Legal moves could jeopardise America's Cup plans

Bermuda’s Premier Michael Dunkley addresses the crowd at a welcoming ceremony for the America’s Cup. But will ongoing litigation dampen the mood?

^{Word count: 1,701; Original documents.}

Plans to use City of Hamilton property for the America’s Cup could be scuttled by legal wrangling over the waterfront, Politica can report.

Lawyers for developer Michael MacLean say there’s a “real possibility” that an injunction will be filed to prevent Government from using land which is at the centre of a constitutional challenge over the Government’s powers.

Bermuda is scheduled to host the America’s Cup World Series in mid October. Government has committed to using parts of the waterfront for the event and proposed an in-principle agreement with the Corporation of Hamilton in December last year.

It has also emerged that Wakefield Quin, the law firm hired by MacLean to advise on arbitration proceedings and the constitutional challenge, was also engaged by the Government to negotiate the agreement with the City.

The matter was raised at a directions hearing on Monday after Government’s lawyer Alan Dunch asked the court to hear his client’s strike out application over three days in July.

Eugene Johnston, representing MacLean’s Allied Development Partners, argued against Government’s proposed timetable and the need for a separate hearing, and said the matter should be dealt with more expeditiously given Government’s plans for the America’s Cup.

He said the Government should not need another month to gather evidence for a strike out. The lawyer handed Chief Justice Ian Kawaley a bundle which included a draft memorandum of understanding between Government and the Corporation of Hamilton.

That MOU concerns the America’s Cup… and the property for which this claim is concerned with – dealing with that property for the benefit of the America’s Cup,” Johnston said. The difficulty, I think, is apparent.

MacLean’s Allied Development Partners and Allied Trust are claiming compensation of $90 million to cover loss of profits caused by Government’s voiding of his Waterfront redevelopment agreements with the City. He is also advancing an alternative argument that the agreements – which include his company’s 262 year lease of the City property – could not have been properly voided when the legislature agreed in 2014 to reject the agreements.

If we are right about the central issue then the America’s Cup, as brilliant as it is and may be for the economy of the country, is in a bit of difficulty. The government simply can’t enter into an agreement over land that belongs to my client, Johnston added.

Government, he suggested, was deliberately delaying proceedings for the sake of the America’s Cup.

We haven’t taken the position, for instance, that we should file an injunction, we think it can be dealt with otherwise. But if the court’s timetable is one which should be extended to September – as Mr Dunch suggests, we’re getting perilously close to the time where they would start to move in and do whatever they have to do. …there’s surely a question as to whether or not the government has driven this thing to a point where they would have these America’s Cup events on that date and they are going to press these matters back further and further so they can get their way.

Johnston questioned whether Dunch is able to reassure the court that Government was not planning to develop the waterfront for the America’s Cup.

Now Mr Dunch has the power, I assume, to tell the court that the government is not interested in developing the waterfront for the purposes of the America’s Cup. If he were to stand and say that then we can have a very liberal timetable. If Mr Dunch can’t stand and say that it leaves us in the perilous position of deciding whether we file an application for an injunction and we thrash out the issues in a separate hearing over the course of a day or whatever time is available. Or we set down a timetable now where the court can resolve these issues once and for all at least at this level. So the government knows – and my clients know – what we’re going to do and what’s going to happen about this land.

Justice Kawaley questioned whether Johnston was not raising an “artificial concern” saying that his clients would be able to seek compensation in any case if the strike out fails.

If the government is willing to run that risk why can’t the court give appropriate relief if you succeed at the end of the day? Justice Kawaley asked.

But Johnston replied that plans for using the land for the America’s Cup were well underway and “the difficulty is us coming to court and saying now that we have now succeeded give us relief. We undermine the national interest by saying ‘pull it all back’.” MacLean’s claim was “already magnanimous”, he continued, and the developer was contractually bound to develop the waterfront.

If the America’s Cup is on it, our primary concern would be to get the America’s Cup off of it so we can develop it in the way that our agreement says we should develop it. That’s our concern. We are between a rock and a hard place. I understand the commercial consideration – that’s half of it – but compensation doesn’t get us half as far as we want to be. What we entered into this deal for is to develop the real estate and to develop the waterfront.

Dunch told the court that it was not possible to hold the strike out hearing any earlier. “It is as compressed as I can make it.” He added that he was not aware of the draft MOU.

I asked Mr Johnston if this is going to be another case of trial by ambush. This America’s Cup thing – I have never even seen this document.

The MOU, which can be seen in full below, was not approved by the City Council before Municipalities Minister Michael Fahy took stewardship over the City in January. And it is not clear whether the Minister, who has a fiduciary responsibility to protect the interests of the City’s ratepayers, can order the City to agree the terms of the MOU. But at a town hall meeting last month, the public was told that Hamilton’s waterfront is to be used for the America’s Cup.

Graeme Outerbridge whose term as City of Hamilton Mayor ended yesterday confirmed that the MOU had not been signed by the City Council.

Conflict of Interest Concerns

The issue also raises concerns about the role of law firm Wakefield Quin which was involved in negotiating the MOU on Government’s behalf. Wakefield Quin was also engaged by MacLean to advise on arbitration proceedings to determine the amount of compensation due to him, and represented the developer in the constitutional challenge until Monday’s hearing. Citing client confidentiality, Wakefield Quin lawyer, Michelle Stone, declined to comment when asked whether her firm had a conflict of interest.

I am unable to respond to specific allegations due to client confidentiality, and would merely comment that many of the premises on which‎ your questions are based are factually inaccurate or misconceived.

She would not elaborate on her claim that our questions were based on inaccurate or misconceived premises, saying her duty of confidentiality was “absolute”.

See email exchange below:

MacLean told us that he had not been made aware that his lawyers were also negotiating with City Hall on behalf of the Government. He explained that an attorney now with Wakefield Quin had drafted the waterfront lease and development agreement. When the legislature rejected the agreements last year, the firm advised him to go to arbitration as provided for by the law, he said.

I asked them about the constitutional case [after the lease was rejected]. I was told the arbitration route was the way to go and the amendment act leads us to arbitration and that’s the best means of getting my compensation.

Once it became apparent to MacLean that his lease may still be valid he raised the issue of an injunction with the lawyers and was told it would be out of his reach because he would have to put up a substantial sum of money to proceed – advice the developer says is not necessarily correct.

During that process we found out that Wakefield Quin’s attorney Michelle Stone was the one that was drafting this MOU between the Corporation of Hamilton and the Government.

MacLean did not rule out taking action against his attorneys if he loses his case against the Government.

They gave us bad advice from the beginning. And it looks like there’s a motive behind them giving us bad advice.

He continued:

You want to take land from us and offer me peanuts and then go and use it for a major event like that? Come on. How much is it worth? You’re willing to pay them 70 million to host this event here and then give me – not even peanuts – the shells. This sounds like Tuckers Town all over again.

We asked MacLean whether there was now a good chance the parties would reach an out of court settlement.

Compensation to me means that they pay me, he replied. Whether its through a settlement, whether its through the courts or somebody comes down my office with a brown paper bag saying Fahy or [Premier] Dunkley said give this to you and here’s four plane tickets for you and your family. However it comes, its not going to make a difference to me, but if it don’t come I’m going to keep fighting.

Municipalities Minister Michael Fahy and Attorney General Trevor Moniz ignored our queries submitted on Tuesday. But Economic Development Minister Grant Gibbons said that he thought it inappropriate to comment on a matter before the courts.

See our queries to Government Ministers here

This article belongs to Politica ! The original article can be found here: Legal moves could jeopardise America’s Cup plans