TUI sides with gov’t in 15-year-long dispute with contractor

[Photo: Renato Marques]

The Court of Final Appeal (TUI) has finally ruled on a case pitting the government against a building contractor regarding renovation works at the Sports Bureau (ID) in 2008.

According to the ruling, the TUI upheld the lower courts’ previous decision, siding with the government in its claim for compensation, including a fine against the company for failing to meet the contract deadline.

According to the case information, the contract was initially signed by the parties in July 2008, with a total price of MOP31,448,143 to be paid in four installments.

The contractor was obligated to complete the work within 115 days of the commencement of work, and a penalty would be applied if it failed to do so within this timeframe.

According to the project schedule agreed upon by the parties, the execution period was to begin on October 3, 2008, and the completion date was scheduled for January 25, 2009.

However, due to a work accident during the execution of the works, the Lunar New Year holidays, and repair works carried out by the company, the ID only completed the inspection and acceptance of the works on March 15, 2010.

During the execution of the work, it was found that there were discrepancies between the project drawings and the bill of quantities in the documents prepared by the ID, with the company, after consulting the project supervisor, having to carry out additional and amendment works, which were reflected in the actual cost of the execution of the work, which exceeded the awarded price.

By order dated February 12, 2010, due to the delay in completing the work and under the terms stipulated in the contract, the Chief Executive (CE) imposed a daily fine of MOP30,000 on the company until the specific date of completion of the work, resulting in a fine of MOP7,980,000.

The company appealed this decision in March. However, the CE rejected the appeal, maintaining the decision to impose the fine, leading the company to resort to the courts, claiming there was no breach of contractual duties, and seeking to have the CE’s order declaring the fine upheld as null and void.

Concurrently, the company also sought compensation for additional work not covered in the contract, in the amount of MOP639,189, and requested that the government be ordered to pay the fourth installment of the contract price in full, totaling MOP6,289,628.60.

The case was heard by the Court of Second Instance (TSI), which dismissed the claims, but dissatisfied with the decision, the company appealed to the TUI.

Upholding previous rulings, TUI noted that, in the absence of any document amending the originally signed contract, the price of the works is the one stated in the contract, and therefore there is no basis for the requested compensation.

In other respects, the TUI ruled that the government acted in accordance with Article 838 of the Civil Code by not paying the final installment, as a form of compensation for non-compliance with the contract deadline and in line with what was previously agreed and signed by the parties, dismissing the company’s appeals.