Row over waterfront legal fees

Standing tall: Home Affairs Minister Senator Michael Fahy won’t answer questions on his Ministry’s decision to hire law firm MJM. (File photo: Ayo Johnson)

Bermuda Government has refused to reveal exactly how much funding approval it is seeking from parliament for litigation expenses involving the City of Hamilton waterfront and its powers over the island’s municipalities.

It also has not responded to questions about the identity of the local law firm involved.

We can report, however, that MJM was instructed by Municipalities Minister Michael Fahy “to advise him on and deal with various matters in relation to the Corporation of Hamilton,” according to correspondence seen by Politica.

Fozeia Rana-Fahy, the wife of Minister Fahy, has been a director of the law firm since February 2014. Admitted to the England and Wales Bar in 2003 and the Bermuda Bar in 2006, Rana-Fahy has enjoyed a meteoric rise to the top of Bermuda’s legal fraternity. After spending four years with Bermuda law firm Appleby as an associate she moved to MJM in 2009. Five years later she was appointed a director.

Principal lawyer on the Corporation of Hamilton brief is Alan Dunch, an MJM director since 1996, who was recently appointed Chair of Bermuda’s new Gaming Commission, and sits on the Employment Tribunal as a Fahy appointee.

Besides handling the ongoing arbitration on the waterfront lease, Dunch is also representing the Government on a related claim for compensation from developer MacLean and is handling two constitutional challenges to the Minister’s powers over the municipalities.

(We have also received reports – which we have been unable to corroborate – that Dunch advised Fahy following the “JetGate” revelations of an underground election campaign funded by US businessmen.)

Government tabled $23 million in supplementary funding requests in the House of Assembly last week. The supplementary estimates included $1.5 million for “Legal Fees – Waterfront Lease” and a loan guarantee for the Bermuda Economic Development Corporation.

We asked for a breakdown of the amount shortly after the request was tabled but have yet to receive a reply.

No comment: Home Affairs Minister Michael Fahy. (File photo by: Ayo Johnson)

Minister Fahy has not responded to any of our queries submitted through the Department of Communication and Information in the past 12 months.

The Department did issue a statement on the Minister’s behalf yesterday which characterised as “misleading and false” criticism from Opposition Senator Marc Daniels over the legal fees.

In his statement, Sen Daniels said it was an “affront to every Bermudian” that Government had “paid out nearly $1.5 million in legal fees to seek guidance on how to void the Hamilton Waterfront Lease”.

Assuming the OBA’s chosen law firm allocated a senior counsel and junior counsel, and even a QC to review the advice, and to address the legal issues arising from retroactively voiding a contract, it is inconceivable that such counsel would incur in excess of 1,000 billable hours to produce an opinion. Even if the law firm drafted the legislation, in addition to providing its advice, it is almost criminal to suggest that nearly $1.5 million would be incurred in legal expenses. The public should further expect even more money to be paid out as the OBA’s attempt to justify their actions before the courts is expected to continue.

He went on to say that the governing One Bermuda Alliance was engaged in “highly suspect” activities and demanded that the identity of the law firm involved be revealed.

See full statement here:

Sen Fahy’s response did not include the law firm’s identity or the precise amount that has been spent on legal fees.

‎This measure is designed to cover legal fees expended, and fees possibly to be expended in respect of the waterfront arbitration, for fiscal year 2014/15.
‎
In addition, it is anticipated that the measure would cover costs for the Constitutional challenge to the changes to the Municipalities Act 1923 currently before the Supreme Court of Bermuda, again, for fiscal year 2014/15.

He added:

Fees have been spent on overseas Counsel, expert advice, preparation of pleadings, witness statements and other litigation expenses.

To date less than half the requested amount has been spent. It’s quite regrettable, as Senator Daniels should know better than to issue such inflammatory and speculative statements particularly when the matter is scheduled to be debated in the House and Senate during the budget debate.” ‎

See the Minister’s full response here:

Government has refused to answer any questions submitted by Politica on this or any other matter concerning Michael Fahy.

The 2014/2015 fiscal year ends in three weeks.

See our original questions on the supplementary estimates in the email exchange here:

This afternoon we sought additional responses from the Government following our finding that MJM is the law firm involved. No answers were received by publication time.

Last year Government entered into arbitration proceedings with Michael MacLean’s Allied Trust in order to determine the amount of compensation due the developer as a result of the voiding of Allied’s 262 year old lease of 20 acres of waterfront property.

Bermudian lawyer Geoffrey Bell, QC, has been chairing the arbitration panel which also comprises George Bartlett QC and Norman Rose – both of the London public law firm Francis Taylor Building.

MacLean has since instituted separate Supreme Court proceedings claiming $90 million for loss of business as a result of the voiding. He is arguing that the agreements were not properly voided and so remain valid. Alternatively, he argues that Allied’s constitutional rights have been violated by the voiding of the agreements.

UPDATE: We have now learned that the BEDC share of the supplementary is $79,039.

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