"We have won a victory against a contractor who tried to avoid responsibility. The Supreme Court has irreversibly ruled that a defaulting company should not be paid for defective work. We have established our name in the real estate market as developers of exceptional projects for whom quality is the highest standard. We demand quality from all our partners. We try to resolve all challenges in good faith, listening to the arguments. However, we could no longer tolerate KG Constructions' constant delays or defects, which have been documented both by independent experts and court-ordered expertise," says Lionginas Šepetys, CEO of SBA Urban.
According to him, the work on the façade of the Green Hall 2 business centre was almost one and a half years late from the deadline set in the contract with KG Constructions, but even after this deadline, not all the work was carried out properly, and the identified defects were not corrected in the agreed time. This necessitated additional costs to find other contractors to complete the work not done by KG Constructions.
According to Mr Šepetys, there had been good relations with KG Constructions for a long time. At their request, work deadlines were postponed, but chronic delays continued. "KG Constructions' failure to honour its agreements and to complete the work on the façade and the roof of the business centre resulted in the premises being handed over to the tenants of the business centre later than planned. As a result of the daily losses and KG Constructions' continued failure to carry out the works, Upės Projektai had no choice but to apply liquidated damages and not to pay for the non-performance. This was provided for in the contract signed by both parties. KG Constructions was paid in advance for work which it never managed to carry out to a high standard. The Supreme Court has also stated this.
"Moreover, KG Constructions is still in breach of its obligations and has not carried out any warranty work for several years due to the defects that have been revealed. So far, we have hired other contractors to repair the defects left by KG Constructions. These facts reveal a lot about the credibility and the perception of responsibility of this company," says L. Šepetys.
In 2021, the Vilnius Regional Court ruled that SBA Urban had correctly imposed a penalty of EUR 50 000 for breach of contract. However, the same court confirmed that SBA Urban was not legally obliged to pay €100,000 for KG Constructions' defective work. The Court of Appeal had awarded EUR 60 000 to KG Constructions, which had defaulted, for such work. However, in an unappealable ruling, the Supreme Court overturned the Court of Appeal's decision. It held that the sum of EUR 60 000 did not belong to KG Constructions and that KG Constructions had to reimburse it to SBA Urban's subsidiary 'Upės projektai'. KG Constructions will also have to pay the costs.
