Re – Subcontractor’s default – Unavailable Manpower to attend snagging, DE snagging
Our Ref: xxx
Date: xxx
To : xxx Construction Engg. Corp. (Middle East) LLC
P. O. Box xxx
Dubai, U.A.E.
Attention : Mr. xxx
Project : xxx – Zabeeel Second, Dubai, UAE.
Subject: Re – Subcontractor’s default – Unavailable Manpower to attend snagging, DE snagging, PQA & CHO works @ Tower-1, 2 & 3.
References:
a) xxx dated 27 November xxxx
b) xxx dated 04 December xxxx
c) xxx dated 14 April xxxx
d) xxx dated 05 May xxxx
e) xxx dated 11 May xxxx
f) xxx dated 19 May xxxx
g) xxx dated 28 May xxxx
h) xxx dated 01 July xxxx
i) xxx dated 04 August xxxx
j) xxx dated 23 November xxxx
k) xxx dated 21 January xxxx
l) xxx dated 29 March xxxx
m) xxx dated 21 April xxxx
n) xxx dated 10 June xxxx
o) xxx dated 13 July xxxx
p) xxx dated 30 August xxxx
q) xxx dated 21 November xxxx
r) xxx dated 06 December xxxx
s) xxx dated 12 December xxxx
t) xxx dated 19 December xxxx
u) xxx dated 21 January xxxx
v) xxx dated 26 May xxxx
w) xxx dated 25 October xxxx
Dear Sir,
We are writing to formally respond to your notice of default, which we reject on the grounds that it is false, unfounded, and baseless.
Xxx has successfully completed the production, delivery, and installation of all the Pods under its scope of work, as per the Subcontract Program of works, over two years ago.
It is important to note that every single one of the 3441 Pods produced by Xxx has been fully snagged in the factory prior to delivery to site and has been inspected and approved by both the Main Contractor and the Engineer, including inspectors stationed in our facility during the execution of the works. All approval documents including Pod MIRs are part of the project records.
None of the alleged pending works or damages/defects as listed in your letter were noted during these inspections or recorded in the approval documents.
First, with regards to your allegations, we formally record again that the Main Contractor and his representatives, as well as various subcontractors engaged by the Main Contractor, including MEP teams on site, have been, and still are, placing scaffoldings, ladders, and other temporary works inside completed and approved Pods, to access and work on their own incomplete works above the Pods and through the Pod access panels. These uncontrolled activities on the Main Contractor’s project site and careless behavior have resulted in extensive damage to the Pods, which the Main Contractor is now attempting to pass on to Xxx as “snagging”. These are damages and not snags and are the result of the Main Contractor’s actions.
The Main Contractor’s own negligence on site has resulted in damages ranging from extensive damages to paint on the ceilings and access panels, to widespread damage and dirtying of white tile grout on the floors leading to darkening of the grout color, to scratches on the vanities and vanity tops, to damages on the glass partitions, and to various damages to installed sanitary accessories in the Pods.
Xxx has also raised multiple damage reports to the Main Contractor, all of which have been acknowledged and signed by the Main Contractor’s representatives on site.
Additionally, Xxx has given notice to the Main Contractor that failure to provide Wild Air and controlled temperatures and humidity in a manner consistent with Pod installation will result in damages to finishes including sealants and joinery, any resulting damage to finishes due to the delay of providing Wild Air and Temperature control is at the sole liability of the Main Contractor.
Second, with regards to the presence of Xxx’ team on site, we refute the allegations that Xxx’ manpower is not available on site. Xxx still has manpower on site in accordance with its Scope of Work.
We would like to remind you that pursuant to Appendix 1 – Subcontract Particulars, the date of completion of the Subcontract is 5 September xxxx (which is the completion date of the Main Contractor for the Main Works). Accordingly, the Main Contractor’s own snagging activities should have been completed before 5 September xxxx, and any minor and final snag by the Employer’s representative on Xxx completed scope of works should have been raised prior to this date.
As of today, Xxx has maintained its manpower on site for 19 months beyond what is stipulated in our Subcontract Agreement as a result of delays on the Main Contract solely attributable to the Main Contractor.
