Petrojam, company clash over alleged $57m fuel debt
Published:Sunday | April 6, 2025 | 12:05 AM
A nearly $60-million contract dispute between the state-owned Petrojam and a private developer has escalated into a legal battle over fuel deliveries and refinery’s bid to use properties to recover the alleged debt.
Petrojam, in court filings, accuses Kayla Acacia Company Limited of breaching a fuel supply agreement by racking up an unpaid bill of $56.7 million as of February 19, 2024. The refinery obtained a default judgment in May 2024 after arguing that Kayla Acacia failed to respond to the lawsuit.
Kayla Acacia has rejected Petrojam’s assertions and is seeking to have the judgment thrown out. Attorney Sean Kinghorn and Judy Ann Kinghorn are two shareholders and directors of the company, according to Companies of Jamaica records.
Telroy Morgan, Petrojam’s general manager, stated that an agreement signed on April 12, 2021, formed the basis for a series of fuel deliveries to Kayla Acacia. However, by February 2024, payments were over 40 days overdue, covering supplies such as unleaded 87 and 90 motor gasoline, automotive diesel oil, and ultra-low sulfur diesel.
Morgan said Petrojam’s lawyers – Nunes, Scholefield, DeLeon & Co – issued a demand letter on February 26, 2024, to Sean Kinghorn and Judy-Ann Kinghorn, with a March 7, 2024, deadline for payment.
He said the demand was not met.
The lawsuit, filed on April 2, 2024, claimed that Petrojam “has suffered loss as a result of the defendant’s breach of its obligation to pay for petroleum products received”.
Petrojam obtained a default judgment, arguing that Kayla Acacia did not file a response or acknowledge the lawsuit.
An affidavit from a bearer, who claimed to have delivered the court documents to a person identifying themselves as a supervisor at Kayla Acacia’s registered address, was submitted to the court. The Supreme Court accepted Petrojam’s application and granted judgment in favour of the refinery, including legal costs, totaling approximately $56.8 million.
However, Kayla Acacia is now challenging the judgment.
In an application filed on February 28, 2025, the company claims it was never properly served the lawsuit and only became aware of the proceedings in mid-February, when Sean Kinghorn saw the case listed in the court. Kayla Acacia’s general manager, Rohan Murdock, is contending that the bearer gave the lawsuit documents to someone at Kinghorn’s law office, not Kayla Acacia.
A legal clerk employed at the firm acknowledged receiving the documents. However, she denied being employed by Kayla Acacia or the telling the bearer she was. The bearer has since rejected the official’s assertions.
Murdock argues that the company had “good reason” for not acknowledging the lawsuit earlier and that Kayla Acacia has “a good defence with a reasonable prospect of success”.
Among the company’s key claims is that the alleged fuel deliveries did not occur as stated and that Petrojam failed to submit a statement of account despite requests.
“The company has always honoured the invoices presented,” Murdock said.
He further asserted that arbitration – not litigation – was the proper route for dispute resolution under the contract.
“Arbitration is a precondition to litigation,” Murdock said, claiming that Petrojam breached the fuel-supply agreement by bypassing this step.
Kayla Acacia also accused Petrojam of acting in bad faith.
“We were in amicable discussions when Petrojam circumvented the talks and filed the lawsuit,” the company claimed in court documents, demanding proof of the deliveries and the debt.
In response, Petrojam maintained it has followed proper procedure, including using an alternative method of service allowed under the court’s civil procedure rules.
Morgan said that since Kinghorn and Judy-Ann Kinghorn are the registered directors of Kayla Acacia, serving Kinghorn’s law firm was “sufficient to bring [the lawsuit] to the attention of the directors”.
He also said Kinghorn “represented himself to the claimant company (Petrojam) as being with the requisite authority to act on behalf of the defendant” in their dealings.
Petrojam insists Kayla Acacia has no viable defence and that setting aside the judgment “will be a waste of the court’s resources”.
Morgan cited an email from Sean Kinghorn, copied to Murdock, in which he allegedly acknowledged the outstanding debt in response to the March 2024 demand letter.
“We also acknowledge and accept the fact of the debt outstanding,” stated the “without prejudice” email. The legal phrase generally means that statements made in an attempt to settle a dispute cannot be used in court as evidence of any admission.
Morgan also said he met with Kinghorn on December 27, 2024 to discuss payment terms.
“At no point did Kinghorn or any other representative for the defendant dispute service of the claim or challenge the default judgment or that the sums which are being claimed were in fact due and owing,” he asserted.
On January 6, 2025 Petrojam applied to the Supreme Court for a charging order to secure the debt against at least five properties it said are solely owned by Kayla Acacia in St Catherine and St Ann. A charging order allows a creditor to secure a debt against a debtor’s property and ultimately to force a sale if the debt is not paid.
Morgan said some of the properties were being developed and the order was necessary to “safeguard” Petrojam’s interest.
He also said Petrojam “is now entitled to enforce the said judgment” because “the defendant has shown no intention of settling its indebtedness.”
At a hearing on February 1, Justice David Batts received an undertaking from Sean Kinghorn, Kayla Acacia’s attorney, that the properties would not be sold until the court rules on the charging order application.
The fight deepened on February 28 when Kayla applied for the default judgment to be set aside and for a declaration that the court had no jurisdiction in the matter.
Murdock accused Petrojam of misleading the court, saying Petrojam “now accepts” that service was effected on someone at Kinghorn’s law firm, not Kayla Acacia.
“This representation made by the claimant to the court, that the defendant was served, was, therefore, untrue and on this basis, without more, the judgment is irregular and ought to be set aside,” he said in a filing.
He also blasted Petrojam’s use of “without prejudice” communication “to colour the mind of the court” against Kayla Acacia.
Murdock said Petrojam had submitted no invoices when it applied for the default judgment and disputed the validity of the ones filed later. He said Kayla Acacia paid $53.6 million in January 2024, which he claimed Petrojam has not accounted for.
He also rejected Morgan’s claims that there was no dispute over the debt and contended that the sum paid in January 2024 “effectively settles the debt alleged to be owed”.
He further accused Petrojam of misapplying those payments to older invoices, which he said had been paid.
“If the claimant company has taken funds paid towards invoices for December 28, 2023-January 18, 2024 and applied them to invoices in November to December 2023, then it is clear that these funds have been misapplied and the defendant does not owe the claimant the sum it claims,” Murdock said in an April 2 filing. He has questioned Petrojam’s record keeping.
Petrojam is expected to respond to those assertions.
Morgan rejected Murdock’s allegations of a breach of contract and maintained that Petrojam’s lawsuit is justified. He said under the deal, if informal talks fail to settle a dispute, the seller can chose to go to court if they did not refer the matter to arbitration.
Talks with Kayla Acacia “yielded no positive results” and that Petrojam saw “no useful purpose referring the matter to arbitration”, he said. “The only concern [from Kayla Acacia], before learning of the charging order, was to be given time to settle the judgment debt,” he added.
Both Sean Kinghorn and Petrojam declined The Sunday Gleaner’s request for comment.
The matter is set to return to court in June.