McAlpine sued for $4.18M

Androgroup Ltd. has sued McAlpine Ltd. for $4.18 million, representing what it claims it is owed in relation to its subcontractor work on the Butterfield Place project in George Town.

Butterfield Place project in George Town

Androgroup Ltd. has sued McAlpine Ltd. for $4.18 million, in relation to its subcontractor work on the Butterfield Place project in George Town.

McAlpine, one of the leading construction companies in the Cayman Islands for more than 30 years, was the general contractor on the project to build the new office building for Butterfield Bank.

According to information in the Statement of Claim filed in Grand Court on 23 December by Diamond Law Associates, McAlpine requested Androgroup to supply labour, materials and equipment to perform mechanical, electrical, plumbing and fire prevention works for the Butterfield Place project. Andro later agreed to perform similar services on behalf of Butterfield Bank in relation to the tenant fit-out of the office space.

Androgroup said in the Statement of Claim that it fulfilled its obligations.

‘Andro supplied and performed the requested MEPFP works and the subsequently changed MEPFP works for both of the [Butterfield Place] projects during the period from around April 2006 to around July 2008,’ the Statement of Claim maintains. ‘Andro dedicated 30 per cent of its labour resources in doing so.’

The Statement of Claim also maintains that during the course of the design and construction of Butterfield Place, McAlpine’s agents made ‘several significant and costly errors or failed to act reasonably or fulfil their duties’.

Those errors or failures included several design flaws made by the architectural firm contracted by McAlpine, which was CGMJ Ltd, the Statement of Claim maintains. Some of those design flaws only became apparent as the construction progressed and ‘had to be rectified by adding new works, undoing works already performed, performing works out of sequence’ causing Andro to perform the works ‘in different and more difficult conditions to those planned’.

‘The architect design flaws and ensuing requests via McAlpine that Andro make changes to the MEPFP works required for Andro to dedicate a great deal more time and skilled labour at higher costs than would have been required had there not been any architect design flaws,’ the Statement of Claim maintains. ‘The architects failed to reasonably and contemporaneously issue extensions of time to Andro in respect of any of the changed works.’

Change orders

The Statement of Claim also maintains that the architects also failed to issue proper change orders for changed works with directions as to how those changed works would be paid, which significantly increasing Andro’s administrative burden.

‘McAlpine then neglected, omitted, refused or failed to acknowledge, certify or authorise payment for many of the changed works or additional administrative burdens thus placed on Andro.’

The Statement of Claim maintains Andro encountered similar problems with the tenant fit-out project with regard to design flaws made by CGMJ Ltd. It also maintains that BCQS Ltd, a cost consultant contracted by Butterfield Bank to measure completed works, evaluate the cost of the works and certify for payment to Andro on the project, ‘failed to reasonably and contemporaneously evaluate and certify for payment sums due to Andro for changed works and neglected, omitted, refused or failed to reasonably and contemporaneously certify for payment costs to Andro for loss of productivity caused by the changed works’.

According to the Statement of Claim, McAlpine issued more than 200 instructions for changes to the MEPFP works to Andro and expressly or impliedly requested Andro perform and provide the additional MEPFP works without differentiating between whether they were caused by its own negligence or by Butterfield Bank’s negligence.

‘McAlpine knew or should have known that its own negligence and the owner’s negligence and the changed works and the additional MEPFP works would significantly impact and extend the time required to complete the [Butterfield Place] project,’ the Statement of Claim maintains.

Increased costs

In addition, it states McAlpine knew or should have known that its own negligence and the owner’s negligence and the changed works and the additional MEPFP works would significantly increase costs and therefore price to perform the works.

‘At no time did McAlpine suggest or imply to Andro that Andro might have to bear any of the costs or would not be paid at Andro’s standard and reasonable rates for any of [its works on the Butterfield Place projects]’.

In total, the Statement of Claim says Andro performed works in the sum of CI$9.62 million on the Butterfield Place projects and were paid, through 8 February 2008, an amount of CI$5.96 million by McAlpine.

In July 2008, McAlpine made a payment on another project ‘clawing back approximately CI$527.346.59, being a significant part of the money it had paid Andro on [Butterfield Place] by 8 February’, the Statement of Claim maintains.

‘This leaves owing from McAlpine to Andro the sum of CI$4,186,831.17.’

Sum due

According to the Statement of Claim, McAlpine has not made the payment of the sum Andro claims is due despite numerous requests and demands and being told that failure to pay would cause Andro ‘serious damage and may cause Andro to become insolvent and may even cause the failure of Andro as a business and essential service provider in the Cayman Islands’.

McAlpine’s failure to pay also caused damages to Andro’s reputation and credibility with its clients, suppliers and service providers, in addition to causing a loss of established credit facilities, employees and employee satisfaction, the Statement of Claim maintains.

Speaking to the Caymanian Compass recently, Androgroup Ltd. Managing Director Alan Roffey said that when a general contractor does not pay a subcontractor, it puts a lot of burden on the subcontractor.

‘We have paid all of the people we were supposed to pay,’ he said. ‘We paid labour, pensions, health insurance and all of our vendors. We have paid all of our bills, but we are out of pocket.’

Efforts to obtain comment from McAlpine Ltd. were unsuccessful as of press time.

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