During this period, Xxx has fully supported the Main Contractor, and has even attended to damages to Pods by the Main Contractor’s teams despite the deplorable and repeated actions of the Main Contractor to evade payment for these abortive works which the Main Contractor himself instructed.
Third, we refer to all formal Notices of Default which we have been issued by Xxx to the Main Contractor including the latest letters dated 26 May xxxx (ref. UP-1661/LET-1417-22/YR-at) and 25 October xxxx (ref. UP-1661/LET-1484-22/YR-at) both of which have remained unanswered and undisputed by the Main Contractor, and we again formally notify the Main Contractor that he remains in default on all points raised in our previous notices, and in particular as it pertains to the Main Contractor’s defaults in payment.
We also record that on 04 January 2023 the Main Contractor released (with over 18 Months of delay) Payment Certificate 22 which included a payable amount of AED 688,457.98.
In the same correspondence, the Main Contractor’s representative instructed Xxx to issue a tax invoice for these certified works based on which Xxx issued to the main contractor tax invoice #LOC/2023/00001 dated 04 January 2023. As per the Main Contractor’s certificate document this payment was due on 18 March 2023
This payment is still not released, and again the Main Contractor is intently delaying an overdue payment for works which have been certified and completed over two years ago even though the invoice is submitted following the instruction of the Main Contractor.
Finally, the Main Contractor is now seemingly attempting to bully Xxx into performing additional work (attending to the rectification of damages and abortive works) which are resulting from the actions of the Main Contractor’s representatives on site, by withholding a due payment already accepted by the Main Contractor and in parallel, threatening deductions.
We record and remind the Main Contractor that in previous such cases, Xxx has attended to such additional and abortive works at the instruction of the Main Contractor and based on signed damage reports by the Main Contractor confirming such additional works. The Main Contractor then proceeded to deliberately evade payment for these instructed works by completely disregarding the submitted variations as recorded in our letter ref. xxx dated 26 May xxxx thereby demonstrating beyond a doubt his bad faith in fair determination.
We are appalled by such unprofessional and inappropriate behavior of the Main Contractor and his representatives. Xxx has delivered this project in full despite all recorded defaults of the Main Contractor, and we have remained, still today, open and ready for reasonable discussions in relation to deploying manpower for performing additional works and rectification of damages in a manner consistent with the Main Contractor’s requirements.
However, should the Main Contractor choose to deploy his own workforce to repair damages on his Project Site which are the result of the actions of his representatives or any third party under his engagement, he does so at his own liability and responsibility. Any cost, expense, losses, and/or liability of whatsoever nature incurred and/or suffered by the Main Contractor shall be at the Main Contractor’s sole liability, including any voiding of Pod warranties which will result from works executed inside approved Pods by the Main Contractor’s representatives without the prior coordination with and clearance of Xxx.
Xxx has done everything it can to ensure utmost cooperation and support to the Main Contractor. However, Xxx cannot condone such blatant abuse and bad faith in the management of its Subcontract Agreement by the Main Contractor.
We again reserve our right to take any action against you until such time as our delayed payment is released in full, our completed and approved works are certified and paid, and until all pending commercial issues are resolved.
We further reserve our right to claim for the cost of all the workforce which Xxx was required to maintain and still maintains on site from 5 September xxxx onwards as a result of the Main Contractor’s delays including the cost of daily transportation of such workforce to site and their local accommodation.
We equally reserve our right to suspend the execution of the Sub-Contract Agreement until full payment of our outstanding dues in reference to Article 247 of the UAE Civil Code and /or terminate the Subcontract Agreement in view of your uncontested and unjustified default pursuant to Article 272 of the same Code.
In the same line, Xxx will not be held liable for any direct or indirect impact on the site progress and work completion.
Should you elect to remain in default by withholding approved overdue payments and/or choose not to coordinate with Xxx to engage additional resources to rectify damages and perform abortive works and instead attempt to forcefully deduct payment due to Xxx, we will have not choice but to proceed with taking any and all actions against you.
All our rights are reserved.
Yours faithfully,
On behalf of xxx LLC
xxx
Project manager