Court condemns NiQuan for non-payment of ex-VP

FINANCIALLY-crippled gas-to-liquids, NiQuan Energy, is now saddled with an almost $21 million court-ordered payout to its former vice president for Global Services.

On Friday, Justice Westmin James made the payment orders in favour of David Small, a former independent senator, who left the company in November 2021.

Small was NiQuan’s vice president for Global Services from January 1, 2015. In his lawsuit, Small contended NiQuan breached a mutual settlement agreement and was entitled to a total of $18,575,880.40, representing his salary, accrued vacation, ex-gratia payment and a one-time $12.8 million bonus on the financial close of the World GTL plant.

The judge agreed that NiQuan breached the agreement by failing to fulfill its obligations and also ruled that there was no condition attached which would have prevented the company from keeping with a payment schedule that was agreed to.

“The defendant has not paid any of the payments on the payment schedule which is a fundamental term of the MSA.”

James said while the case involved large sums of money, the principles of law were very simple.

In addition to ordering the payments identified in the agreement, the judge also awarded Small an additional $1.1 million for its “reprehensible” actions and conduct which was “calculated to take advantage of every chance to delay paying or not paying anything at all.”

“The process which was engaged by the defendant in delaying all payments and not making any payment and the excuses were outrageous, high-handed and egregious to the court.

He also pointed out that the evidence also showed that NiQuan agreed to pay US$500,000 to another employee who filed a similar lawsuit in the US courts, “yet failed to accept the claim here.”

“The behaviour, improper motives which fashioned the action undertaken by the defendant and the pure unfairness as well as unequal treatment has to be condemned.

“In light of all the facts, I do think the conduct of the defendant must be punished and a proportionate award of aggravated damages must be made so as to reflect the blameworthiness of the defendant's conduct and to signal that it will not be tolerated or condoned by the court,” the judge said in his ten-page ruling.

In its defence, NiQuan contended Small “always knew” that it would not be able to pay his accrued salary once it had sufficient debt or equity financial or operational revenues after the commercialisation of its GTL plant.

In October last year, NiQuan Energy announced it achieved commercial readiness status for its GTL plant in Pointe-a-Pierre, making it the first commercial small-scale plant of its kind in the world and the first operational plant in the western hemisphere.

Also in defence of Small’s claim, NiQuan contended that payment of the $12.8 million bonus was contingent on the successful close of the bond refinancing which was scheduled to take place in December 2022, once it received it.

It denied there was a breach as the money was not yet due and owing.

The decision said on November 2, 2021, the company sought to terminate Small’s employment and they entered into the MSA which provided that the then-VP would voluntarily resign and in return, he would receive a little over $17.6 million.

The decision said the MSA also stipulated that the sums would be paid in a schedule between November 2021 to January 2022 with the $12.8 million one-time bonus paid once the company had closed and received disbursement under its anticipated long-term bond refinancing which was targeted at the end of March 2022.

The judge said the sums were accepted as full and final settlement of any claim Small would bring arising out of his employment or termination and in exchange, he would not challenge either nor would he work in competition of NiQuan for a year.

James had to determine if there was a condition precedent – an action or condition that had to take place before a right or duty arose – which would have exempted NiQuan from making the payment according to the schedule.

NiQuan argued there was. It claimed that was “business common sense” that it would only be able to meet the scheduled payments once it had sufficient debt or equity financing or operational revenues after the commercialisation of the GTL plant.

In his ruling, James said the burden was on NiQuan to persuade him of an implied condition precedent. The judge disagreed.

“Having regard to the background facts, the evidence before the court and the surrounding circumstances, the court is not of the belief that there were implied term(s) as proposed by the defendant.”

Of the evidence, he said, “The MSA was entered after the claimant raised concerns of not being paid his salary and entitlements.

“The claimant was called into a meeting and was told that the defendant was terminating his employment with the defendant.

“A negotiating process took place after which the parties reached an understanding set out in the MSA. The purpose was to agree to the sums owed to the claimant and to the timeline that the defendant would pay those sums to the claimant, who would accept it in full and final settlement in relation to his claim or potential claims against the defendant.

“The claimant would on the other hand resign from his position with the defendant.”

He said while the MSA was mainly drafted by NiQuan, it ensured Small’s resignation without admission of liability to the company’s benefit if a wrongful dismissal lawsuit was filed and to avoid potential judgment against it “with all the negative connotations that it could bring, including reputational damage.”

“The agreement would also be of benefit to the claimant in avoiding the uncertainty of a hearing and providing him with payment of monies owed to him. It also brings closure of the claim which avoids any prolonged stress and anxiety that a hearing would bring.

“The MSA, therefore, represented a compromise in full and final settlement of the defendant’s liability to the claimant.”

James said NiQuan’s implied terms would be contrary to the terms of the MSA.

“Although a court may properly imply certain terms into a contract, it cannot imply terms that are inconsistent with the expressed terms of the contract.

“A term can only be implied by the court if it is necessary to give business efficacy to the agreement. The court by doing so, is doing only what the parties themselves would have done, if they had thought of it themselves. It must be something so obvious, it goes without saying.”

He said except for the one-time bonus, the first three payments refereed to the dates they were to be made and there was “no other condition placed on them.”

“The clause says that payment was to be made strictly in accordance with that instalment schedule. If the parties wanted to place any condition precedent on those three dated payments other than the dates for such payment, they would have said so.

“The fact that the one-time bonus arguably contains a condition precedent, the parties could have so constrained the first three payments.

“Therefore, any precondition proposed by the defendant in relation to those three payments would run contrary to the clear unambiguous terms of the MSA.”

“For a term to be implied it must be capable of being expressly clearly and articulated. It must be sufficiently certain,” the judge said. He said the alleged implied term conflicted, to some extent, NiQuan’s pleadings, the evidence of its founder Ainsley Gill and its attorneys submissions to the court.

“If the defendant is not clear as to what exactly is the precise term to be implied it fails the test to be implied.

“The various iterations of the proposed implied terms were indicative to the court that the precondition proposed by the defendant was neither obvious nor necessary.”

“If the proposed term, which is not expressed in the contract, is not compatible with the commercial purpose of the agreement and is one to which no sensible party would agree to due to the nature of that contract, it is equally not one that could give rise to any reasonable expectation or needed for business efficacy.”

The judge said the terms proposed by NiQuan were “incompatible” with the commercial purpose of the agreement and “no sensible person would agree to them.

“I am far from satisfied that the claimant, as a reasonable man, could have been expected to agree to such preconditions which may preclude him from possibly ever obtaining his money.”

In September, NiQuan said its plant was offline because the Government was withholding its natural gas supply.

NiQuan, in August, filed an injunction against TT Upstream Downstream Energy Operations Company Ltd, to force the state to resume its natural gas supply.

On August 21, Justice Kevin Ramcharan dismissed the application. NiQuan has since appealed the injunction.

Also last month, the Prime Minister insisted Government has assisted “in every way” to ensure NiQuan’s success.

Dr Rowley said Government had no reason to see NiQuan fail.

“NiQuan and the Government cooperated in introducing to our economy some element of economic expansion. That’s the singular basis on which the Government was involved with NiQuan, a private business.”

“The Government would have assisted in every way possible to see that NiQuan would be successful but at the end of the day public interest and private interest did not converge.”

NiQuan is reportedly US$250 million in debt.