The Tribune

• ‘Allow’ Court of Appeal to rescind damages

• As in settlement negotiations with the Gov’t

• Outcome of talks to ‘affect’ BOB and Resolve

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Attorneys for an ex-Cabinet minister last night said they agreed to the overturning of a near-$10m damages award against the Government because both sides are now in settlement talks.

Damian Gomez QC, himself a former minister of state for legal affairs, told Tribune Business he and Leslie Miller were “optimistic” they could negotiate an out-of-court resolution with the Government over its alleged breach of multiple lease agreements for public sector agencies to rent space in his client’s Summerwinds Plaza complex.

Justice Cheryl Grant-Thompson had originally awarded Mr Miller and his companies $9.846m in damages against the Attorney General and Treasurer for breach of contract, but the Court of Appeal on Monday allowed the appeal by the Government defendants and ordered that the case be sent back to the Supreme Court for a hearing before a different judge.

However, Mr Gomez told this newspaper he had agreed with the Government’s attorneys to allow the appeal to succeed because both parties are in negotiations to settle the matter without the need for further legal action.

“We agreed to that because we’re in settlement talks right now with the Government,” Mr Gomez explained. Asked how confident he was that these talks will result in resolution, he replied: “We are optimistic. We’re in settlement talks, and I cannot say any more than that. We are in silence mode.” 

Mr Gomez declined to go into further detail due to the sensitive nature of the negotiations, and the confidentiality that surrounds them, other than to say the outcome will impact Bank of The Bahamas and its Bahamas Resolve bail-out vehicle which are also parties in the case and/or affected by it.

“It affects everybody,” he added of the talks,”but it’s really the Government. Once we’ve agreed that, it affects everybody else. I agreed to it [allowing the appeal] because we’d already spoken to the Government and entered into discussions. We were trying to save on legal costs.”

Mr Gomez did not confirm when settlement discussions began. Mr Miller was an ever-present for the Progressive Liberal Party (PLP) on the recent general election campaign trail, appearing in photos alongside multiple New Providence MP candidates as they conducted door-to-door canvassing in the run-up to September 16. 

The former minister of state for legal affairs spoke after Tribune Business was informed that Justice Grant-Thompson’s verdict in favour of Mr Miller had been overturned at Monday’s appeal hearing. One well-placed source, speaking on condition of anonymity, told this newspaper: “The appeal was allowed and the judgment overturned. 

“The Court of Appeal ordered that the matter be remitted back to the Supreme Court before a different judge. The Court of Appeal said this matter has to be tried, and the judgment cannot stand. The entire judgment was set aside, and the matter is as it was originally - a claim by Leslie Miller and his companies versus the Government and everyone else that was brought into it.”

Justice Grant-Thompson’s verdict awarding Mr Miller and his companies almost $10m stemmed from his bid for summary judgment against the attorney general and Treasurer of The Bahamas, on the basis that they had provided “no reasonable defence” to his claims over the five lease agreement breaches.

The former Cabinet minister is also arguing that the failure to follow through on the leases, and make combined rental payments exceeding $4.5m annually, resulted in his companies being unable to repay Bank of The Bahamas loans secured on the Summerwinds Plaza.

The BISX-listed institution, which is alleging it is owed more than $30.5m by Mr Miller and his companies, subsequently transferred the delinquent loans and assets upon which they are secured to the Bahamas Resolve bail-out vehicle. 

The verdict’s overturning, and the settlement talks with the Government, also coincide with Mr Miller’s ambition to re-open his family’s Mario’s Bowling and Family Entertainment Palace, which is located at the Summerwinds Plaza.

However, as revealed by Tribune Business on Monday, this is likely to be frustrated by Bahamas Resolve’s Supreme Court-appointed receivers for the Plaza as they do not want to incur any additional operating expenses and losses that will further undermine the value of the assets they are seeking to recover. Mario’s is among the entities included in the receivership.

Justice Grant-Thompson, in her judgment, affirmed that the PLP-controlled House of Assembly passed a resolution in 2014 permitting Mr Miller and his companies to enter into rental contracts to lease space to government agencies.

Two leasehold agreements had already been entered into for the Summerwinds complex in May and June 2013, but “significant renovations and structural work” were required to make the property ready for the Government agencies.

To finance these works, Mr Miller and his companies sought further advances from Bank of The Bahamas. A $2.5m “upstamping” of the mortgage that the BISX-listed institution held on the Summerwinds complex occurred, but only $185,000 was advanced to the former Cabinet minister and his companies.

The former Christie administration had agreed to provide new lease deals in 2016, shortly before it was voted out of office. Justice Grant-Thompson said that while the Government accepted the “veracity” of these arrangements, it did not agree that it had committed to fund the renovations.

The Government cited the Financial Administration and Audit Act as its principal defence, particularly the section that requires companies and individuals seeking to do business with the Government to provide a valid Tax Compliance Certificate (TCC) if the contract’s value is worth $10,000 or more.

It alleged that Mr Miller and his companies had not provided the necessary TCCs, which Justice Grant-Thompson described as “a technical reason to exit the contract” for the five leases. Noting that the Act allows government ministers “discretion” to waive this requirement, she said the Government was using this as an excuse to justify its lease breach.

“The Government had to have known that the plaintiff was ‘asset rich/cash poor’ when they entered into these arrangements whereby an important part of the contractual triangle was the delivery up of properly appointed premises and that Bank of The Bahamas was to provide the funds necessary for the renovations, further bolstered by the anticipated rents,” Justice Grant-Thompson ruled.