Decision to terminate Haags Bosch landfill contract hasty, unfair

– court finds in favour of BK International

The decision by the Ministry of Local Government (now Ministry of Communities) to terminate a contract awarded to BK International to construct and manage the Haags Bosch landfill site at Eccles was not only too hasty but unfair, according to Acting Chief Justice Ian Chang.

Justice Chang on Thursday handed down a judgement in favour of the construction company and one-time site manager of the landfill project, seven months after a court action was filed against the abrupt termination of the contract which was to expire in 2019.

He said that given the provisions of the contract, “The respondents were under a public law obligation to afford BK an opportunity of being heard before it made any decision to terminate the contract. Had such an opportunity been afforded to BK, BK could have pleaded the numerous admitted breaches of the contract by the respondents themselves (including the serious breach of those provisions relating to the provision of finances to BK) as causes affecting its performance to its own detriment and to the prejudice of the public interest,” Justice Chang said in an 80-page ruling.

Brian Tiwarie
Brian Tiwarie

He said the question which arises in this case is whether it is appropriate that the termination be subject to the judicial review process – despite the existence of private law remedies in contract.

He said it is indisputable that the relationship between the ministry and BK arose out of the contract made between them but is also equally indisputable that the function of constructing and operating the Haags Bosch Landfill waste disposal facility was a function of the government carried out through the medium of BK under a contractual arrangement made with it by the government in the exercise of the state’s common law power to contract. He said it is also indisputable that the construction and the operations of the project involved considerable public expense and that the general public had a direct interest in the project not just because of the level of public expenditure involved but also because of the importance of the project to public health and welfare.

According to Justice Chang, under these circumstances it was not only about BK’s contractual obligation to it the ministry but also the ministry’s own primary obligations to the public health and welfare.

“It is the view of this court that there is a sufficient public law element underlying the contractual relationship between the Ministry of Local Government and BK to attract the judicial review process – despite the existence of contractual remedies available to BK. The submission made by the respondents that BK’s application for judicial review is misconceived and that his quest for relief lies solely in private law procedure and not in judicial review proceedings must therefore be rejected.”

Justice Chang continued that since it is the claim of the respondents that their relationship with the applicant BK was purely contractual in nature was not infected with a public law element, “it hardly lies in the mouth of the respondents to claim that the decision to terminate was in conformity with the substantive principles of public law e.g. natural justice and procedural fairness and rationality.”

He said the court further finds that the failure of the respondents to take into consideration such relevant factors, rendered its decision to terminate as “irrational in public law sense since, in the circumstances, no public authority could reasonably fail to consider its own breaches of the provisions of the contract in making a decision whether to terminate its contract with BK.”

The chief justice made it clear that in the particular circumstances the respondents ought to have been guided by the principles of public law in making a decision to terminate the contract. “Admittedly, their decision to do so was made on the sole basis of their private law power to terminate. Therefore, the decision to terminate was not an abuse of public law authority or power but rather a misuse of private law power. The court so finds,” he said.

Justice Chang made it clear that since it is not the function of the court in judicial review proceedings to enforce contractual rights or to prevent the formation of contracts unless such formation is governed by public law, the court did not see it fit to make six of the Orders or Rules nisi of Prohibition and Mandamus granted on March 13, 2015 absolute.

However, it was seen fit to make two of the reliefs granted absolute; one pertaining to showing cause why the termination of the contract should not be quashed and the other, stopping the respondents and their servants from terminating the contract. The other relief not made absolute included the removal of BK’s machinery from the site and awarding the contract to another company.

Over the years there had been an ongoing tussle between BK and the government over the delay in works at the landfill site at Eccles, East Bank Demerara.

In the ruling Justice Chang pointed out that in his Affidavit in support of the motion Brian Tiwarie, the company’s Chief Executive Officer, explained at length about the challenges the company faced with the continuous changing of aspects of the contract and then subsequent delays of payments by government.

Tiwarie, in the court documents, said he was told by his legal counsel that the Termination Notice was unjustifiably issued by the minister/and or the permanent secretary in the exercise of “ their public law power in egregious bad faith as part and parcel of practice and pattern of conduct victimizing the applicant company – the Minister and/or the Permanent Secretary abusing their powers and reaching a decision which no reasonable authority could have adopted if all relevant considerations had been taken into account and all irrelevant collateral matters had been ignored.”

He claimed that the ministry had constantly delayed and changed design instructions due to shoddy design work and had expected the applicant company to immediately adapt to the ministry’s ever evolving needs while at the same time pressuring BK to accept and to process an increase of almost double the amount of waste originally contemplated all against the backdrop of maliciously withholding payment.

Tiwarie said the company went to great lengths to meet the ministry’s demands and in the five years it had been at the location had spent millions of its own money on the project.

It was explained that around February 2007, the Inter-American Develop-ment Bank (IDB) entered into a loan agreement to develop the Haags Bosch Sanitary Landfill involving the approximate sum of $18.07 million guaranteed by the Government of Guyana.

In or about 2009, the Government of Guyana, though the ministry, accordance with the provisions of the Procurement Act and subsequent Regulations, using taxpayers’ funds, invited bids to build and to operate the Haags Bosch Landfill site. BK, along with another private entity, Puran Brothers Disposal Service (Puran Brothers), submitted responsive bids and eventually won the tender.

On November 20, 2009, BK, in association with Puran Brothers, entered into a contract with the ministry for the design, execution, completion, operation and maintenance of the Haags Bosch Landfill. The contract was worth US$9,729,822.50 but was later reduced to US$7,729,822.50.

The CEO said that BK had a legitimate expectation that (1) the ministry would administer the contract in good faith with proper motives and in an equitable manner (2) BK would be able to operate the landfill at least until 2019 and (3) BK would be able to apply to adjust the contract rates upwards in the event of an increase in volume of waste, costs, expenses among others.

He said that following the opening of the landfill in 2011 it became clear that the terms were vague and that there was a need for them to be reviewed.

Before long the ministry started continuously changing the design, according to Tiwarie.

He said that despite the company’s efforts, a number of inaccuracies and misrepresentations were peddled in the media in favour of the government. Before long the bad faith extended in the refusal to pay over monies owned and despite not being paid for 18 months, Tiwarie said, BK continued its work in keeping with the contract.

The Landfill currently occupies 64 acres and is made up of one operational cell, various roadways, a building housing an administrative section, a full canteen, recreational facilities, a workshop maintenance area, a large weighing scale house, a leachate pond area currently under construction, a medical centre and a fully functional storm water pond – all of which were painstakingly constructed by BK over the past few years, he said.

He noted that the termination has left some 50 persons on the breadline.

According to him the Haags Bosch Landfill site had steadily increased since October 2014 to its highest ever since its existence – “solely as a result of the work and efforts of BK.”

Gordon Gilkes, the Project Manager of the Georgetown Solid Waste Management Project in his affidavit in answer on behalf of the respondents admitted that instructions were given for changes to be made in the design to which BK agreed. However, he denied that BK was forced to process double the amount of waste originally contemplated by the contract. He admitted that there had been delays in making payment to BK for the operational phase of the contract but asserted that there had been no delay in making payment to BK in the construction phase of the contract, according to what was written in Justice Chang’s decision.

 

 

 

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