The Tribune

An ex-Cabinet minister has pledged "to fight on principle" a $2.57 million damages award against himself and his law firm, which the Court of Appeal last week backed as enforceable.

Tennsyon Wells told Tribune Business there was "no doubt" his wife, Stephanie, and their Wells & Wells law firm would appeal to the Privy Council and "expose all that took place".

He was speaking after the Court of Appeal last week became the latest judicial body to uphold a $2.57 million arbitration award against Mr and Mrs Wells, as partners in their law firm.

Mr Wells and his wife had argued that they had been improperly served with the judgment Order against them, and that the former attorney-general was "inactive" as a partner in the law firm.

But Appeal Justice Jon Isaacs, in a ruling backed by his colleagues, found that Mr Wells could not escape liability for the actions of other partners simply because he was "inactive".

"To the extent that others may be similarly inclined to invoke the term 'inactive' as a defence in the circumstances of this case, they do so at their peril. Persons ought to guide themselves accordingly," Appeal Justice Isaacs wrote.

Mr Wells's attorneys also argued that it would have been illegal for him to remain a partner in the law firm because he was appointed to ministerial office during the first two Ingraham administrations.

The Court of Appeal, though, rejected this because the Bahamas Government Code of Ministerial Conduct allows ministers to retain their interests (equity holdings) in businesses - they are only prohibited from sharing in the profits, and must show they are 'inactive'.

This blocked the argument by Mr Wells's attorneys that the Wells & Wells partnership had to be dissolved under the Partnership Act's section 35, because an illegal act had taken place.

Gail Lockhart-Charles, the attorney representing the claimant against Wells & Wells, said the verdict had clarified ‘inactive partner’ liability, including that of Cabinet Ministers.

"The decision of the Court of Appeal has provided much needed clarity on the issue of the liability of inactive partners, including Cabinet Ministers, for the acts of their other partners,” she told Tribune Business in a statement.

"We are very pleased to have prevailed after a long and hard-fought battle involving proceedings both in this jurisdiction and the United Kingdom. The ruling means that the path has now been cleared for our client’s judgment to be enforced."

Oshi Enterprises, a Bahamian-domiciled company, obtained the initial arbitration award against Wells & Wells due to a dispute over a $2.5 million 'arrangement fee'.

The two sides had agreed that Wells & Wells would act as the 'escrow agents' for the fee via a June 8, 2000, deal that was part of a larger banking transaction.

However, Oshi Enterprises claimed that Wells & Wells breached their agreement by "paying away" the arrangement fee and failing to return it. It also alleged that the latter failed to comply with other responsibilities relating to the banking deal.

Oshi Enterprises initiated arbitration proceedings against Wells & Wells via the International Chambers of Commerce (Paris).

The sole arbitrator, UK-based Stuart Isaacs QC , ruled in Oshi Enterprises' favour on July 29, 2004. He ordered that Wells & Wells pay it $2.57 million, plus cover $118,811 of legal costs and a further $90,000 in arbitration hearing costs.

Wells & Wells appealed the total $2.7 million-plus award to the UK High Court of Justice the following month, but Justice Andrew Smith dismissed their case and affirmed the arbitration award.

The legal action then shifted to the Bahamas when Oshi Enterprises sought to enforce its award. Justice Stephen Isaacs, in an August 5, 2011, ruling backed the previous two verdicts and applied a 3 per cent interest rate to the award until it was paid.

Justice Isaacs' ruling was not appealed, and was subsequently filed in the Supreme Court registry as a Judgment Order on July 24, 2013. It was served on Mr and Mrs Wells on August 30 that year, along with a Summons dated July 5, 2013.

Apart from executing the judgment, the Order also required Mr and Mrs Wells to provide Oshi Enterprises' attorneys with a list of all their assets - even those held in trust for others -within seven days.

The summons was heard by then-Chief Justice, Sir Michael Barnett, who ruled in January this year that Mr Wells' argument that he was not a partner in 2004 - due to his previous Cabinet appointments - was "unsustainable".

