The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A major obstacle to the Grand Lucayan’s sale was this week eliminated by the Supreme Court’s denial of an injunction bidding to block the terminations of around 175 staff.

Michael Scott QC, the hotel’s chairman, told Tribune Business it was “business as usual” as he and the Government attempt to close the property’s sale to the ITM Group/Royal Caribbean joint venture by month’s end.

He blasted the legal action launched by the Bahamas Hotel Managerial Association (BHMA), which represents around 63 Grand Lucayan middle managers, as “a monumental waste of time, misconceived and a further attempt to burden the Bahamian taxpayer” who has likely invested at least $100m in the hotel’s acquisition and upkeep to-date.

However, Obie Ferguson, the union’s president and attorney, told this newspaper that Justice Petra Hanna-Weekes had also determined the BHMA raised a sufficiently strong case that needs to go to full trial.

While confirming that the BHMA’s injunction application had failed, Mr Ferguson said it now planned to pursue a claim for wrongful and/or unfair dismissal on behalf of its terminated members on the basis that Lucayan Renewal Holdings, the special purpose vehicle (SPV) that owns the resort on the Government’s behalf, had failed to consult with it before making the cuts.

The termination of the existing Grand Lucayan workforce, and payment of their due compensation and benefits by the Government/taxpayer, was a key term in the deal worked out with ITM/Royal Caribbean’s Holistica joint venture for the resort’s sale.

This would have been halted had the BHMA’s injunction bid been successful, delaying as well as complicating a deal the Government hopes will revive Grand Bahama’s battered tourism industry and economy post-COVID-19 with a planned $300m investment.

Mr Ferguson confirmed that the Supreme Court had cleared the path for the ITM/Royal Caribbean sale to proceed, saying: “She [Justice Hanna-Weekes] said the injunction was not granted. A part of the case they made was that the hotel will be sold or closed by the end of July.

“They [the hotel] were saying that to allow the matter to go on beyond that date would create some difficulty for the deal reached between the parties. They made the point that if it goes beyond that date it would create some difficulties for future potential investment. On that basis, the court decided not to issue the injunction.”

The Grand Lucayan’s sale is part of a much larger redevelopment involving Freeport Harbour’s expansion and the creation of a water-based adventure park between that location and the hotel. The Government, prior to COVID-19, viewed the deal as critical to rescuing Grand Bahama’s moribund economy through the creation of 3,000 new jobs and attracting an extra 3.5m visitors annually.

With the cruise industry’s enforced shutdown lasting until September 15 at earliest due to the COVID-19 pandemic, the ITM/Royal Caribbean deal’s closing has been inching forward despite both the massive financial hit suffered by the purchasers and the uncertainty over when their core business activities will resume.

“We don’t have an injunction in place and, as far as I’m concerned, it’s business as usual,” Mr Scott told Tribune Business. “It’s my case from inception, and is still my case, that I consider this litigation a monumental waste of time, misconceived and an attempt to further burden the taxpayers of the country.

“If they had gotten an injunction I would have gone straight to the Court of Appeal. In my opinion, they never made out the case for an injunction. I consider this a complete waste of time, an added burden to the taxpayer and, ultimately, it’s just an abuse.”

Mr Scott confirmed the Government and Lucayan Renewal Holdings Board, which he heads, are aiming to close the resort’s sale to ITM/Royal Caribbean within the next two weeks by July’s end. “That’s still the target,” he told this newspaper.

“We’re not quite there, but I’m pushing really hard. We’re all anxious to get on with it, that’s the bottom line.” The Government is keenly hopeful that COVID-19’s impact will be restricted to a delayed construction timetable and completion, rather than any pull-back by ITM/Royal Caribbean on the jobs front.

Mr Ferguson, meanwhile, pointed to the Supreme Court’s finding that a “triable” case had been made by the union over the Grand Lucayan’s alleged failure to consult with it as the recognised bargaining agent for the middle management staff prior to the terminations starting.

The former Christie administration’s changes to the Employment Act require an employer, via its section 26 a), to confer with trade unions or worker representatives if they plan to terminate 20 or more staff. The BHMA is arguing that the resort thus failed to follow the law - something previously rejected by Mr Scott, who said its was not the recognised bargaining agent given that the industrial agreement had long expired.

“The injunction was really designed to force the hotel to meet with the union, and work out all of what was required to be paid to the workers,” Mr Ferguson told Tribune Business. “Recognise the bargaining agent of the workers, and meet with us with a view to resolving whatever contractual issues we have with Lucayan Renewal Holdings....

“The court decided there is a serious issue to be tried. Our case will now be based on wrongful dismissal and unfair dismissal. That was made a part of the claim when we filed the amended notice of motion. Sixty-three workers will make the case for wrongful dismissal and unfair dismissal.”

Mr Scott, though, dismissed the BHMA’s claims, arguing that it had to meet “a very low bar” to show it had a “reasonable cause of action” that did not warrant being struck out. “They’re saying it’s redundancy,” he added. “It’s not redundancy because they’re being terminated as part of a contract that’s settled in the normal way.

“As far as I’m concerned it was never a case of redundancy. It was a case of contractual termination, and we followed the requirements of the Employment Act and the labour laws of The Bahamas.”

This newspaper previously reported that the Government will have spent more than $11m on employee termination packages and support by the time it closes the Grand Lucayan’s sale.

The latest separation round involving around 175 employees will cost “about $3m” in due severance pay and benefits, following prior employee severance and COVID-19 support packages that cost the Government some $8.542m.

The figures give an insight into the burden Bahamian taxpayers have had to shoulder beyond the $65m purchase price in a bid to rescue Grand Bahama’s ailing resort product and economy. Tribune Business records show the Government injected $13m into the property during the six months to year-end 2018, while a further $16.1m outlay was approved in February’s supplementary Budget for 2019-2020.

It is unknown if the previous $8.542m termination payments were included in these figures, but the sums involved suggest the Government - via the taxpayer - will have spent around $100m in total to facilitate the property’s long-awaited sale. Operating losses running at between $1m to $1.5m a month will have been subsidised for much of the Government’s ownership.