The Tribune

By NEIL HARTNELL

Tribune Business Editor

A WELL-KNOWN businessman has confirmed to Tribune Business that he paid a $5,000 fine after being found in Contempt of Court, describing as "unfortunate" the situation he and a former business partner now found themselves in due to a dispute over a $1.1 million Old Fort Bay home.

Explaining how he and former Caribbean Construction and Management Services (CCMS) business partner, Alex Reed, had been found in Contempt, Robert Myers said they had taken too long to comply with a January 19, 2012, Supreme Court Order to provide it with the company's accounting records in relation to a $383,916 judgment made against them.

The judgment, a copy of which has been obtained by Tribune Business, was obtained by Old Fort Bay homeowner, Isabel Rattazzi, in relation to a dispute that erupted between herself and CCMS in relation to construction of her property.

The November 23, 2011, judgment rendered by Sir Michael Barnett, the Chief Justice, described how Ms Rattazzi had claimed that CCMS "wrongfully repudiated the contract" between them "by walking off the job", causing her damage and extra costs to complete the job.

In return, CCMS - Mr Reed and Mr Myers - had counterclaimed for damages worth $86,808, alleging that this was for work done and that Ms Rattazzi "wrongfully refused to pay". The company had also sought compensation for the loss of 12.5 per cent profit on the contract's remaining value.

Detailing the reasons for his verdict, Sir Michael noted that CCMS had argued that the contract between themselves and Ms Rattazzi was never signed, and that the budget summary "always showed a projected cost higher than $1.1 million, and always showed overhead charges of 5.5 per cent".

The Chief Justice found that "it would be wrong" for CCMS to "exploit the fact" the contract was never provided and signed, saying the company knew at all times Ms Rattazzi's intent was the construction price should not exceed $1 million.

The budget summary, Sir Michael said, was "ambiguous", and the 5.5 per cent overhead charge was never discussed with the homeowner.

"I am prepared to find that as the only document signed by both parties records that the house was to be built at a price equivalent to the [CCMS] costs of labour and materials, plus 12.5 per cent profit with a guaranteed maximum price of $1.1 million, those were the terms of the construction agreement between the parties," Sir Michael ruled. "I reject the [CCMS] contention that it was entitled to charge the 5.5 per cent, and that the price was not limited to $1.1 million."

Turning to the issue of whether CCMS was entitled to terminate their arrangement in February 2006, after receiving a 'short payment' of $100,000 from Ms Rattazzi instead of the requested $209,565, the Chief Justice noted that the company carried on working.

He said it was only after the March 14, 2006, meeting and Ms Rattazzi's demands for back-up documents that CCMS made the demand for the short payment and decided to walk-off the job. Sir Michael said there was nothing to back-up Mr Reed's contention that Ms Rattazzi was having 'cash flow issues', and found she had lost confidence in him.

As a result, Sir Michael said the short payment could not be seen as a 'repudiation of the contract' by Ms Rattazzi, and found that CCMS "was in breach of contract when it terminated" their agreement on March 17, 2006.

While rejecting Ms Rattazzi's claim for "damages for defective performance", Sir Michael set great store by a CCMS e-mail to her New York architect. This said the company was doing the work for a $220 per square foot price, when all other "work of this calibre" was priced at $320 per square foot, at a minimum, and usually at $380-$400 per square foot.

"The real problem stemmed from the fact that [CCMS] had, upon reflection, underbid the job," Sir Michael ruled. "The $1.1 million was simply not achievable at a profit to [CCMS] and recognising that, he sought to exert the nuclear weapon available to builders, namely walking off the job.....

"Clearly, the job was underbid by [CCMS] usual rates. However, the defendant overshot his bow. He had no right to terminate the contract."

Sir Michael found that since Ms Rattazzi had paid CCMS $745,269, and she had to pay a further $739,135 to finish her Old Fort Bay home, she was entitled to $383,916 in damages from CCMS - as a $1.1 million property had taken $1.484 million to build.

Explaining to Tribune Business why CCMS had been unable to pay the damages, and why both he and Mr Reed had paid $5,000 Contempt of Court fines, My Myers said the pair had severed their relationship due to "disagreements between us". As a result, CCMS was now a dormant company.

In addition, CCMS had operated more as a project manager and 'cost plus' contractor, finding sub-contractors to do the physical construction. As a result, according to a May 17, 2012, affidavit sworn by Mr Reed, the company "never accumulated any substantial assets", such as heavy equipment, that could be used to satisfy the Rattazzi judgment.

CCMS ceased trading on April 17, 2011, and Mr Myers told Tribune Business that its accounting and financial records, which the court wanted to see, had all been "boxed and stored".

"The reason we got that fine is because it took me a long time" to sort through the accounting records," Mr Myers said. "I had to hire an accountant to dig out the information to process what the court required, and couldn't do it in the time the judge required."

Mr Reed's affidavit backed this up, saying: "The reason that this process took so long is that, although CCMS has not been formally liquidated, it had stopped trading many months before the injunction was issued.

"All CCMS staff had been made redundant, and the company's books and records had been boxed and stored, with the accounts in an unreconciled state. It therefore took some time for the records to come to hand, and an accountant, Roshan Noronha, of ACIT Bahamas, had to be instructed to compile the information."

When it came to meeting the damages sum, Mr Reed's affidavit said CCMS held $46,395 in cash at Royal Bank's Lyford Cay branch, and was working to recover $110,584 in receivables owed to it. It owed $60,000 in debts to a former employee, and $31,376 in legal fees to Glinton, Sweeting and O'Brien, its attorneys.

"It's unfortunate and I'm upset by the whole thing," Mr Myers told Tribune Business, "but I don't know what else to do. Hopefully this will calm down.

"It's the first time I've had such a situation happen to me. I'm not sure how it goes. We certainly paid the $5,000 fines, and Alex is still doing stuff for clients to ensure we get paid. We have to adjust the numbers to what the receivables will be. It just took me more time than what was allowed.

"We got stung and it's unfortunate. It's business and I understand it. There's not much we can do about it. We acted as responsibly as we could. We don't necessarily agree with the judgment, but completely accept it.

"We can't keep fighting it. Just paying the legal fees, it's prohibitively expensive, and with no company it's impossible. It's tough, but that's the way the law works. We just got caught up in it. It's a risky business."