- NEWSDAY.CO.TT - A la Une - Hier 16:33

Dipcon Engineering loses $11.2m appeal against Udecott

AN engineering firm has lost its final appeal of the dismissal of its claim for $11.2 million owed to it by the Urban Development Corporation of Trinidad and Tobago (Udecott) for certain engineering services in the construction of houses at Oropune Gardens Phase II in 2010. In 2017, Justice Ricky Rahim dismissed Dipcon Engineering Services Ltd’s lawsuit. On January 24, 2023, the Appeal Court also dismissed the firm’s appeal, and on June 25, it lost its final appeal before the Privy Council. “After hearing Dipcon’s argument, it became clear to the board that Dipcon could not succeed on either of the bases put forward in its case. “For that reason, it became unnecessary to hear oral arguments on behalf of Udecott. For the reasons given, the board dismisses the appeal,” Dame Janice Pereira, former chief justice of the Eastern Caribbean Supreme Court (ECSC), said in the court’s ruling. In March 2003, Udecott retained Dipcon to perform engineering services at the Oropune Gardens Phase II housing project. The services were done between April 2003 and July 2006. In January 2010, Udecott proposed to make a payment of $18.8 million as a full and final settlement. Dipcon replied that they would accept the offer of payment and would send their final invoice, but asked Udecott to consider an additional claim for $11.2 million, representing the increased cost of equipment usage, which was to be added to the contract price. The disputed sum represented Dipcon’s alleged increase in the cost of the use of its equipment for certain engineering services on the project. Udecott contended it paid the final settlement of all Dipcon’s claims, including an increase in costs quantified in the sum of $3.5 million. In its appeal, Dipcon contended that Rahim was wrong to find that approval for additional sums was required by Udecott’s board. It maintained that no such approval was required within the terms of the FIDIC contract for settling claims. FIDIC contracts are considered the international standard in the construction industry. Dipcon also contended there was no requirement for board approval as a precondition of payment of the sums assessed; there was no evidential burden on Dipcon to prove that board approval was obtained and the trial judge failed to hold that Udecott’s obligation to pay was trigged by its assessment of the additional claims by the engineer although he had accepted this was done. Udecott, however, maintained that Dipcon’s claim was premised on a new oral contract for which there was no evidence, and it was not a claim made under the terms of the FIDIC contract. In its ruling, the Appeal Court held there was no agreement to settle for $18 million as the correspondence between the parties was not compliant with the FIDIC terms. “Further, Dipcon’s acceptance of the payment of the said sum was conditional upon a reassessment of its additional claim, which it alleged was still due and owing,” the Appeal Court said. It also noted that the parties did not enter into negotiations to reassess Dipcon’s additional claim, as those negotiations were not done according to the terms of the contract. “It was a fresh negotiation made between the parties to ascertain the additional claim without regard for the procedures set out in the FIDIC contract. In that negotiation, the parties were aware that Board approval was required before any agreement to pay any reassessed sum could be made.” “In the final analysis, the parties negotiated with one another directly with respect to a claim for increased costs. It was not FIDIC compliant. It was subject to the understanding that Board approval would have been required.” The Appeal Court said while Dipcon did not accept the final payment of $18.8 million or the assessment of $3.5 million for the additional costs, their conduct and negotiations were, as the trial judge correctly concluded, a reassessment subject to board approval. “It was open to the trial judge to conclude that the evaluation or assessment was not final or binding, nor can Dipcon rely on any term under the FIDIC contract to make such a re-assessment binding on Udecott.” In dismissing Dipcon’s appeal, the Privy Council held that the company failed to establish an entitlement to the sums claimed. In its judgment, the Privy Council noted that while Dipcon based its claim on Clause 70.1 of the FIDIC contract — relating to price fluctuations — it ultimately relied on Clause 53.4, arguing that the parties’ course of dealing had effectively bypassed the formal procedural requirements outlined in sub-clauses 53.1 to 53.3. Dipcon maintained that, because both sides engaged directly on the matter, the claim was FIDIC-compliant and that Udecott’s internal reassessment of the claim was sufficient to trigger payment obligations. However, the Privy Council found that Dipcon did not comply with the required notification and documentation procedures under Clause 53. Specifically, Dipcon failed to notify the engineer of its intent to claim additional payment within the required 28-day period following completion of works in 2006. The additional claim was not submitted until 2009, the board noted. Dipcon argued that subclause 53.4 allowed the claim to proceed based on direct dealings between the parties, suggesting that Udecott had assessed and verified the claim through its employees. The Privy Council rejected this, finding that Udecott, as a corporate entity, could only act through its board of directors unless authority had been delegated, which was not the case. It held that the reassessment by Udecott’s officers did not amount to formal approval, and there was no evidence that the board itself had authorised or ratified the payment. The Privy Council also rejected Dipcon’s alternative argument that the parties’ “course of dealing” had created a binding interpretation of the contract that permitted direct settlement without formal board approval. While acknowledging that both parties had deviated from the strict FIDIC procedures in agreeing to an earlier “agreed sum” payment in 2010, the Board found that this prior settlement was explicitly subject to board approval, which had been obtained. In contrast, the additional claim had never received such approval, the ruling said. The Privy Council noted that the lower courts had made concurrent findings of fact that Dipcon knew board approval was required, citing the company’s correspondence in 2012 acknowledging this requirement. The Privy Council declined to interfere with these findings, stating no exceptional circumstances had been presented to justify doing so. “As the courts below found, the reassessment never got to the stage of board approval, a necessary requirement for grounding Dipcon’s entitlement to payment. The result is that Dipcon’s entitlement to payment of the additional claim never crystallised. “Accordingly, on this alternate basis also, Dipcon has been unable to demonstrate its entitlement to payment of the additional claim.” Having concluded that Dipcon failed to demonstrate entitlement on either the contractual or alternative basis, the Privy Council ruled in favour of Udecott. At the hearing of the appeal in March, the British judges did not proceed to hear oral arguments from Udecott’s team. Also presiding over the hearing were Lords Hodge, Briggs, Burrows, and Richards. Tom Poole, KC, and Adam Riley represented Dipcon while Ravindra Nanga, SC, John Paul Nahous and Sasha Darbreau represented Udecott. The post Dipcon Engineering loses $11.2m appeal against Udecott appeared first on Trinidad and Tobago Newsday.