The Wa­ter and Sew­er­age Au­thor­i­ty (WASA) has won its law­suit against an in­sur­ance com­pa­ny over its re­fusal to re­lease a $2.5 mil­lion per­for­mance bond for re­ha­bil­i­ta­tion works on the San Fer­nan­do East Trunk Sew­er af­ter the con­tract for the project was ter­mi­nat­ed. 

De­liv­er­ing a judg­ment on Wednes­day, High Court Judge Joan Charles up­held the State-owned util­i­ty’s claim against Bankers In­sur­ance Com­pa­ny Lim­it­ed.

The bond re­lat­ed to a con­tract for the project signed be­tween WASA and Project En­gi­neer­ing Con­sul­tants Lim­it­ed, based in Phoenix, Ari­zona, and La Ro­main-based Oil­field and Ma­rine Sales and Ser­vices Lim­it­ed. 

Un­der the terms of the con­tract, val­ued at $25,452,552, the com­pa­nies were giv­en 180 days in which to com­plete the project and were re­quired to pro­vide a bond worth ten per cent of the con­tract sum. 

While the con­tract was signed in Sep­tem­ber 2012, the bond was pro­vid­ed by the in­sur­ance com­pa­ny when it (the con­tract) was award­ed af­ter a ten­der­ing process sev­er­al months be­fore. 

In June 2013, the en­gi­neer­ing com­pa­ny as­signed to the project wrote to the com­pa­nies rais­ing con­cerns over cer­tain de­fects in their work. 

It al­so com­plained that the com­pa­nies had failed to present their pro­posed method­ol­o­gy for rec­ti­fy­ing the de­fects and com­plet­ing the con­tract. 

In their re­ply, the com­pa­nies in­di­cat­ed that their meth­ods to per­form their oblig­a­tions had failed and they need­ed ad­di­tion­al time to com­ply. 

WASA re­fused their ex­ten­sion re­quest due to their fail­ure to sub­mit their method­ol­o­gy. 

WASA even­tu­al­ly ter­mi­nat­ed the con­tract based on the non-com­pli­ance and de­mand­ed the pay­ment of the bond as un­der the con­tract it was en­ti­tled to $50,000 a day up to a max­i­mum of the bond fig­ure for de­lays in the project. 

The in­sur­ance com­pa­ny re­fused as it claimed that the move was pre­ma­ture as the com­pa­nies had to ac­knowl­edge their al­leged breach or WASA need­ed to ob­tain a court or­der over it. 

It al­so al­leged that the project was de­layed due to is­sues with fi­nanc­ing and by spe­cial­ist ma­chin­ery that had to be im­port­ed. 

It main­ly claimed that the con­tract be­tween the com­pa­nies and WASA pre-dat­ed the bond and was there­fore void.

In up­hold­ing WASA’s case, Jus­tice Charles re­ject­ed the in­sur­ance com­pa­ny’s claims. 

Stat­ing that it was aware that it had to pro­vide the bond be­fore the con­tract was signed, Jus­tice Charles said, “In light of this, I con­clude that at the time that the said per­for­mance bond was is­sued, the de­fen­dant was aware of the oblig­a­tions of the con­trac­tor and agreed to act as sure­ty in re­spect to the per­for­mance of these oblig­a­tions.”

She al­so ruled that WASA fol­lowed the cor­rect pro­ce­dure for seek­ing the re­lease of the bond. 

As part of her de­ci­sion, Jus­tice Charles or­dered the in­sur­ance com­pa­ny to pay 3.5 per cent in­ter­est on the bond be­tween when WASA filed the case in 2015 to the date of the judg­ment. 

WASA was rep­re­sent­ed by Neal Bis­nath and Ly­dia Men­don­ca.