Dexim Holdings disputed NHT claims in multibillion-dollar housing saga
Published:Sunday | January 14, 2024 | 12:06 AM
Developer Dexim Holdings Limited disputed claims of breach of a $2.5-billion contract with the National Housing Trust (NHT), arguing that it experienced problems in COVID-19 that impacted its work and efforts to deliver 200 houses.
The parties signed an agreement in August 2019 for the company to provide 200 houses in Discovery Bay, St Ann, at a total cost of $2.5 billion by January 2021. But the deal was later amended in January 2021, extending the deadline to August 2022.
In its September 2022 lawsuit, the NHT said after almost three years, which included the trust advancing $650 million, Dexim failed to deliver any of the units and was selling lots assigned to it.
The parties have reached a settlement, confirmed Dexim’s attorney Michael Williams who declined to give further details. The NHT acknowledged receipt of Sunday Gleaner questions on the matter last Wednesday but has not provided a response.
Documents obtained by The Sunday Gleaner reveal that Dexim CEO George Neil accused the state entity of not being fulsome about the state of affairs in its application to the court in September 2022.
NHT’s claim that the company was selling lots assigned to the trust and that it may not receive the 200 units was “disingenuous”, countered Neil in his affidavit dated September 29, 2022.
Neil insisted that NHT’s complaint was the subject of “open, transparent and ongoing good-faith” discussions between the two parties.
Third-party purchasers
The businessman admitted that 122 units of 172 constructed in phase one were sold to third-party purchasers, but he argued that this was “completely within the certain knowledge and active support” of NHT.
“I specifically refer to the sale of units on lots that were previously assigned to the claimant but were subsequently designated by the claimant as ‘non-confirming’,” he said, referring to the NHT’s complaint that the company built units on its lots larger than specified in the agreement.
Neil said given that discussions were being held between the parties up to six days before NHT filed its lawsuit, the state agency was “attempting to use the processes of the court for an improper purpose”.
Noting that the agreement with NHT was executed before the St Ann Municipal Corporation (SAMC) approved the development plans, he said when the parish authority finally granted approval, some of the lots allocated to NHT “became non-conforming”. He said only 107 of the 374 proposed lots for the development were approved for splinter titles up to September 2022.
“Irrespective of the specification of the lot size required by the claimant (NHT) and engrossed within the [agreement], it is the size and configuration of the lots as approved by the planning authorities, including the SAMC that shall be applicable to the development and further that the [agreement] cannot be lawfully inconsistent with such approval,” the Dexim boss argued.
Dexim also faced major financial troubles, including not being able to repay investors whose funds totalling $250 million became due on July 29, 2022.
Neil said the housing development was financed through equity in the company, the cash advance from the NHT and the loan from investors.
Among the exhibits to one of Neil’s affidavits was a letter dated September 1, 2022, that he received from the Jamaica Central Securities Depository Trustee Services.
That letter advised Neil that the trustee services would take steps to recover $264 million owed in principal and interests to investors.
“We will be taking actions to ensure the noteholders are made whole,” the letter said.
The trustee services said it had served a notice of default on Dexim on August 12, 2022 but “no action was taken … to pay the outstanding amounts”.
The problems were compounded by the COVID-19 pandemic, which Neil said forced his company to trigger the force majeure clause of the contract. He said notice was given to the NHT in a letter dated January 12, 2022.
To resolve the issues
Dexim said it had been experiencing “difficulties … with labour, supply chain issues, including the price of building materials, which directly affected the delivery of units being built”.
The company also said it requested “good faith” discussions to resolve the issues caused by the disruptions but the NHT “neglected and refused to meet” although the contract said if the disruption goes on for longer than three months, the parties “shall enter … good faith discussions” to determine a mutually satisfactory solution.
Dexim said a meeting was held with the NHT on September 13, 2022 and its lawyer wrote to the Trust six days later confirming its proposal for a resolution of the issues.
On the same day the letter was written, the NHT filed its court action.
In the proposal, Dexim noted that it was unable to construct or deliver the number of units in line with the original agreement due to the impact of COVID-19, market conditions and hyperinflation.
Dexim said it would also not seek any future drawdown from the NHT and would amend the agreement to allow for the delivery of 50 units, down from the 200.
Those 50 units, the company said, would have be sold at an increased price of $18.5 million per unit for delivery by June 2023. Dexim said it would make an eight per cent profit at that price. Their status is now known.
Another proposal related to the two-bedroom units that were bigger than NHT’s specifications. Dexim said those units were on the market for $23 million, but it was prepared to sell to NHT at $21 million for a 14 per cent profit.
The third proposal dealt with three-bedroom units whose price Dexim said was a “moving target” because of hyperinflation. Dexim stated a price of $27 million per unit, but it said a final price would be provided “shortly”.
Dexim’s proposal was copied to Neil; Dr Ronald Robinson, a consultant to Dexim; Oswald James; and Vencot Wright, then acting chairman of NHT’s guaranteed purchase programme committee.
Meanwhile, Neil alleged that the NHT did not disclose to the court that it requested a document with the houses that did not conform with its specifications for its “purchase consideration”.
Neil said if the court granted the injunction, Dexim “would be rendered unable to finance ongoing work to complete housing units” and further that if the company is blocked from transferring units already sold, it “shall become bankrupt”, a condition for the termination of the contract with the NHT.
Dexim also indicated that at “exorbitant cost” to it, a $650 million performance bond was secured with General Accident Insurance Company to guarantee the monies advanced by the NHT.
“The claimant is not at risk of losing its cash advance to the defendant and is at liberty to realise the performance bond if is so chooses,” Neil said, noting that the NHT indicated at meetings that it was not interested in terminating the contract.
Dexim also rejected NHT’s claim that it was to get the first 200 units constructed in the development. It said delivery was to be in batches of 50 and distributed evenly between the two parties.