EFCL ordered to pay $300,000 over terminated contract

Derek Achong

Se­nior Re­porter

[email protected]

A con­tract­ing com­pa­ny has won its law­suit over the fail­ure of State-owned project man­age­ment com­pa­ny Ed­u­ca­tion Fa­cil­i­ties Com­pa­ny Lim­it­ed (EF­CL) to pay it over $300,000 in fees for a ter­mi­nat­ed con­tract. 

De­liv­er­ing an oral judg­ment at the end of a brief tri­al last week, High Court Judge Frank Seep­er­sad up­held the case brought by Mt Hope-based Saran Sam­path Lim­it­ed against EF­CL. 

In Au­gust 2011, the com­pa­ny re­ceived a $5,948,230 con­tract to per­form re­me­di­al work on the Mal­abar Gov­ern­ment Pri­ma­ry School. 

The com­pa­ny claimed that it mo­bilised staff and pur­chased equip­ment to com­plete the project but in April 2013, EF­CL ter­mi­nat­ed the con­tract. 

EF­CL claimed that it had in­stead de­cid­ed to award the con­tract for the work by open ten­der and apol­o­gised for the change in the ten­der process. 

The com­pa­ny made a claim for loss of prof­it and stand-by re­sources. 

Al­though EF­CL made an of­fer of $327,619.88 to ful­ly set­tle the claim, which was ac­cept­ed by the com­pa­ny, no pay­ment was ever made. 

The com­pa­ny filed the law­suit af­ter it made sev­er­al un­suc­cess­ful at­tempts to get EF­CL to set­tle the is­sue. 

In up­hold­ing the case, Jus­tice Seep­er­sad or­dered the com­pen­sa­tion sought. EF­CL was al­so or­dered to pay the com­pa­ny $54,261.99 in le­gal costs. 

In ear­ly 2022, EF­CL made an ap­pli­ca­tion for the com­pa­ny to be wound up due to sig­nif­i­cant debts it could not ser­vice. 

In its pe­ti­tion, EF­CL’s act­ing chief ex­ec­u­tive of­fi­cer Gay­a­tri Badri-Ma­haraj sought to de­tail the com­pa­ny’s cur­rent as­sets and li­a­bil­i­ties. 

She not­ed that the com­pa­ny had 79 un­sat­is­fied judg­ments/awards dat­ing back to 2016 and to­tal­ing $321 mil­lion, 30 pend­ing law­suits in the High Court and In­dus­tri­al Court worth over $119 mil­lion, and le­gal claims which are yet to be filed to­talling $47 mil­lion. 

It al­so has a $156 mil­lion bal­ance on a syn­di­cat­ed loan agree­ment with RBC Trust (T&T) Lim­it­ed, which it en­tered in­to to help fi­nance the con­struc­tion of schools in 2017. 

Badri-Ma­haraj al­so point­ed out that the com­pa­ny’s 41 em­ploy­ees have not been paid since Sep­tem­ber 2021 and were owed ap­prox­i­mate­ly $2.27 mil­lion.

Badri-Ma­haraj ex­plained that the com­pa­ny de­rived its in­come sole­ly from project man­age­ment fees paid by the Min­istry of Ed­u­ca­tion. 

She claimed that in 2016 the com­pa­ny’s ac­tive projects were re­duced from 118 to 20 schools and in June 2020, it re­ceived in­struc­tions from the min­istry to cease en­gag­ing con­trac­tors. 

She claimed that the com­pa­ny’s ac­count­ing soft­ware in­di­cat­ed that the min­istry still owed it $44.8 mil­lion in project man­age­ment fees and $889 mil­lion in con­struc­tion costs. 

In a de­ci­sion in Ju­ly 2023, High Court Judge Car­ol Gob­in dis­missed the wind­ing up pe­ti­tion, which was op­posed by sev­er­al con­trac­tors with out­stand­ing debts. 

Had the pe­ti­tion been grant­ed, a court-ap­point­ed liq­uida­tor would have been man­dat­ed with sell­ing the com­pa­ny’s min­i­mal as­sets to re­pay its cred­i­tors. 

Con­sid­er­ing that when the pe­ti­tion was filed, EF­CL’s as­sets con­sist­ed of $4,508 in its ac­count at RBC Roy­al Bank and $46,000 in of­fice fur­ni­ture, it would have meant that the con­trac­tors could have on­ly hoped to have re­cov­ered a mi­nus­cule frac­tion of what they are in fact owed. 

Jus­tice Gob­in’s de­ci­sion meant that the com­pa­nies can now bring sep­a­rate lit­i­ga­tion against mem­bers of EF­CL’s board, who served be­tween 2015 to present, the Of­fice of the At­tor­ney Gen­er­al, the Min­is­ter of Ed­u­ca­tion, or the Min­is­ter of Fi­nance to re­cov­er their debts. 

In de­cid­ing on the pe­ti­tion, Jus­tice Gob­in had to con­sid­er whether Sec­tion 355 of the Com­pa­nies Act, which pre­scribes the pro­ce­dure for court-or­dered liq­ui­da­tion, could ap­ply to State-owned spe­cial-pur­pose com­pa­nies such as EF­CL. 

She not­ed that it could not as un­der the Con­sti­tu­tion and leg­is­la­tion, the Min­is­ter of Fi­nance as the com­pa­ny’s cor­po­ra­tion sole is re­quired to re­port to Par­lia­ment on its fi­nan­cial well-be­ing. She point­ed out that such a du­ty for trans­paren­cy and ac­count­abil­i­ty does not ap­ply to pri­vate com­pa­nies. 

“To avail the cor­po­ra­tion sole or State En­ter­pris­es of the pro­vi­sion of Sec­tion 355 of the Act, in the ab­sence of ev­i­dence of com­pli­ance with statu­to­ry du­ties would per­mit the low­er­ing of the lev­el of ac­count­abil­i­ty that is re­quired un­der the law and the con­sti­tu­tion,” she said. 

“The court would be of­fer­ing wind­ing up as a read­i­ly avail­able al­ter­na­tive. This, in my opin­ion, is im­per­mis­si­ble,” she added. 

Jus­tice Gob­in al­so made note of the fact that the wind­ing up of the com­pa­ny was not sug­gest­ed when EF­CL’s fi­nan­cial sit­u­a­tion and al­leged sys­temic mis­man­age­ment were con­sid­ered by a Joint Se­lect Com­mit­tee (JSC) on State En­ter­pris­es in March 2018. 

Deal­ing with EF­CL’s claims over its in­abil­i­ty to ser­vice its sig­nif­i­cant debts, Jus­tice Gob­in point­ed out that it was par­tial­ly due to its gross reck­less­ness in de­fend­ing lit­i­ga­tion against it for un­paid fees. 

“The debt was sim­ply al­lowed to mount. It is as­tound­ing that this was al­lowed to hap­pen with seem­ing dis­re­gard for the ef­fects on the pub­lic purse,” she said. 

“When this reck­less­ness is viewed against the grounds of the pe­ti­tion, it is hard to avoid a lev­el of cyn­i­cism,” she added. 

Saran Sam­path was rep­re­sent­ed by Leslie-Ann Lucky-Sama­roo, SC, while Am­ri­ta Ram­sook rep­re­sent­ed EF­CL.