The Tribune

• Judge finds him 'not a credible witness'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sky Bahamas principal yesterday slammed as "a travesty of justice" a Supreme Court ruling that ordered the now-defunct airline to pay $220,000 plus interest to the owner of its hangar at Lynden Pindling International Airport (LPIA).

Captain Randy Butler hit out after Justice Diane Stewart, in her June 9, 2023, written verdict did "not find him to be a credible witness" during trial testimony where he "continually contradicted his own written and oral evidence" - including stating that an affidavit he signed and swore was "inaccurate".

The former Sky Bahamas chief and his attorney, Ashley Williams, both told Tribune Business that an appeal will be launched after Justice Stewart found in favour of AOG Maintenance, the entity purporting to own the hangar and which had leased it to the airline for $26,000 per month from New Year's Day 2019.

The verdict is the first in a series of rulings expected in the dispute involving Captain Butler, Sky Bahamas and the airline's main financier, foreign investor Fred Kaiser and his companies, Alpha Aviation and Advanced Aviation. The latter first initiated legal action over an an alleged $28m "bogus loan conspiracy" in late 2020, and the battle over the LPIA hangar is the first element to pass through the Supreme Court.

The affair triggered the resignation of former deputy prime minister and minister of finance, K Peter Turnquest, even though he was not named as a defendant in the original writ. Described as “a director and manager” of both Mr Kaiser’s plaintiff companies, as well as “owning and/or controlling and/or managing” Sky Bahamas, Mr Turnquest has consistently and vehemently denied the claims against him and only rated a passing mention in Justice Stewart's verdict.

The judge, in finding that there was "a binding oral lease agreement" for the hangar between AOG Maintenance and Sky Bahamas, also dismissed the airline and Captain Butler's counter-claim "for breach of contract and unlawful detention of assets" belonging to itself. Sky Bahamas had claimed itself, not AOG Maintenance, was "the true sub-tenant" of Nassau Airport Development Company (NAD) for the 1.89 acre parcel upon which the hangar stood.

"If I had to describe this, it's rally a travesty of justice," Captain Butler told this newspaper of the verdict. "We've already appealed. She [Justice Stewart] gave a an oral judgment six weeks ago. Other than give a general notice of appeal, we wanted to see how she came up with her verdict. It was more painful than expected. It's disappointing, I'm discouraged, but my faith first is in God and I trust in him. It is what it is. It's been a very learning experience for me."

AOG stands for Aviation Oversight Group, and Justice Stewart described AOG Maintenance as a commercial real estate investor. She noted that "for a period of time the operations of AOG and Sky were intertwined" because Captain Butler was a director and shareholder in both entities and they "were not sufficiently separated".

AOG's annual general meeting (AGM), held on December 17, 2018, sought to achieve this separation with all shareholders - including Captain Butler - present. It was resolved that Captain Butler's 25 percent AOG Maintenance stake, together with another 25 percent interest held by another investor, would be acquired and transferred to MCI Company.

Beginning on January 1, 2019, Sky Bahamas would be required to enter into a formal three-year lease of the commercial premises for $26,000 per month plus taxes, while Captain Butler would arrange for swipe cards to be provided to two other directors to give them access to the property.

No formal written lease agreement was prepared or executed by any of the parties, although AOG Maintenance sent monthly rental bills to Sky Bahamas. "Notwithstanding the agreement at the AGM, Sky never paid rent or applicable taxes," Justice Stewart wrote. "Consequently, AOG claimed that Sky was in arrears of rent and applicable taxes (as at August 1, 2019) in the amount of $204,826. Despite multiple demands by AOG to Sky, the outstanding debt remained owing."

This triggered the legal battle, with Sky Bahamas alleging there was no lease agreement and it was the entity - not AOG - that had erected the maintenance hangar. It alleged that AOG "unlawfully, willfully and illegally occupied it at the expense and exclusion of Sky". The airline also claimed that it was evicted, and AOG distrained and sold off assets belonging to itself.

Mr Kaiser, while confirming that Sky was the initial sub-tenant, said AOG had taken over this role from February 17, 2012, and a new nine-year lease was agreed between itself and NAD with effect from April 1, 2020. He also asserted that AOG had loaned money to Sky Bahamas and leased a fleet of aircraft to the airline.

Detailing Mr Kaiser's testimony, Justice Stewart wrote: "Despite injunctive relief obtained by AOG to prevent Sky Bahamas, its officers, employees and agents from entering the property, Captain Butler entered the property and removed a variety of items including aircraft log books and financial records of Sky, along with engines of several aircraft. Sky also defaulted on hire purchase payments to JESCO LLC for leased engines being used in aircraft."

Captain Butler was also said to have sold his AOG shares to Mr Kaiser's companies for $750,000 on June 5, 2018, but the former Sky chief denied this. He argued that the airline remained NAD's sub-tenant for "legal and technical reasons", and claimed it was "unlawfully evicted" from the hangar and never received an inventory of its assets.

AOG, though, denied that the eviction was unlawful and said Sky's counter-claim was "misconceived" because all the airline's property was logged, accounted for an handled properly. It added that the value of Sky's property in the hangar was below $1m, and not the $3.2m to $5m that the airline claimed, while only goods belonging to Mr Kaiser's companies were taken and sold.

Captain Butler, under cross-examination from AOC's attorney, Michael Scott KC, admitted he was at the 2018 AGM. Justice Stewart, finding there was no evidence he objected to Sky paying rent, said the meeting's official minutes led her to accept there was an oral lease agreement for the airline to pay rent over a three-year period.

Finding that Sky's eviction was legally sound, as no rent had been paid for eight months, the judge found AOG was entitled to damages for breach of the lease agreement contract totalling $220,000 with interest. "I found Mr Kaiser to be a convincing witness," Justice Stewart ruled. "He remained consistent in his evidence, despite rigorous cross-examination.

"I accept his evidence and believe there was no distraint of Sky's goods. The only goods taken belonged to third parties who had leased engines to Sky and, upon default of payment, was entitled to their return which were taken by AOG and returned to them or engine parts which belonged to AOG. There was no evidence of any of Sky's goods sold by AOG."

However, Justice Stewart then said: "Captain Butler, on the other hand, continually contradicted his own written and oral evidence and was recalcitrant throughout the whole trial. He stated that an affidavit which he executed and swore to be true and correct was inaccurate. He even equivocated concerning his own signature to that affidavit."

Under questioning, Captain Butler said "it's not clear" if it was his signature on the affidavit, then added that he "did not sign a document with this number". And, when asked about how he accessed the hangar, Captain Butler said he "did not break in" before then stating he was advised by his attorneys he could enter the building.

Justice Stewart said no evidence was provided to prove that Sky had between $3.5m and $5m in goods in the hangar, despite Captain Butler's claim, and said: "Due to the inconsistencies in Captain Butler's testimony, the court does not find him to be a credible witness." She added that the former Sky chief was given a chance to get his belongings, several of the goods supposed to have been sold-off were in his possession, and that he entered the hangar without AOG's permission.

AOG will now have to collect on its damages from a defunct airline that is no longer flying.