The John Gray High School construction project shut down Friday amid the threat of legal action and claims by the government that the contractor may have duplicated fund allocations for pre-purchased equipment.
The $59.4 million project was shut down by general contractor Tom Jones International after it had issued a seven-day stop-work warning the previous week. Tom Jones owner/director Hunter Jones said the stop-work warning was issued ‘to protect our company’ after the government missed a payment due on 10 September.
The amount of that payment was $3.64 million.
However, a letter written to Tom Jones International by Ministry of Education Chief Officer Mary Rodrigues on 24 September stated the payment referred to in the stop-work notice was not yet due.
‘[The Ministry of Education] reiterates that the application [for payment] was received late and, pursuant to the terms of the contract, payment is not due until 10 October 2009,’ the letter stated. ‘Payments due will be made on that date.’
In the letter, Ms Rodrigues stated that Tom Jones International acknowledged it had submitted the application for payment late in an email dated 29 July and that the terms of the contract were clear in relation to when payment was due.
Ms Rodrigues stated that Tom Jones International was expected to withdraw the stop-work notice immediately.
‘If it does not, TJI will not only expose itself to significant costs which inevitably arise from a shutdown and which are not recoverable from the owner is these circumstances, but it will be necessary for the owner to recover damages as a result of TJI’s breach,’ she wrote.
In addition to what she called an ‘unlawful stop work’, Ms Rodrigues said the Ministry of Education had other issues of concern, including that Tom Jones International ‘may be wrongfully accounting for the value of payments received against the completed work’.
Ms Rodrigues stated a bridge loan had been used as a method to make payments in accordance with the contract.
‘Those advanced funds are to be accounted for by TJI as payments made pursuant to the contract,’ she stated. ‘However, it appears that TJI has not properly accounted for the loan withdrawals on its applications for payment and is in fact requesting funds for equipment items for a second time without accounting for the bridge loan funds in a proper manner.’
The letter went on to say the Ministry of Education was now aware that Tom Jones International had received payments for equipment and material purchases invoiced on specific certificates of payment; had received advanced payments of CI$6 million; and had also received withdrawal payments through the bridge loan facility, all without ‘an accurate and proper accounting’.
Although Ms Rodrigues stated that the Ministry had other possible remedies in relation to the matter, it preferred at this time to meet with Tom Jones International to review the allocation of advanced funds and the bridge loan withdrawals, rather than void the certificate of payment.
Despite the warning not to stop work and the invitation to meet, Tom Jones International proceeded to shut down the project.
Caribbean Mechanical (High Schools 2008) Ltd. Chief Executive Alan Roffey, whose company acts as a mechanical electrical and plumbing subcontractor on the job, said he was told verbally that work on the John Gray project would be suspended on Thursday afternoon. He received written confirmation of the suspension by email on Thursday evening.
Mr. Roffey said the Tom Jones International letter, stated: ‘The owner has refuted our notice to stop work for a number of reasons, all of which we deny.’
The letter warned that that issue ‘may have adverse effects on payments to sub-contractors’.
All of the Caribbean Mechanical employees were paid Friday, but the shutdown will cause the immediate lay-off of some 40 of the company’s employees. Mr. Roffey said nine workers will be kept to do a stock check next week, after which they would be subject to lay off as well.
‘We’ll be mindful of finding positions for our longer term employees affected by this lay-off,’ he said.
Fifty-one Caribbean Mechanical employees were given lay-off notices on 18 September, including 20 Caymanians. On 18 September, Mr. Jones said Tom Jones International would also lay off employees if a work stoppage occurred.
Clifton Hunter project
Rumours swirled at the John Gray site that a shutdown of the Clifton Hunter High School project in Frank Sound could also occur as soon as next week.
Tom Jones International also has the contract for that project.
Mr. Roffey said that even if the Clifton Hunter project continued, his company would be affected in the delivery of its contract by the shutdown of John Gray if his company does not receive payments due.
‘It’s not possible to isolate the two jobs and say the shutdown of one is not going to affect the other,’ he said, explaining that his company priced and ordered equipment and materials based on two jobs. In order to get materials and equipment needed for one job, it will have to pay for all of it.
Mr. Roffey said the shutdown will have an effect on his company’s credibility if payment for the materials cannot be made.
In the end, however, Caribbean Mechanical’s only recourse is through Tom Jones International, who hired it as a sub-contractor.
Although sympathetic to Tom Jones International’s position, Mr. Roffey said his company expects to get paid.
‘Their credit risk is not our credit risk,’ he said.
Mr. Roffey also indicated there would be extra costs associated with the re-mobilisation of the project, when it occurs.
‘This has destroyed the momentum of the project,’ he said.
A statement issued late Friday afternoon by Minister of Education Rolston Anglin acknowledged that Tom Jones International had stopped work on the John Gray project. Since the Ministry argues that the work stoppage was invalid, Mr. Anglin said any costs associated with the work stoppage will be Tom Jones International’s responsibility.
‘There are clear contractual terms for the settlement of disputes, including mediation, which have not been followed by the general contractor,’ said Mr. Anglin. ‘The cessation of the work has circumvented these terms.’
Efforts to contact Mr. Jones about the matter Thursday and Friday were unsuccessful.