CEPEP agrees to pay contractor despite contract concerns

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THE CEPEP Company has agreed to settle a lawsuit brought against it by a San Juan contractor for a fraction of what was being asked for work done at Success Laventille Health Center in 2015.

Naclud General Contracting Company Ltd, of Chanka Trace, filed a claim for $1,856,560 for renovations to the health center in 2015.

The contractor claimed to have provided construction work and services to CEPEP, which refused to pay. The work was carried out in April-May 2015 and approved by the company, according to the lawsuit. He said that after submitting an invoice for payment, CEPEP failed to honor its payment obligation.

In its defense filed in opposition, CEPEP gave the history of the company and how it came to provide project management services, claiming in 2014 that the general secretary of the limited liability company, which operated thanks to monetary subsidies from the State, had written a note to the Cabinet misrepresenting the capabilities of the CEPEP company.

The memo, the defense said, claimed the company had project management expertise, which it did not have, and had accepted multimillion-dollar building and hospital renovation contracts.

This Cabinet Note provided for a contractual agreement with the Ministry of Health to renovate and maintain district health facilities, health centers and hospitals in the North Central and North West Regional Health Authorities, with the Ministry funding the project under the health sector initiative program.

The defense also argued that there were no minutes of the board of directors changing the mandate of the CEPEP company from the improvement and maintenance of the environment to the construction or renovation of the hospital.

Although it accepted a settlement amount of $599,427.35 based on the quantum meruit of what the contractor had earned for the work performed, which was quantified by an independent quantity surveyor in January 2019, CEPEP has declared that the contract was not enforceable. He said the then chief executive was not authorized to enter into such an arrangement because there was no prequalification process or public tender, which made the alleged contract illegal.

It also maintained that for sums over $100,000, a contract of this magnitude should be subject to a public call for tenders in accordance with company rules and policies.

In a counterclaim, CEPEP said that although certificates of completion were sent, work remained unfinished at the health center.

The case was to be tried on Wednesday, before Judge Frank Seepersad. However, lawyers for both parties told the judge that the parties had reached consensus on the quantum meruit payment.

Seepersad commended the parties for the position taken, but said that after reading the pleadings, he was very concerned about the authority to enter into the type of contractual arrangements described, also noting that there appeared to be merit in the defense filed as it related to CEPEP’s concerns about lack of authority.

CEPEP was represented by attorneys Philip Lamont, Farai Hove Masaisai, Issa Jones and Jennifer Farah-Tull while Navindra Ramnanan represented Naclud.

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