REVERA successfully defended the interests of the client for the construction of a production facility

25.08.2023

• Background
• How did we help?
•  Proceedings*
• Expertise
• Findings and judgement of the court
• Decision

Background

The client is a customer for reconstruction of a production workshop (plant); 

The Customer and the General Contractor entered into a turnkey general construction contract for the reconstruction of the plant at a cost of over RUB 20 million;

The Client provided the General Contractor with an advance payment of RUB 3.7 million;

The general contractor has contracted the works for the amount of RUB 0.8 million. After six months, the construction actually stopped, the deadlines were significantly violated;

The customer refused to fulfil the contract and filed a lawsuit for recovery of unearned advances in the amount of RUB 2.9 million.

How did we help?

In preparation for the trial, REVERA has prepared:

• a business strategy outlining potential risks;
   
• documents for unilateral cancellation of the contract;
   
• a claim for return of unjust enrichment or provision of documents confirming the disbursement of funds;
   
• Initiating a pre-trial expert examination to assess the scope of work actually performed and inviting the General Contractor to participate. Due to the General Contractor's non-appearance, the expert examination did not take place;
   
• draft statement of claim for recovery of unjust enrichment in the amount of RUB 2.9 million;
   
• drafts of procedural documents related to the forensic construction and technical expertise;
   
• draft consolidated position on the case and other procedural documents.

Positions of the parties

Claimant

Defendant

The defendant is obliged to return unjust enrichment in the form of undisbursed advances   The plaintiff has repeatedly demanded that the C-2b acts be produced   The general contractor did not hand over signed certificates in respect of works worth RUB 2.9 million   The burden of proving that the scope of work has been fulfilled rests with the General Contractor

Advance actually worked, additional work not paid for   Approved design documentation was not handed over to the General Contractor, no contract was concluded   The burden of proving non-performance lies with the Claimant   Provided the court with an electronic copy of Act C-2b, a register of work performed by subcontractors, copies of the bill of lading and bill of quantities for the materials that the Respondent claims were used on the site   Provided a bill of lading for the manufacturer's delivery to the Respondent of a transformer substation worth RUB 0.6 million, which was actually delivered to the Project. No documents were signed with the Customer on the transfer of the substation.

 Proceedings*

The court verified compliance with the essential conditions for the conclusion of the contract and recognised it as concluded;

The Court assessed the Employer's unilateral refusal and found it to be justified;

The court requested:

• the accounting records of the General Contractor and the Employer, which showed the correctness of the Claimant's calculations in respect of the unearned advance;
• all contracts with contractors engaged by the Employer;
• executive documentation of the General Contractor and its subcontractors, contracts with subcontractors, T&Cs for materials and other documents;

The defendant claimed that the work had been carried out by its subcontractors without providing any documents;

The court appointed a construction-technical expertise.

Expertise

The General Contractor did not provide the expert with the performance documentation and certificates of completed works;

The Respondent was unable to specify the locations of the works which had previously allegedly not been accepted by the Employer;

According to the expert's explanations, it is not possible to establish the work performed by the Respondent without providing executive documentation;

In the research part, the expert indicated what types of work were generally performed at the site

Findings and judgement of the court

The Respondent's arguments that the Claimant must prove by whom the work was performed are contrary to the law, since the procedure for presenting the work, confirming its scope and quality was not observed by the Respondent;

The risks of the Respondent's failure to provide evidence in the case file are borne by the Respondent;

The Respondent did not prove acceptance of any works from the subcontractors, did not submit any documents in terms of the existence of claims to the subcontractors, sending them certificates of completed works, executive documentation, etc., therefore, the Respondent did not accept the said works from the subcontractors;

The existence of the works claimed by the Respondent has not been confirmed by examination;

The bill of lading for materials cannot be a proof of work performance in the absence of the materials write-off list and the absence of these costs in the accounting data of the Respondent;

Decision

To satisfy the Client's claims in part (minus the cost of the transformer substation confirmed by the expert). To recover RUB 2.28 million from the defendant.

The decision was appealed by the Respondent. The appeal was dismissed.
 

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