The Tribune

• Airline financier’s case against Butler ‘far short of mark’

• Former deputy prime minister added as fourth defendant

• Judge: ‘Striking’ Turnquest not named as party earlier

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Supreme Court judge yesterday cited “glaring deficiencies” as he overturned a default judgment against Sky Bahamas’ principal over an alleged $33.4m “bogus loan conspiracy”.

Justice Loren Klein branded the claims made against Captain Randy Butler and the airline by the latter’s former financier, Fred Kaiser, and his companies as “rather threadbare” and “far short of the mark” when it came to making a case for “fraud and/or conspiracy” against them.

And he found it “striking” that former deputy prime minister, K Peter Turnquest, was not named as a defendant to the action despite Mr Kaiser and his companies alleging that he had played a key role in the purported fraud as a “third party conspirator”.

Michael Scott QC, attorney for Mr Kaiser’s Alpha Aviation and Advanced Aviation entities, yesterday told Tribune Business that concern has been resolved after he obtained Justice Klein’s permission for Mr Turnquest to be added as a fourth defendant alongside Captain Butler, Sky Bahamas and another company, Aviation Group Oversight.

“The same judge has granted leave to add K Peter Turnquest as a fourth defendant,” Mr Scott said when contacted by this newspaper. The ex-deputy prime minister, who stepped down from that post and as minister of finance when the allegations first surfaced in late 2020, did not respond to messages seeking comment last night.

However, he has always vehemently denied Mr Kaiser’s claims against him, and rejected any notion of wrongdoing. Captain Butler, who yesterday said Justice Klein’s verdict had “lifted the weight” from him (see other article on Page 1B), has similarly refuted the allegations made against him. Mr Scott, though, labelled the ruling “a minor detail” that will not derail his client’s case.

Justice Klein’s ruling arose from Captain Butler’s appeal against an April 22, 2021, ruling against himself and Sky Bahamas by Supreme Court deputy registrar, Carol Misiewicz, in which she entered a default judgment against them on Mr Kaiser’s behalf.

She also rejected their argument that the former Sky Bahamas financier needed to provide “further and better particulars” of the allegations against them so that they could file a proper defence to his claims.

“The issues arise in the context of extremely serious allegations of dishonesty levelled against the defendants, in which the plaintiffs [Mr Kaiser and his companies] claim that the defendants and a third party engaged in a conspiracy over a period of nearly a decade to defraud them of over $33m,” Justice Klein noted.

“In the main, the plaintiffs allege that the defendants and a third party, Kevin Peter Turnquest, who is identified in the statement of claim as a conspirator but not made defendant to the action, have engaged in fraud, conspiracy and breaches of fiduciary duties over the period 2008 to 2017.

“It is said that these actions have caused the plaintiffs’ to dishonestly pay over to the defendants’ the sum of $33.423m. The plaintiffs claim compensation and damages for that loss, and seek other relief including a declaration on accounting and inquiries, as well as ‘compensation in equity’.”

After being served with Mr Kaiser’s ‘statement of claim’ on November 19, 2020, Captain Butler and the two companies had until December 17 that year to file their defences. They obtained an extension until January 22, 2021, but - four days before that deadline was reached - demanded that Sky Bahamas’ financier provide more details to enable them to provide proper defences.

This was rejected as a time-wasting tactic by Mr Scott, resulting in Captain Butler’s attorney, Michael Horton, filing a summons “for further and better particulars” on January 22. Three days later, Mr Kaiser’s attorney entered a judgment in default of defence, which was subsequently upheld by Ms Misiewicz.

Justice Klein said she appeared to have rejected Captain Butler’s case for “further and better particulars” on the basis that this should not occur before a defence is produced. However, he found she was “clearly in error” as the Supreme Court has the leeway to determine if more details are needed to enable defendants to properly plead - as required in this particular case.

And, under the Supreme Court’s rules, plaintiffs must “plead the material facts” they are relying upon and outline their case “with sufficient clarity and particularity so that [their] opponent is not taken by surprise and knows exactly the case they have to meet at trial”.

Describing Mr Kaiser’s case as “remarkably succinct”, Justice Klein said: “While brevity and conciseness of language are the hallmarks of good pleadings, there is only so much that can be sacrificed to attain economy.

“Considering the seriousness of the allegations, and scale of the fraud alleged, the long span of time over which it is alleged to have occurred, and the individual and corporate defendants alleged to be involved, the pleadings may be thought rather threadbare.

“It does not require a painstaking analysis to discern that the pleadings as they stand fall far short of the mark in setting out a case of fraud and/or conspiracy. In the main, the allegations are simply that the conspirators ‘dishonestly caused’ various payments to be made to them over a period of time as ‘some form of bogus loan’,” Justice Klein added.

“There are no facts, matters or circumstances pleaded to support the allegation that the defendants were dishonest (as opposed to, for example, merely negligent), or that the bogus loan (whatever that may mean) was procured or orchestrated by the defendants for then purpose of fraud, or that the defendants entering into such a transaction necessarily had a dishonest state of mind.”

Justice Klein said Mr Kaiser’s case failed to outline “the nature and object of the conspiracy”, with the details of his fraud claims against both Captain Butler and Mr Turnquest lacking. “In fact, faced with the generality of the allegations and lack of particulars, the defendants may be thought less than vigilant in not having applied to have them struck out,” he said.

Acknowledging that the legal battle was at an early stage, Justice Klein voiced surprise that Mr Turnquest had not been named as a defendant in the original action given the nature of the claims against him and the frequency with which he was named in the ‘statement of claim’.

“It is striking that the named third party conspirator [the ex-deputy prime minister] is not made a defendant to this action,” he wrote. “Obviously this raises issues as to whether all the proper parties are before the court to enable it to properly determine the issues.....

“In my view, the pleadings are glaringly deficient and I conclude that the defendants would be embarrassed and prejudiced in attempting to plead them without the assistance of further and better particulars.”

As a result, Justice Klein ordered that Mr Kaiser and his companies specify:

• The dates when Mr Turnquest was a director/manager of Mr Kaiser’s companies, and when he and Captain Butler owned, controlled and managed Sky Bahamas

• The details on whether the first $20.68m advanced to Sky Bahamas was issued as a single sum, or in tranches; the dates the payment(s) were made; and the form this took

• Whether the alleged loan was paid into a Bahamas bank account owned and managed by Sky Bahamas

• The dates at which a further $5.917m was transferred to Sky Bahamas, and the origin of these transfers, plus an explanation for what is meant by “some kind of bogus loan

• Details of the allegedly 39 fraudulent invoices paid to Sky Bahamas and Aviation Oversight between February 2008 and July 2016, and Captain Butler’s purported failure to ensure the companies kept financial records and books

While this alone was sufficient to overturn the Supreme Court deputy registrar’s ruling, Justice Klein also ruled that she was wrong to refuse to set aside the default judgment. He dismissed Mr Scott’s argument that the judgment was “regularly entered” as “self-negating”, as the relief his client is seeking did not fit within the rules required for this.

“If what Mr Scott argues were correct, it would mean that a plaintiff could assert against a defendant claims which fall under any ‘other claim’ - which requires an application to the court - and then retrofit it at his convenience within one or other of the rules by simply abandoning ex post facto any other claim that did not fit that particular rule,” Justice Klein found.

“This would run a horse-and-carriage through the scheme set up under Order 19 for entering judgment in default of defence.”