138 Student Living in $119m legal fight with Prime developer
The John Lee-led 138 Student Living Limited (138SL), which constructs student dormitories, has revealed that a contractor for its first phase of developments, Prime Development Limited, has filed a $118.9 million claim against it, with arbitration set for February.
138SL described the outcome as uncertain but avoided accounting for a possible loss. Attorneys for the 138SL, the listed construction company, believe that at worst it would be forced to cover legal fees.
“The arbitration proceeding is scheduled to start 6 February 2017 and its outcome is uncertain,” stated 138SL in its financials for year ended September 2016.
The company said it is currently involved in two matters, an arbitration and a claim in the Supreme Court. Both matters arise from a construction contract dated September 16, 2014 between 138SL and Prime Development.
“Arising from disputes under the construction contract, the contract administrator along with the quantity surveyor issued a final certificate recommending that Prime owed 138SL $32.2 million,” stated 138SL, adding that Prime responded in June 2016 by filing points of claim asking for its own award.
“Prime claims that $118.9 million is due under the construction contract and has asked the arbitrators to award same,” said the report.
In response, on December 10 138SL filed a defence to the points of claim and also counterclaimed for general damages for breach of contract.
138SL stated that on August 24, 2016, the court put the claim on hold pending the outcome of the arbitration set for February.
“Further proceedings on the claim is dependent on the outcome of the arbitration and the attorneys are of the opinion that even if there are further proceedings on the claim there is no risk of 138SL being ordered to pay a sum of money to Prime, save for legal costs if 138 SL is unsuccessful in defending the claim,” added 138SL.
In 2014, 138SL raised funds in its initial public offer to list on the junior market of the Jamaica Stock Exchange. The listing of 138SL shares was reportedly in part to satisfy arrangements with primary lender Jamaica Mortgage Bank which backed a portion of the $1.3 billion construction cost for the first phase of the project contracted to Prime, which was to deliver 576 units by August 2015.
138SL made $26 million net profit on revenues of $295 million for its September year end 2016 compared with net profit of $1 million a year earlier.