collusive bidding vitiated the contracts as a matter of public policy.

They argued that the companies would have to have known about the alleged breaches of fiduciary duty for the contracts to be voided for public policy.

At the January hearing, Senior Counsel Ramesh Lawrence Maharaj, who leads a team of attorneys for three of the contractors, was critical of Aboud’s findings, saying the EMBD’s pleadings were incomplete and deficient and rather than strike them out, the judge ignored them and allowed the case to proceed to the case-management stage.

Maharaj insisted the judge had no discretion to do so and erred in law, since the pleadings offended the fundamental rule that the general nature of the case must be supported by particulars.

“It is important for the right to know and the right to be heard in a case in which there is a pleading of fraud, dishonesty and bad faith,” he submitted.

He also said the EMBD’s pleadings should have also set out the particulars of the alleged conspiracy.

Maharaj alleged that EMBD did not investigate whether pecuniary loss arose out of the allegation of unlawful means, but was now saying it was in the process of trying to find that out.

“Pleading it without that essential ingredient is an abuse of process. You have to plead damage caused by pecuniary loss. Only then does the tort becomes complete,” he said.

“After three years, the EMBD has not come forward with any particulars on actual pecuniary loss,” he added, reminding the judges that the limitation period for the claims would already have expired, since the alleged actions were sometime in 2014.

EMBD attorney: Case like a jigsaw

In response to Maharaj’s contentions, British Queen’s Counsel David Phillips, who argued the case for the EMBD from his chambers in London, urged the judges to look at the statement of case to see how the matters were pleaded. He said the detail given was overwhelming, with a vast quantity of figures. He said the way the formulae operated were set out in the claims and the judge recognised the reference to the schedule advanced to show the pecuniary losses.

He said the application for particulars for pecuniary loss, as had been sought by the contractors, was tantamount to asking for an order to strike out the claim, “which the judge rightly refused to do.”

“If the court operates too tight on particulars, it is less likely it will come to revelation at trial. A sophisticated conspirator leaves no trace. We follow a trail,” he said.

Phillips added that the judge understood what the pleadings said, insisting there could be no complaint that the judge misunderstood what was pleaded.

“There was compelling evidence from the primary facts pleaded, powerful evidence of concerted wrongdoing," he submitted. “It doesn’t mean because details aren’t given we have not set out losses. We are in the process of investigating a sophisticated fraud.

“The case is like a jigsaw. The judge had sufficient pieces of the jigsaw to say that this is the picture, even though all the pieces were not before him. We have filled in lots of these gaps in litigation…We have roads that were not properly constructed that were paid for. The tendering process was not followed. It shows bidding anomalies, with someone fixing prices.”

Moonilal and the others are accused of participating in the cartel arrangement by colluding to ensure that specific companies, by a wrongful and unlawful agreement, were awarded specific contracts at inflated amounts and received payments that were not due.

The former minister was not part of the group which challenged the EMBD’s claims.

The complex fraud scheme was described as a “cartel arrangement” in an unlawful scheme conspiracy.

A separate appeal involving Moonilal and the others was adjourned to that date to allow for the parties to file submissions.