The Lava Hotel has sued the Ca’bella Pacific Construction and Tinai Gordon and Associates Limited for $4.9 million tala.
The lawsuit was filed in April this year against Ca’bella over claims of breach of contract. It also claimed negligence, alleging breach of a duty of care to carry out its contractual obligations; unjust enrichment is also alleged.
For the Tinai Gordon Associates, Lava Hotel which is owned by Digicel, is seeking two causes of action namely alleged breach of contract and negligence, damages.
The Court document says that both Ca’bella and Tinai Gordon Associates have filed statements of defences and counterclaims.
In April 2018 Lava Hotel and Ca’bella entered into a reimbursement contract for construction of the hotel and Tinai Gordon and Associates, was hired as the engineer to the contract.
Two years later the hotel project was completed.
The matter was heard before Supreme Court Justice Lesatele Rapi Vaai. The court document says three claims were not paid by the Hotel and the Ca’bella served a demand letter last year November 2020 for payments.
In response, the Lava Hotel filed a motion to set aside the demand letter challenging the debt.
In April, this year, the Hotel filed an application to amend its claim and a hearing was held last month.
Court documents say that as per contract, Ca’bella was required to obtain insurance to cover advance payment bonds, performance bonds and retention bonds.
It was the obligation of the Hotel to reimburse the Construction company.
The Ca’bella obtained insurance bonds from Progressive Insurance in the amount of $108,000 tala;in September this year, the insurance company was placed into voluntary liquidation.
The hotel claims that with the placement of Progressive Insurance into voluntary liquidation, the policies obtained by Ca’Bella are worthless, because Progressive Insurance was never in a financial position to honour any insurance claim which the Hotel may have submitted.
Ca’bella however claims that Progressive Insurance went into liquidation after the statement of claim was filed. Furthermore the Construction company contends that there is no cause of action arising from the liquidation from which the Hotel is entitled to claim damages.
The court rule that Ca’bella was in compliance with its contractual obligations as they have acquired the four bonds from Progressive Insurance which has been its insurer for its construction contract obligations.
The ruling reads “It was not required of [Ca’bella] to investigate the financial affairs and status of its insurer.
“Neither can it be established that [Ca’bella] was put on notice in 2018 that Progressive Insurance was in financial difficulties and was likely to go into liquidation in 2021, nor would it be unlikely to honour the bonds if the plaintiff did have the need to make any valid claim.”
In the end the Supreme Court Justice refused to amend the statement of claims and the Lava Hotel was ordered to pay costs of $1,000.