Commissiong and Company Limited (CCL), a Trinidad and Tobago firm, has slapped the Guyana Oil Company (GUYOIL) with an $84.2M lawsuit for breach of contract.
The suit was filed after GUYOIL allegedly failed to pay for the fabrication and erection of two 10,000-barrel storage tanks at its terminal at Providence, East Bank Demerara. The court action was filed by prominent Guyanese attorney, Anil Nandlall on behalf CCL, a limited liability company duly registered as an external company under the Companies Act of Guyana.
The Trinidad-based company is claiming the sum of US$291,055.05 being the sum due, owing and payable for works done according to the agreement dated May 24, 2019, for the fabrication and erection of two 10,000 barrel storage tanks at the GUYOIL terminal, Providence.
Additionally, the company is claiming damages for breach of contract and special damages in excess of twenty-three million five hundred and forty-two thousand, eight hundred and eighty-six Guyanese dollars ($23,542,886.)
According to the claimant, sometime in February 2019, an Invitation to Bid to supply, fabricate and erect two 10,000-barrel storage tanks at GUYOIL Providence Terminal East Bank Demerara was advertised.
Under the advertisement, an agent of the CCL visited the site where inquiries were made by the said agent as to whether international and/or foreign bonds would be accepted by the GUYOIL, since most contractors equipped to undertake this scale of works would be not locally based.
An agent of GUYOIL had
assured the claimant’s agent that international bonds would be acceptable and
further, even the Standard Bidding
Document for Procurement of Works Data Sheet did not exclude international bonds.
Acting on this representation, CCL submitted a bid for the said contract on February 22, 2019, which was supported by a bid bond dated February 21, 2019, issued by the Furness Anchorage General Insurance Company Limited, in the sum of two thousand five hundred United States Dollars.
However, on April 25, 2019, a letter of acceptance by Ilissa McTaire-Jones, Company Secretary/Legal Officer of GUYOIL was issued to the claimant notifying them that the bid dated February 22, 2019, for the execution of the supply, fabrication, and erection of two 10,000-barrel storage tanks at GUYOIL’s Providence terminal, E.B.D., for the contract price of one hundred and ten million, two hundred and eighty-five thousand, nine hundred and thirteen dollars ($110,285,913), VAT included, within eight months was accepted.
The letter further requested that the claimant furnish the defendant with a performance security bond for an amount equivalent to Guyana Dollars three million, three hundred and eight thousand, five hundred and seventy-seven (GY$3,308,577) within 15 days.
The performance security was to be in the form of a bank draft or bank guarantee in favour of GUYOIL, or an insurance bond which would be valid until the end of the defects-liability period.
Finally, the letter stipulated that with the issuance of the said acceptance letter and the furnishing of the performance security, the contract for the said works would stand concluded. Under the stipulations outlined in the said letter, CCL provided GUYOIL with a performance bond in the sum of fifteen thousand, eight hundred and fifty-seven and eighteen cents United States Dollars ($15,857.18), sealed and dated April 30, 2019.
The said performance bond was accepted by GUYOIL and on May 24, 2019, a written agreement was entered into between the two companies for the execution, fabrication, and erection of two-barrel storage tanks at a project cost of GY$110,285,913.
Following the expressed terms of agreement, the claimant commenced work under the agreement. On May 31, 2019, under the CCL’s expressed contractual obligations, the Tank Construction Material List was submitted to the defendant via email and was received. That according to the said agreement, the claimant began purchasing materials to fabricate the said tanks.
After the contract was entered into and the performance had begun, the claimant was approached to supply and erect a third storage tank. An email dated July 5, 2019, was sent to Mr S. Nascimento, with quotations for the supply and erection of a third storage tank.
On July 8, 2019, under the CCL’s contractual obligations, construction drawings for the supply, fabrication, and erection for two 10, storage tanks at Providence E.B.D., were emailed to S. Nascimento, S. Norvill and B. Persaud, all agents of the defendant.
On July 18, 2019, the CCL Director received a phone call from Mr. Nascimento who indicated that he was informed by GUYOIL’s CEO that the advance payment guarantee submitted by the claimant would be rejected and that the claimant must submit local bonds.
Against this background, on July 23, 2019, the claimant sent a letter to GUYOIL stating the funds spent on the project thus far. The claimant never indicated that it would cease construction for works if the advance payment was not made.
At this point, construction drawings were already approved by the defendant, materials for the construction of tanks were purchased by the claimant and prefabrication of the tanks had commenced.
However, on October 7, 2019, the defendant issued a letter to the claimant stating that the three contracts would be terminated for convenience under clause 59.4 of the said agreement.
Nevertheless, on November 14, 2019, the claimant’s attorney wrote the Company Secretary and Legal Officer of GUYOIL and threatened to file legal proceedings if his client was not paid the money owed.
Further, as a result of the defendant’s premature termination of the agreement, the claimant was prevented from completing the contract and has thereby suffered loss and damage, including the profit that it would otherwise have earned on the balance of the agreement.