By Lynford Simpson, Parliamentary ReporterA BREACH of contract by the Ministry of Construction (Housing), has cost the Government more than $90 million, the Public Accounts Committee of Parliament was told yesterday.
Genefa Hibbert, Permanent Secretary in the Ministry of Water and Housing, told the PAC that the developer, Y.P. Seaton and Associates, was given an out-of-court settlement of $25.15 million, plus accrued interest of $65 million for damages claimed against the ministry for its, "failure to meet certain obligations in relation to a construction contract."
TRANSFER
"Of the total settlement of $90.15 million, $30 million was paid in cash and the balance was to be settled by the transfer to the contractor of certain Government-owned lands," Ms Hibbert said. Cabinet approved the settlement.
The new Ministry of Water and Housing, in its written response to the PAC, explained that on June 2, 1988, the former ministry agreed to sell the developer roughly 140 acres of land which was part of Eltham Farm and Angels Pen, St. Catherine. The purpose of sale was to enable the purchaser to develop a housing scheme on the said lands within 36 months.
"Although the agreement does not impose on the ministry obligation to provide any infrastructure other than raw land, the then Minister of Housing (Bruce Golding) agreed at the time of sale that the developer would have access to a sewer complex to be provided by the ministry at a cost to be negotiated," the report to the PAC said.
In September 1991, the ministry reportedly entered into an agreement with a contractor to build a new sewage plant in seven months. "The contractor did not perform as contracted and, in June, 1992, when the developer was in a position to commence delivery of the housing units, only 37 per cent of the sewage plant was completed."
Y.P. Seaton itself was subsequently hired as a sub-contractor and took one year to bring the work to the stage where connection from the completed houses to the sewage plant could take place.
Y.P. Seaton said it suffered loss as a result of the ministry's failure to complete the construction of the plant in a timely manner and filed a lawsuit in 1992 claiming damages.
REFERRED TO CABINET
The matter was referred to Cabinet which gave approval for the establishment of a panel of lawyers and engineers, to investigate and assess the validity of the claim. The panel was also charged with determining whether there was any obligation on the part of the Government to honour the claims and, if so, to recommend settlement.
The panel reported that there was an obligation on the part of the Government to honour the claims and an out-of- court settlement of $90 million was agreed to.
"The findings of the panel were referred to Cabinet. Cabinet by decision No. 41/01 approved the terms and the amount of the settlement."
