The Tribune

By NEIL HARTNELL

Tribune Business Editor

COTTON Bay's chairman yesterday said the Supreme Court verdict that rejected its $11 million performance bond claim against CIBC FirstCaribbean International Bank (Bahamas) would "not be devastating" for the project, adding that he had emerged with his personal reputation intact.

Disclosing to Tribune Business that he was awaiting the advice of Higgs & Johnson, Cotton Bay's attorneys, before determining whether to appeal Justice Stephen Isaacs' ruling, Franklyn Wilson said such actions were never entered into lightly, likening it to a "David and Goliath fight".

Adding that Cotton Bay obtained four legal opinions from attorneys "inside and outside the Bahamas", including from QCs and retired judges, before pursuing its action, Mr Wilson said CIBC FirstCaribbean and its attorneys had failed in their efforts to portray him as a witness lacking in credibility.

Cotton Bay had sought a Supreme Court ruling that the two performance bonds, one for $8 million and the other for $3 million, were valid and binding on CIBC FirstCaribbean, and the bank was liable to it. The two bonds were issued at the request of well-known contractor, Edward Penn, to guarantee two construction contracts he held for the development.

CIBC FirstCaribbean, though, challenged their validity, saying the documents were incomplete; not sealed by the bank; not stamped for Stamp Tax; and that the ex-executive who signed them did not have the necessary authority.

Justice Isaacs accepted the bank's position, finding that there was a "pre-ponderance of evidence" to show the performance bonds were not valid or authentic. He concluded: "The state of the bonds makes it impossible to construe their meaning and effect. In the instant case, the original bonds are nowhere to be seen, and the facsimiles produced raise serious questions as to their being true copies of the originals."

Asked by Tribune Business whether FirstCaribbean would appeal the ruling, Mr Wilson responded yesterday: "We don't know yet. We're waiting for our attorneys, Higgs & Johnson. They're in the process of analysing the judgment, and will give us their advice in short order.

"In the first instance, you don't rush to initiate an action against a major international financial institution. It's one of those David and Goliath fights.

"We don't go to court unless we believe we have a just case. We got opinions from four different attorneys inside and outside the Bahamas, including a QC in Barbados, two retired judges of the Supreme Court in the region, and we thought we had a credible case. The ruling is what it is, and we move on."

Lamenting how events in relation to Mr Penn and the alleged CIBC FirstCaribbean performance bonds had played out, Mr Wilson told Tribune Business: "You do the right thing. You sign a contract with a contractor, and he says you have a performance bond.

"You're in a contract that obliges the contractor to give you a performance bond. You think you have a performance bond. The contractor does not fulfill his obligations, and you tell the bank you're going to call in the bonds.

"The bank says they're no good. You say: 'What do you mean they're no good? We have a confirmation letter'. The bank says: 'It's the wrong person who signed off on them'. The court says: 'That's not enough. The bank was looking after its own interests; they were there as a lender, not as a surety'."

The judgment noted how CIBC FirstCaribbean called on reports from two experts, Paul Worrell, a chartered quantity surveyor, and David Nicoll, an international commercial banker, which were admitted as evidence despite attempts by Cotton Bay to have them thrown out.

Justice Isaacs accepted their conclusions, namely that the amount of the two performance bonds would not have exceeded 35 per cent of the construction contract price, not the 100 per cent alleged by Cotton Bay. They also said the state of the bond documents "should have caused any reasonable professional and/or business person to be suspicious of their genuineness, validity and legality".

Summing up the impact of Justice Isaacs' ruling, Mr Wilson told Tribune Business: "This court ruling, if it had gone the other way, would have been very helpful, but it's not devastating."

The businessman, who chairs the Sunshine Group of Companies as well as Cotton Bay, said he had also defeated efforts by CIBC FirstCaribbean's legal team, Michael Hylton QC and Luther McDonald, to paint him as an unreliable witness.

The judgment noted that Mr Hylton attempted to undermine Mr Wilson in cross-examination over his appearance in the Hotel Corporation Commission of Inquiry in the 1990s. Evidence given then by Mr Wilson involved "dealings with Penn and others in generating funds to assist the late Prime Minister, Sir Lynden Pindling".

Justice Isaacs dismissed these efforts, and Mr Wilson said yesterday: "They did things to try to paint me as a not credible witness, but the judge found no basis to accept that. From a personal viewpoint, I came out with my reputation."

In his ruling, Justice Isaacs said: "In the witness stand, Wilson seemed to be drawing on his memory as best he could.

"I doubt that Wilson was deliberately attempting to mislead the court, but rather trying to get across his understanding of the nature and validity of the performance bonds, obviously after having taken legal advice.

"What was crucial to the issues in cross-examination is that Wilson acknowledged that the signature page and the signature on both performance bonds appeared to be identical, even though they were executed at different times. I note that what he received from Penn were telefaxed copies of the bonds, and Wilson did not recall asking to see the originals. Further, the amount on each bond was left blank."

The judgment also recorded that Mr Wilson, when it was pointed out that page three for both bonds appeared to come from the same document, replied in cross-examination that "somebody went to a lot of trouble to create what is purported to be two different documents".

Mr Wilson said he received the first $8 million bond via fax on June 22, 2005, with Cotton Bay alleging that the first bond was executed between August and October 2005 - the dates being different.

"There is the additional problem that pages one and two of the bond were faxed on a different day from page three, and neither date matches the date on the cover sheet," Justice Isaacs wrote.

"As to the second bond, Wilson testified in cross-examination that it was physically delivered in about June 2006. A facsimile was produced, however, which bears a date in 2005 on the fax machine."