High Court orders GRDB to pay miller US$70,000 for rice exported to Panama
The Guyana Rice Development Board (GRDB) has been ordered by the High Court to pay Essequibo rice miller, Vilvoorden Investment Incorporated US$70,000.20, which represents payments for rice GRDB took from the company and exported to Panama.
In 2018, GRDB entered into two written contracts with the Agriculture Marketing Institute, a State Agency of the Government of Panama, to sell to the institute 380, 950 quintals of rice.
To perform its obligations, GRDB entered into several oral and written agreements with local millers and farmers, including Vilvoorden Investment for the latter to provide milled rice.
As it relates to one of the contracts, the GRDB entered into an oral agreement/sub-contract with the company for the supply of six containers of long-grain white rice.
Despite providing the quantity of rice, the company was, however, not paid by the GRDB. As a result, in 2022, the company initiated legal proceedings against the State agency which is registered under the Companies Act of Guyana.
While the GRDB acknowledged that it is indebted to Vilvoorden Investment in the sum of US$77,000.20, it argued that its obligation to effect payment was conditional and contingent on it receiving payment from the Agriculture Marketing Institute in Panama.
Therefore, since the Rice Board claimed that it had not received any commission from the Agriculture Marketing Institute, it contended that it was not obligated to pay the company.
In advancing its case, the GRDB had asserted that it had made and continues to make diligent efforts and has taken reasonable steps to demand payment from the Agricultural Marketing Institute of Panama but the latter has not fulfilled its contractual obligation to pay the former.
Justice Gino Persaud, in a recent ruling, noted that the payment clause in the contract between Guyana and Panama states: “The buyer will pay the seller the value for the white rice … after deductions as stated are made by the buyer on receipt of payment from Panama”
According to him, the words in the contract do not suggest that payment is contingent on being paid by the Agricultural Marketing Institute. “The language of this clause, therefore, suggests a pay-when-paid clause. However, the language used in the clause is ambiguous and does not specifically refer to the entity in Panama which payment would be made from,” he held.
He said more confusion is added by the latter part of the clause which states: “Invoices for each weekly shipment are to be submitted to the Guyana Rice Development Board. Payment will not be made if the seller doesn’t submit the invoices to the Guyana Rice Development Board.”
The above clause, Justice Persaud noted, suggests that payment would be made after invoices are supplied by the subcontractor [Vilvoorden Investment] on a weekly basis. If these invoices were not supplied the subcontractor could not be paid, he pointed out.
Having regard to these observations, he held that the GRDB cannot rely on the pay-when-paid clause since the clause is unspecific and ambiguous. Moreover, he said that the company had completed its obligation under the contract four years ago.
Thus, Justice Persaud held that Vilvoorden Investment is entitled to be paid within a reasonable time for the rice supplied. “The pay-when-paid clause did not absolve the [GRDB’s] liability to pay the [Vilvoorden Investment] even if it had not been paid.”
By relying on that clause, he reasoned that the Rice Board had to advance all means possible to obtain payment from Panama but from the evidence provided it had not done so. “Merely, sending letters to demand payment is not sufficient, given that four years have passed.”
In the circumstances, judgement was granted in favour of Vilvoorden Investment in the sum of USD 77,000.20 or its equivalent in Guyana dollars, together with interest on that sum, along with costs in the sum of $1 million to be paid in six weeks hereof.
