The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

China Construction America’s (CCA) Bahamian subsidiary is alleging that Baha Mar “tied our hands” over resolving a $755,000 payment dispute, which was placed on the back burner due to the $3.5 billion project’s “implosion”.

Pengfel Yu, CCA (Bahamas) commercial manager, alleged in a November 12 affidavit that a sub-contractor on the Baha Mar project was attempting to “smear” the Chinese contractor.

He argued that US-based Controlled Demolition Incorporated (CDI) had failed to comply with its contract, and was seeking to “circumvent” the requirement to take its claim before a Disputes Resolution Board (DRB) specifically created for the Baha Mar project.

Mr Yu, denying that CCA (Bahamas) was deliberately ‘stalling’ due payment, instead alleged that CDI had failed to perform the work demanded by its Baha Mar contract.

He argued that the developer, then-headed by Sarkis Izmirlian, had refused to approve changes to CDI’s scope of works and the release of the last payment portion.

“Baha Mar never approved CDI’s claimed change orders or released retainage for CDI’s work, despite CCA Bahamas’s repeated requests for it to do so,” Mr Yu alleged, placing the blame squarely on the Cable Beach developer for the payments dispute. “CCA Bahamas was stuck in the middle and left with its hands tied.”

He then claimed that CDI’s demands for full, and final, payment in mid to late-2014 had to play ‘second fiddle’ to CCA (Bahamas) efforts to save the Baha Mar project.

Arguing that the US sub-contractor had “mischaracterised” its response to the payment demand, Mr Yu alleged: “During the time that CDI was filing its claim, CCA (Bahamas) was focusing on completing and saving a project that, due to the owner’s mismanagement, was on the verge of implosion.

“CCA (Bahamas) never acted in bad faith or inconsistently with its right to arbitrate, and instead has sought to negotiate with Baha Mar regarding CDI’s claim, all the while attempting to complete construction of the project.

“CDI ignores the fact that to the extent that there were any construction delays, they were justified. Instead, CDI chose to portray CCA (Bahamas) as purposefully stalling and ignoring CDI in bad faith.”

That is not quite how CDI sees it. The US-based demolition specialist, in its legal filings with the southern New York district court, alleged that CCA (Bahamas) had “thwarted, stonewalled and misled at every turn” for two-and-a-half years its efforts to collect on the outstanding $754,704 balance.

CDI was hired on November 25, 2011, to demolish the former Nassau Beach Hotel and towers ‘F’ and ‘J’ at the Wyndham resort - thus making way for the $3.5 billion Baha Mar campus.

It ultimately completed its contract, including an expanded ‘scope of works’ package, and handed over the demolition site to CCA on February 11, 2013.

The $754,704 outstanding payment hinged on CCA conducting a ‘final inspection’ and issuing a completion notice. But CDI’s president, Mark Loizeaux, alleged that the Chinese contractor “continually stalled” on carrying this out due to what was described as “a minor issue”.

Part of CDI’s contract was to crush concrete from the demolished hotel buildings so that it could be used to construct the new roadways for Baha Mar.

Just the the final 5 per cent of the concrete remained to be crushed to ‘golf ball’ size when the crushing equipment broke down, and Mr Loizeaux claimed CCA (Bahamas) and CDI dealt with the issue by the latter agreeing to accept reduced payment.

The CDI president agreed with Mr Yu that CCA (Bahamas) then refused to pay on the grounds that Baha Mar was not satisfied.

However, he suggested that the developer’s subsequent actions showed it was more than happy, refuting the Chinese contractor’s position.

“By August 2014, CDI had learned that all of the crushed concrete had been fully used by Baha Mar to build roadways and as structural backfill material in the new resort (something that CCA had not disclosed,” Mr Loizeuax alleged.

“Thus, CDI learned Baha Mar was fully satisfied, and CDI was now indisputably entitled to a Notice of Final Completion, final payment and release of retainage.”

Mr Yu, though, claimed that CDI was seeking to do nothing more than blacken CCA (Bahamas) name.

“CDI mischaracterises a lengthy and largely irrelevant factual background in an unfair attempt to smear CCA (Bahamas) and distract the court from the fact that it has failed to comply with the sub-contract,” he claimed, arguing that it was seeking to “circumvent” the DRB.

Mr Yu claimed it was “factually inaccurate” for CDI to allege CCA (Bahamas) was ‘stalling’, and accused it of “glossing over” its failure to complete the rock crushing.

“This issue - CDI’s failure to perform its demolition and crushing responsibilities according to the contractual terms - was not minor, and it seems unfair to characterise CCA (Bahamas) as ‘stalling’ when it was merely seeking to enforce the sub-contract according to its terms,” Mr Yu alleged.

“Rather, reaching an agreement with CDI took time, and attempts to negotiate with the project owner, Baha Mar, who remained dissatisfied at CDI’s performance, failed.”

Mr Yu alleged that CCA (Bahamas) informed CDI that the final payment request was “premature and incomplete”, and explained why.

“In short, CCA (Bahamas) disputes whether CDI was owed final payment, and it thus disputes the validity of CDI’s claim,” he alleged further.

And, while CCA (Bahamas) insisted that CDI’s contract bound it to use the Baha Mar-specific DRB to resolve payment disputes, the latter’s position is that there is no requirement to go this route.

Mr Yu also blasted CDI’s position that the DRB provisions are no longer valid as “based on false facts”.

“The DRB remains in effect until the project is complete, or Baha Mar or CCA (Bahamas) terminates the Prime Contract for cause,” he alleged.

“The project is not complete, and the prime contract has not been terminated. Thus, CDI cannot escape its obligation to submit its claim to the DRB.

“First, the Bahamian Ministry of Works and Utilities has not yet issued a Certificate of Occupancy for the entire project, and construction is not yet complete,” Mr Yu added.

“Second, contrary to CDI’s assertions, the prime contract has not been terminated. Neither Baha Mar nor CCA (Bahamas) has terminated the prime contract for cause. The prime contract is still in effect, and CCA (Bahamas) is doing everything it can to complete the project as expeditiously as possible.”