Gov’t settles with high schools contractor

The Cayman Islands government has agreed to pay $400,000 to its former contractor Tom Jones International to settle all claims relating to the high schools construction project.

The government is paying the construction firm the $400,000 for use of equipment left on site and the return of scaffolding and shoring materials owned by the contractor. Also under the agreement, the government will retain “retention monies” totalling $5.552 million, referring to money earned by Tom Jones International during the project but held by the government for an agreed period following completion of the project.

No ‘substantial assets’ 

Minister of Education Rolston Anglin told the Legislative Assembly on Monday there is no evidence that the Caymanian company Tom Jones International had “substantial assets” that the government could hope to recover in court. Pressed by West Bay lawmaker McKeeva Bush, Mr. Anglin said there is also no evidence that the company’s local shareholders or international affiliates (who may have substantial assets) had a role in the company’s actions leading to the breakdown of the contract, and so could not be held financially liable.

“When the contextual factors were considered, a strong case was made that a settlement agreement would be in [the government’s] best interests at this stage. Following extensive negotiations, both parties have arrived at an outcome that is acceptable to both parties and sanctioned by the Cabinet,” Mr. Anglin said.

He said he feels the settlement is a “zero-sum” agreement since the $400,000 is being paid for equipment that would have been needed anyway for the project, and considering the $5.552 million in retained money. Mr. Anglin said Tom Jones International’s claims against government totalled some $25 million.

Contract terminated 2009 

In early 2008, Tom Jones International bid significantly lower than other construction firms on the project to build Clifton Hunter High School in Frank Sound and the new John Gray High School in George Town. By September 2009, severe problems between the government and Tom Jones over payments became public, and Tom Jones contractors and subcontractors walked off the John Gray project site. They returned shortly thereafter, but walked off the John Gray and Clifton Hunter work sites in November 2009.

In November 2009, Tom Jones International was sued for $2.24 million for amounts due on work completed by one of its major subcontractors on the high school projects, Caribbean Mechanical (High Schools 2008) Ltd. Shortly afterward, Tom Jones sued the Cayman Islands government for $2.95 million for work it said was completed and not paid for. The government proceeded to terminate the company’s contract in early December 2009 and counter-sued Tom Jones, but that suit was thrown out of court by a judge, who said he found it “forensically embarrassing” because of a lack of details.

The difficulty involved disputes over some 85 change orders in the project, which totalled more than $17 million, according to Tom Jones International.

Clifton Hunter opened to students last fall, while the new John Gray school is still not complete.

According to a news release read by Mr. Anglin in the assembly, “The settlement agreement is not to be construed in any way as an admission of liability or wrongdoing by either [the government] or [Tom Jones International]. Instead, [the government] and [Tom Jones International] are of the view that, given the anticipated costs associated with arbitration, legal proceedings, third party experts and additional expenses, it is in both parties’ best economic interests to have reached settlement of all disputes in relation to the school projects.”

In 2012, an arbitrator determined that the government’s outstanding payment issues with Caribbean Mechanical would be resolved for total payments of $5.5 million to the company. The government paid $1.3 million to other firms to help determine the amount of the resolution.