— to terminate BK International Haags Bosch contract

By Svetlana Marshall
ACTING Chief Justice Ian Chang ruled on Thursday that the decision by the former Ministry of Local Government and Regional Development (MLGRD) to terminate with BK International its contract for construction and operation of the Haags Bosch Sanitary Landfill Waste Disposal Facility was irrational.

The Chief Justice’s ruling said: “The submission made by the respondents (MGLRD, Minister Norman Whittaker and Permanent Secretary Collin Croal) that BK’s application for judicial review is misconceived and that his quest for relief lies solely in private law procedure and not in judicial review proceedings must therefore be rejected.”

He said the MLGRD should have afforded BK an opportunity to hear its case before any decision was taken to terminate the contract.

“Had such an opportunity been afforded to BK, BK could have pleaded the numerous admitted breaches of the contract by the respondents themselves (including the serious breach of those provisions relating to the provision of finances to BK) as causes affecting its performance to its own detriment and to the prejudice of the public interest,” Justice Chang explained.

Based on the failure of the Local Government Ministry to take into consideration such relevant factors, the court rendered its decision to terminate its contract with BK as “irrational.”

“…in the circumstances, no public authority could reasonably fail to consider its own breaches of the provisions of the contract in making a decision whether to terminate its contract with BK.”
He said the general public had a direct interest in the project, not because of the level of public expenditure involved, but due to the importance of the project with respect to public health.

“Therefore, the ministry, in making a decision to terminate the contract, had to consider not only BK’s contractual obligation to it, but also its own primary obligations to the public health and welfare. I daresay that in so doing it could not act in disregard of own defaults in its own contractual arrangement with BK, its contractual agent.”

On March 13, 2015, BK International had applied to the court for a number of prerogative reliefs, including an order to quash the Notice of Termination issued by the Ministry on February 27, 2015 on grounds that the Termination Notice was done in bad faith and in breach of the rules of natural justice.

In his Affidavit in support of Motion, BK Chief Executive Officer Brian Tiwarie had pointed out that “the ministry had constantly delayed and changed design instructions due to shoddy design work”. He noted that the MLGRD had expected the company to immediately adapt to its ever evolving needs, while at the same time pressuring BK to accept and to process an increase of almost double the amount of waste originally contemplated.

He said these demands were made although the ministry “maliciously” withheld payment for operational and construction costs from BK for years, and would have failed to establish required accounts necessary to fund the ministry’s shortfall in payments to BK, as agreed.

“All were done in a deliberate but futile attempt to stifle BK and to force a termination of the parties’ contract, and to coerce BK to expend and to utilise its own resources to comply with the Ministry’s ever increasing unreasonable demands.”

Tiwari added: “Despite the fact that BK had not only complied with the ministry’s demands and had constructed and operated the Landfill site without any failure whatsoever, and had invested more than 5 years and millions of dollars of its own money into the project with the reasonable and legitimate expectation that it would reap the benefit of its hard work at the end of the contract in 2019 at agreed revised contractual rates, the ministry conjured up a scheme to terminate the parties’ contract and to victimise BK on frivolous and baseless grounds with the improper motive of operating the Landfill site itself or by a third party without paying BK what was owed or agreed.”

BK was represented by Devindra Kissoon of London House Chambers.

In his Affidavit in Answer, Gordon Gilkes, Project Manager of the Georgetown Solid Waste Management Project in the Ministry of Local Government and Regional Development, on behalf of the respondents, admitted that instructions were given for changes to be made in the design, to which BK agreed. But he denied that BK was forced to process double the amount of waste originally agreed upon in the contract, while admitting that there was a delay in making payment to BK for the operational phase of the contract, but not the construction phase of the contract.

He admitted that the Local Government Ministry had failed to establish the necessary accounts as required by the contract, but at the same time denied that BK was being forced to terminate the contract.

In June, Minister of Communities, Ronald Bulkan, had told the Guyana Chronicle that the funding agent for the project – the Inter-American Development Bank (IDB) — was unwilling to continue funding the project until the contractor for the operation was removed.

The minister had said that both the financial institution and the ministry were “dissatisfied and unhappy” with the contractor’s quality of work, which was one of the factors contributing to the IDB’s withholding of additional funds.