The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of The Bahamas has defeated an ex-Cabinet minister’s bid to enforce a $6m default judgment against it despite being branded “careless and negligent” in its approach to the case.

Stephana Saunders, the Supreme Court’s deputy registrar, found that there was sufficient “merit” in the BISX-listed institution’s defence to set aside the default judgment obtained by companies 50 percent owned by the family trust of Damian Gomez, former minister of state for legal affairs under the former Christie government.

Mr Gomez last night told Tribune Business his attorneys had “lodged an immediate appeal” following the deputy registrar’s October 21, 2019, ruling on the basis that she had “no jurisdiction” to set aside the default judgment obtained when Bank of The Bahamas failed to file a defence within the time ordered.

Miss Saunders found that the dispute, which plunged Bank of The Bahamas into a $4.039m net loss for the three months to end-March 2019 after it was forced to take provisions to cover the claim, should be dealt with at a full Supreme Court trial featuring evidence from both sides.

But Mr Gomez said: “We lodged an appeal immediately following the ruling of the deputy registrar in Freeport. We are attempting to have the appeal/rehearing heard as quickly as possible. We know that the circumstances in Freeport are challenging given the Dorian damage, [but] in spite of the setbacks we are confident we will have our matter heard as quickly as possible.”

Companies that are jointly owned 50/50 by the family trusts of Mr Gomez and David Jennette had initially obtained a default judgment against Bank of The Bahamas on March 31, 2016, after it failed to appear in response to the action they filed over a mortgage loan dispute.

The four disputed loans, which were secured on real estate controlled by the trusts’ companies, totalled some $7.659m. Bank of The Bahamas is also also alleging “breach of fiduciary duty” for failing to ensure compliance with leases that were assigned to it as collateral for credit extended to one of the companies.

The 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. While the companies owned by the family trusts filed their case in accordance with the judge’s orders, Bank of The Bahamas failed to submit its defence, leading to another default ruling.

That was granted two years ago in October 2017, and the family trusts of Messrs Gomez and Jennette subsequently obtained a multi-million damages award Bank of The Bahamas on March 7, 2019, before moving to enforce it.

Bank of The Bahamas argued that the default judgment was “irregular” and should be thrown due to “mixed claims” being made against it. The trusts, for their part, alleged that the deputy registrar had no jurisdiction and could not interfere because the judgment stemmed from a Supreme Court judge’s order, meaning any challenge could only be heard by the Court of Appeal.

Miss Saunders, disagreeing with both arguments, found that the Supreme Court rules empowered her to set aside a default judgment - something that Mr Gomez last night disagreed with.

“We were disappointed that she did not appreciate the point of her lack of jurisdiction,” he told Tribune Business. “The judge specifically set aside the previous ruling of the assistant registrar, thereby restoring the judgment in default of appearance.

“The judge did not state that he was exercising any jurisdiction to set aside the judgment in default, which would have been necessary to give effect to the intention discerned by the deputy registrar. She has effectively assumed the jurisdiction of the Court of Appeal, which she is not permitted to do. But we await the rehearing of the application before a Supreme Court judge.”

As for Bank of The Bahamas, the deputy registrar said it had failed to follow both the Supreme Court’s order and defend the matter. “It would therefore follow that the plaintiffs under the rules of the Supreme Court were entitled to file a judgment in default of defence.

“In the view of this court, the defendant [Bank of The Bahamas] or its previous attorneys through the history of this matter have been careless and negligent. Were the plaintiffs to allow their matter to languish in obscurity and not be heard? The plaintiffs said no and, in my estimation, rightly so.”

Yet Miss Saunders found that Bank of The Bahamas had set out “a quite lengthy and thorough” defence, urging the court to assess the merits of the case and denying the trusts’ allegations.

Explaining how the default judgment came to be filed, the BISX-listed institution blamed it on turnover in its legal department and changes in its attorneys handling the matter, coupled with a lack of communication between both.

It added that there were “over 30 separate alleged losses” caused by Bank of The Bahamas, but those said to be responsible had also left its employment. The loans in question had also been transferred to Bahamas Resolve, the Government-owned vehicle used to twice bail-out the bank.

“It would seem that many errors occurred in the response to the litigation of the plaintiffs based on the failure of the defendant’s previous counsel to communicate with the defendant and lack of communication within the defendant’s corporate structure,” Miss Saunders found.

“The most important issue is whether the defence has a meritorious claim and, in my determination, it does. I conclude that the nature of the claim should be fully ventilated at trial when all of the evidence would be heard and perused, orally and in written documents.

“At this juncture, the court has only one side of the story, and that is the plaintiff’s side. Setting the judgment in default of defence aside will allow the entire claim to be examined and justly adjudicated. It would permit the defendant and the plaintiff’s claims to be properly reviewed and assessed by the court.

“I therefore set aside the judgment in default of defence filed on October 23, 2017, and grant leave to the defendant to file a defence within seven days of the date hereof.”