The Tribune

• Gomez: Attorneys moving to ‘reinstate’ appeal

• Bank hopeful to reverse multi-million provision

• Dispute one of two ‘highest risk’ legal battles

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Cabinet minister yesterday warned “it’s not the end” after an appeal against the dismissal of a $6m default judgment against Bank of the Bahamas was withdrawn by attorneys representing his interests.

Damian Gomez KC told Tribune Business the BISX-listed lender should not celebrate prematurely as companies to which he is linked are now moving to “reinstate” the Court of Appeal action.

He spoke after Kenrick Brathwaite, Bank of The Bahamas managing director, told Tribune Business that it will now be able to “reverse” and recover the $6m provision taken over what the institution described as one of its two “highest risk” legal disputes in its 2021 annual report.

Revealing that the ongoing legal battle with Mr Gomez, David Jennette and Freeport-based MRC (Meridian Research Corporation) Group had been discussed at yesterday’s Board of Directors meeting, he added that the bank cannot afford to “lose a lot of money” at a time when it is still repairing market confidence and its capital base following $300m-plus of taxpayer funded bail-outs over the past decade.

The former minister of state for legal affairs, though, warned that the fight was far from finished. He explained that Harvey Tynes KC, attorney for Kaydee Ltd and other entities in the MRC Group, had applied to the Supreme Court for a “certificate” permitting the appeal to proceed.

Sir Michael Barnett, the Court of Appeal’s president, in an oral December 1, 2022, verdict noted that Mr Tynes had applied to withdraw the appeal on his corporate clients’ behalf. Tribune Business understands this was done after the MRC Group became aware that, because the Supreme Court had effectively functioned as an ‘appeal’ court when overturning the registrar’s original default judgment verdict, it needed its permission to bring the matter to the Court of Appeal.

Mr Gomez, confirming this, told Tribune Business: “They have applied for a certificate. They’re doing that now and they’ll try to get the appeal reinstated. That’s what they’re doing. It should be done. I don’t think we’re at the end. I’m just waiting to see what happens. That’s the way we’re going.”

However, should the Supreme Court go-ahead be forthcoming, further obstacles have to be overcome. It is understood that the MRC Group will then have to seek an “extension of time” from the Court of Appeal in which to lodge its case, and this is not guaranteed as it will have to demonstrate that the matter is of sufficient legal importance - namely that it raises a point of law that is in the public’s interest to be determined - before it can proceed.

It also has the option of bringing the substantive case before the Supreme Court for a full trial on the merits, but Mr Brathwaite argued this was unlikely to succeed as the Supreme Court in overturning the previous $6m default judgment against Bank of The Bahamas had ruled the latter has a solid defence.

“We had a Board meeting today that just discussed that,” the Bank of The Bahamas chief said of the case. “I’m awaiting an actual report from our attorney. That is good news that they have withdrawn. We had provided for that. It’s been going on for a while. It’s a absolutely good news, and that $6m, the provision will be reversed. That was a major issue. Had we not defended it, we’d have lost a lot of money.”

Wayne Aranha, now Bank of The Bahamas’ former chairman, told shareholders in its 2021 annual report that the dispute was one of its two “highest risk” legal battles alongside a separate Supreme Court fight with another former Cabinet minister, Leslie Miller, over the $30m-plus lent for his Summerwinds Plaza.

“In the matter of Kaydee Ltd et al versus Bank of The Bahamas, the bank awaits the delivery of the appeal ruling stemming from the ‘judgment in default of defence’ entered against the bank by the plaintiffs in excess of $6m, which was set aside on October 21, 2019,” Mr Aranha wrote.

The default judgment’s dismissal was upheld by Justice Petra Hanna-Adderley in February this year, and Mr Brathwaite noted that the Court of Appeal had also awarded legal costs in Bank of The Bahamas’ favour over the latest withdrawal. 

Suggesting that a substantive Supreme Court trial was unlikely to work in Kaydee and the MRC Group’s favour, he told this newspaper: “The case was never that strong, and that’s why the ruling was that the bank had a defence. Once the ruling from the judge was that it [the default judgment] be set aside, and the bank had a reasonable defence, I’m not sure how they can win a case before the Supreme Court.”

Dawson Malone, the Callenders & Co attorney, represented Bank of The Bahamas before both the Court of Appeal and Supreme Court. Justice Hanna-Adderley, in her verdict, affirmed that the default judgment had been “irregularly” obtained.

Her verdict recorded evidence that Mr Gomez QC was said to be a 50 percent beneficial owner in one of the plaintiff companies, Seaport Construction Ltd, “and may have an interest in the other” corporate entities. The legal dispute with the bank was behind his decision to resign from the Cabinet in 2015.

Besides finding that Bank of The Bahamas had “an arguable defence with a prospect of success” to the claims, the judge also ruled that the “judgment in default of defence” was obtained irregularly because it needed the Supreme Court’s prior approval.

Justice Hanna-Adderley, setting out the background to the dispute, said it stemmed from the MRC Group’s allegations that Bank of the Bahamas had failed to follow through on various mortgage contracts agreed with it, resulting in its various entities suffering what was initially claimed to be $14.085m in losses and damages.

David Edward Jennette III, as trustee and general counsel to Seaport, one of the MRC entities, had sought in 2009-2010 to secure credit facilities from Bank of The Bahamas as a means to refinance non-bank loans that had become “onerous “ to the group.

He dealt with John Sands, Bank of The Bahamas’ then-senior manager for the northern Bahamas. However, Indira Deal, the bank’s legal counsel, alleged in an affidavit filed as part of the dispute that Mr Sands had been dismissed in May 2011 “for gross misconduct, and he was previously suspended for his role in extending unathorised credit facilities to Seaport and individuals related to Seaport”.

Mr Jennette and the MRC Group companies successfully obtained a default judgment against Bank of The Bahamas on March 31, 2016, after it failed to appear in response to the action it filed over the loans dispute and associated damages.

That first default ruling was set aside prior to then-acting Supreme Court justice, Andrew Forbes, ordering that the dispute proceed to trial in traditional fashion before the Supreme Court. Yet Bank of The Bahamas failed to submit its defence in time, leading to another default ruling.

That was granted in October 2017, and Mr Jennette and the MRC Group subsequently obtained the $6m-plus damages award against Bank of The Bahamas on March 7, 2019, before moving to enforce it. The BISX-listed institution, though, successfully persuaded the deputy Supreme Court registrar to set that aside, too, leading to both the appeal before Justice Hanna-Adderley and the recent Court of Appeal action.