Sir Michael found that "the evidence is clear" he and his wife "held themselves out as partners" of Wells & Wells, and that they could not escape liability because they were not personally served as partners.

Detailing their appeal of this verdict, Appeal Justice Isaacs said: " The submission made on behalf of Mr Wells was to the effect that by the time the transaction in question occurred he was no longer an active partner in the firm.

"In fact, it was argued that evidence of this was disclosed in the firm’s letterhead, which listed him as 'inactive'. As a result, the appellant [Wells & Wells] did not exist as an ongoing entity, and Mr and Mrs Wells had to be served personally with any documents related to this case."

Appeal Justice Isaacs, though, said there was nothing in Bahamian law that allowed partners in a company to escape liability simply by placing the word 'inactive' besides their name.

"There are a limited number of ways a person may avoid liability for the actions of his partners, but those are laid out in the [Partnership] Act," the judgment said.

"We have not been able to locate any authority to support the view that the term 'inactive' absolves a partner of his responsibility for the acts of his other partners."

Appeal Justice Isaacs added that there was no evidence that Mr Wells' 'inactive' status had been advertised to the world via the Government Gazette - just notice of his Cabinet appointment.

He also dismissed the argument that Mr Wells' ministerial appointment made it illegal for him to continue as a partner - an action that would have triggered Wells & Wells' dissolution under the Partnership Act's section 35.

"This submission must fail for two reasons. First, the [Ministerial] Code explicitly allows a person to retain his interest in the entity by the use of the words: 'Is not necessarily required to dispose of his interest in the relevant entity'," Appeal Justice Isaacs wrote.

"Second, while it may have been improper to disregard the injunction contained in the Code, it would not have been illegal for a person to breach it. Such sanction as may have been visited upon him could have been dismissal from the Cabinet."

The Court of Appeal concluded that both Mr Wells and his wife were partners in Wells & Wells at the time of the Oshi Enterprises affair.

However, Mr Wells vehemently denied this to Tribune Business. "I was not there. I left for Cabinet in 1992 and I never went back," he told this newspaper of his Wells & Wells involvement.

"The only time I got involved was when they [Oshi] dropped my name into it to try and get payment. I've never practiced law since 1992, apart from my own business affairs," he added.

"I've never been before any judge or magistrate, or been before any court, since 1992. I can tell you I have not represented any client since then. I never did it for no one apart from family matters, personal matter, the children and the family. I've never done anything since 1992."

Mr Wells resigned from the Ingraham Cabinet in 1999, and unsuccessfully mounted a bid for the FNM leadership in 2001. He was subsequently re-elected to the House of Assembly as an independent MP between 2002 and 2007.

Mr Wells subsequently retired from front-line politics to focus on his business interests, which include real estate development, the Bacardi plant’s purchase and the creation of The Source River water producer.

Mrs Lockhart-Charles, though, suggested at trial that there was "ample evidence" to suggest Mr Wells remained a partner in the law firm when the Oshi Enterprises affair occurred.

"One indication of his continued partnership was the unconditional appearance entered for the appellant in response to the Writ of Summons filed on 6 May, 2015," Appeal Justice Isaacs noted.

"Another indication was the existence of two letters written on the appellant’s stationery dated 29 May, 2000, and 25 August, 2004, absent the word 'inactive' beside Mr Wells’ name on the letterhead."

He added that “perhaps even more telling” was the finding by the arbitrator that Mr Wells was indeed a partner in Wells & Wells.

Mr Wells, though, criticised the UK arbitrator, Stuart Isaacs QC, saying that “the arbitration was not properly done”.

He added: “Stephanie will probably appeal [the Court of Appeal verdict]. We will fight it on principle; a matter of principle.

“We know what the judgment says, what the arbitrator says, but I don’t think the arbitration was properly done.

“If the Privy Council says what we have to do, we’ll go to London,” he told Tribune Business. “There’s more opportunity to deal with it in London and expose what took place.

“The ruling is what it is, and there’s nothing we can do about that. We still have a right to appeal, and in all probability that’s what will happen.”

The Court of Appeal, though, found that their action had “no merit” and was “unsustainable”.