The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fears by Sir Garet ‘Tiger’ Finlayson, and his son, Mark, that they will “be potentially ruined” should a $2.743m judgment be enforced against them have failed to sway the Court of Appeal.

The duo’s bid to prevent a US financial services provider from enforcing the judgment award against them on the basis they would suffer “grave commercial harm”, prior to the hearing of their Privy Council appeal, was rejected by Sir Michael Barnett and his fellow appeal judges because no evidence was provided to support their assertion.

However, the former liquor magnate and Mr Finlayson were successful in persuading the Court of Appeal to grant them permission to appeal to the UK-based Privy Council, the highest court in the Bahamian judicial system, over a verdict stemming from their default on a multi-million loan that was secured on their high-end yacht, Maratani X.

Caterpillar Financial Services Corporation, the creditor and award winner, had opposed the Privy Council appeal by Sir Garret and his son on the grounds that it was “an abuse of process” because their case is “hopeless and has no prospects of success”.

Sir Michael, though, rejected this on the grounds that just because an appeal may not succeed does not render it an abuse of legal process. “There is no basis for finding that this appeal is for an improper motive or purpose, or that its prospects of success are fanciful,” he wrote.

He also dismissed Caterpillar’s argument that the proposed Privy Council appeal raises issues not argued before either the Court of Appeal or the Supreme Court, adding that it was “an appeal as of right” and that the Finlaysons should be granted conditional permission to take their legal campaign to London.

However, Sir Michael rejected the duo’s bid to “stay” both the Supreme Court and Court of Appeal rulings, each of which found for Caterpillar, and the $2.743m award until the Privy Council delivers its verdict. Mark Finlayson, in affidavit supporting their case for an injunction, alleged he and his father would otherwise be “exposed to serious commercial harm and potentially irreparable loss for which damages would not be an adequate remedy”.

He claimed: “The appellants would be potentially ruined, and face grave commercial harm, were the respondent [Caterpillar] permitted to execute upon the said judgment in advance of the hearing and determination of our appeal to the Privy Council. The appellants have exercised their right of appeal within the requisite time frame, and in accordance with the statutory procedure, and believe we have an appeal with good prospects of success in all the circumstances.

“Should the Court of Appeal refuse the stay sought, and the respondent be permitted to execute upon the subject judgment, this would potentially render our appeal nugatory. Not only would the said execution itself be ruinous, but there is a significant risk that we would not be able to recoup any funds paid to the respondent upon successfully appealing the said judgment, particularly as the respondent is a foreign entity with no commercial presence or known assets in the jurisdiction.”

However, Sir Michael said Sir Garret and his son had provided no evidence to support their assertions that they face “potential ruin” and “grave commercial harm” were Caterpillar to enforce the judgment award against them. “Unhappily, the applicants have provided no information as to their financial resources,” the Court of Appeal president wrote.

“They simply said they would be ‘potentially ruined’ and face ‘grave commercial harm’. There is no basis for the court to determine the gravity of this complaint.... As I said earlier, the applicants have provided no information as to their resources. This affidavit evidence is insufficient to discharge the burden on the applicants to establish this harm.

“On the evidence provided, we are unable to make a proper determination that if the judgment is enforced it will ruin the applicants. The applicants have not demonstrated that if the stay is not granted it will suffer grave commercial harm.”

Sir Michael agreed there was some merit to their concerns that, if Caterpillar enforced the judgment but the Finlaysons won the Privy Council, the duo would have difficulty recovering the monies from Caterpillar as the company has no assets in The Bahamas.

However, he noted that Caterpillar has not moved to enforce the judgment award and, as a result, the fear of Sir Garret and his son “may well be an academic one”. And, in rejecting the bid for a stay, Sir Michael said they can make a fresh injunction effort should circumstances change.

The Finlaysons have been prominent figures in the Bahamian business community, having sold their interest in Commonwealth Brewery/Burns House (now 700 Island Wines and Spirits) to Heineken for $125m almost a decade ago. Other ventures they have been involved with, most notably the now-defunct City Markets supermarket chain and Solomon’s Mines, the luxury goods retailer, have been notably less successful.

The Caterpillar dispute stems from assertions by Sir Garret and Mr Finlayson that they are not liable to pay the $2.743m because the lender breached its duty to sell the Maratani X “for the best possible price reasonably obtainable”.

The Court of Appeal, though, unanimously upheld the Supreme Court verdict by ruling that the loan default, and the Finlaysons’ obligation to repay the debt, was “never in dispute” and that they had failed to prove Caterpillar recklessly sold the vessel at an “undervalue”.

The Finlaysons obtained a $9.68m construction loan, via their company, Kurc Ltd, which was secured on the Maratani X, with both men guaranteeing the debt’s repayment.

“Kurc defaulted on the loan. Whilst in Florida, the yacht was arrested at the instance of the respondent (Caterpillar),” the Court of Appeal previously noted. “After the arrest of the yacht, the respondent obtained the permission of a US court to effect repairs to the vessel. Thereafter, the respondent sought to realise on its security. The appellants (the Finlaysons) also retained brokers to assist in selling the yacht.

“The yacht was finally sold by the respondent in December 2016 for the sum of $2.43m. At the time of the sale, the amount of principal owing on the debt was $4.207m. After applying the proceeds of sale to the debt, the balance due was $2.743m. The respondent sued the appellants for that balance due.”

Caterpillar’s statement of claim, which was reproduced by Sir Michael, alleged that it demanded repayment of all sums “due and owing” on the Maratani X loan on December 9, 2015, after the Finlaysons defaulted on the repayments earlier that year.

After the yacht was sold on December 28, 2016, the lender claimed that even after applying the proceeds to the outstanding loan balance it was still owed some $1.981m in principal; $18,077 in unpaid interest; and $764,657 for expenses incurred in trying to collect on the debt. This produced the $2.743m claim, with Caterpillar also alleging that interest was accruing at the rate of $296.34 per day.

The Finlaysons, in their defence, denied liability for the remaining loan balance. They alleged that Caterpillar had failed to effect repairs to increase the Maratani X’s value to potential buyers, and accused the financier of “intentionally or negligently” taking steps that resulted in the yacht “being sold for substantially less than its market value to achieve an unjust and unlawful gain”.