CAC 2000 fighting interest charges in X-Ray & Diagnostics lawsuit
Air-conditioning firm CAC 2000 Limited is challenging the formula used by the Supreme Court to compute interest payments in a lawsuit it lost to X-Ray & Diagnostic Ultrasound Consultants.
The interest charges amounted to nearly half of the total payout.
CAC has already paid over the damages awarded by the court, which means that it would have to claw back the interest payments if its appeal were to succeed.
Last October, CAC was ordered to pay US$372,100 and $568,186.64 - equating to around $56 million - plus interest to the medical services company, as well as loss of profit amounting to more than $7 million. Interest was computed at commercial rates of 9.25 per cent on the US dollar portion of the award and 14.13 per cent on the JMD portion, according to a statement from CAC chairman and CEO Steven Marston published alongside the company's 2016 audited accounts.
Marston described the interest rates applied to the judgment as "unrealistic" and indicated the company's objection to the 13-year span used to assess the damages payable to X-Ray & Diagnostic.
The overall damages and legal fees topped $124 million, of which $61 million was interest charges, according to CAC's disclosures. The company said it filed notice of appeal on December 2.
"The appeal relates to the basis used by the trial judge to determine the interest component of the award for the period June 2009 to 2016," said the notes to the accounts.
X-Ray & Diagnostics, which operates from Ripon Road in New Kingston, had contracted CAC to provide equipment maintenance services for its air-conditioning units, which had been purchased from CAC.
On May 11, 2003, combustible material within the fan coil of the air-conditioning unit ignited and started a fire, which destroyed a section of the X-ray company's premises, as well as several pieces of equipment it said were essential to its business.
The current judgment follows a retrial ordered in 2013 after Supreme Court judge Roy Jones awarded X-Ray and Diagnostics just over $74 million, representing the replacement costs of equipment damaged in the fire and consequential loss of profits.
In its audited accounts, CAC booked charges of $104.18 million to cover the damages and legal fees. The rest was covered from an insurance settlement of $20 million.
CAC has also taken issue with the 13-year span for which X-Ray & Diagnostic was awarded damages, saying that the company was back in operation in less than six months after the fire and "with new equipment".
Efforts to reach Marston and X-Ray & Diagnostics for comment were unsuccessful.
CAC 2000 went public and listed on the junior arm of the Jamaica Stock Exchange in January 2016.
In its financial report for the year ending October 2016, the air-conditioning company reported a marginal dip in annual revenue, from $1.08 billion to $1.02 billion.
Net profit fell from $64 million to $10 million. Without the court award, profit would have doubled.