Privy Council: EMBD must pay $83m to Junior Sammy

JUNIOR Sammy Contractors Ltd (JSCL) is entitled to the $82.8 million owed to it by the Estate Management and Business Development Company Ltd (EMBD), the Privy Council has ruled.

The sum represents the balance owed by the EMBD for residential development work in central Trinidad. This means the EMBD has to pay JSCL the sum it is owed, plus significant interest. The apex court held since the EMBD did not defend the request for summary judgment, JSCL was entitled to $77.6 million and an additional $5.1 million, bringing to $82,804.219.19, the total sum owed by the EMBD, plus interest.

The EMBD petitioned the Privy Council after losing its appeal over a judge’s decision to grant summary judgment to JSCL over unpaid work.

In the 2022 judgment, the Appeal Court ruled that former High Court Judge Mira Dean-Armorer was not wrong to award the contractor a default judgment over EMBD’s inability to defend its case.

In its ruling on October 29, the Privy Council said Dean-Armorer correctly entered summary judgment in the contractor’s favour, dismissing the EMBD’s appeal and affirming the judge’s order.

According to the evidence in the case, the legal dispute concerned a contract for the Caroni Savannah Residential Development undertaken by EMBD.

The contract was first awarded to another company in 2010 but was terminated after it (the company) failed to perform or complete the work. Junior Sammy Contractors submitted a $231 million tender for the project and was awarded the contract to complete the development.

It sued EMBD after only seven of 13 interim payment certificates (IPCs) were paid, which were approved by the independent engineering company appointed by EMBD to act as its agent.

In its defence, the EMBD requested voluntary disclosure of documents which the special purpose state company considered necessary for its defence and relevant to JSCL’s claim for payment under the IPCs.

The contractor refused to provide disclosure and the EMBD applied to the High Court for specific disclosure while JSCL applied for summary judgment.

In opposition to summary judgment being granted to the contractor, the EMBD also claimed JSCL could not pursue the action, as it had assigned the outstanding payments, which are the subject of the lawsuit, to ANSA Merchant Bank. It also argued that JSCL had over-certified and over-claimed in the IPCs.

Justice of Appeal Ronnie Boodoosingh, who presided over the EMBD’s appeal with Chief Justice Ivor Archie and Justice of Appeal Charmaine Pemberton held that there was no “absolute assignment” as Junior Sammy Contractors retained the ability to take legal action over the debt-based agreement between the bank and itself.

He also said the judge was not wrong to reject EMBD’s claim that the IPCs were inflated and the work was not completed as required under the contract.

Boodoosingh also noted that such challenges to the IPCs could only be successful if the EMBD could prove fraud or defects in the work.

“Like the trial judge, after careful examination of the pleaded case, we find that there was not enough to support a proper pleading of fraud or abatement,” Justice Boodoosingh said.

In their ruling, Lords Reed, Hodge, Leggatt, Stephens and Lady Rose found that the EMBD failed to demonstrate that the potential defences of abatement or fraud.

Lord Stephen, who wrote the decision, analysed the EMBD’s evidence in detail and held, “The quality of the employer’s (EMBD) evidence is wholly insufficient to demonstrate that the potential defences of fraud or abatement are not merely fanciful or speculative.

“The application for specific disclosure is a fishing expedition which amounts to no more than a hope that something might turn up.

“The lower courts correctly refused to make an order for specific disclosure and the appeal to the Board seeking an order for specific disclosure is dismissed.”

He also said there was no substance to EMBD's suspicion the works were over-certified.

He also said the EMBD’s claim there was reason to believe there "may" be over-certification, was not enough to allege fraud.

On JSCL’s right to sue the EMBD for the unpaid sums, Lord Stephens said the absence of an assignment was a “strong indicator” that it was not absolute.

“Accordingly, the entire debt of $77,658,948.91 was not being assigned but rather only a part of the debt up to the facility amount of $40,000,000.

“...Accordingly, the assignment constituted an equitable and not a legal or statutory assignment and the contractor is entitled to sue the employer,” Stephens ruled, dismissing the EMBD’s appeal on the issue.

The EMBD was represented by Jonathan Acton Davis, KC, Colin Kangaloo, SC, and Jennifer Jones, KC.

King’s Counsel David Thomas, Ramesh Lawrence Maharaj, SC, and Robert Strang represented Junior Sammy Contractors.