Privy Council Rules In Favour Of Corporation

January 21, 2019

The Corporation of Hamilton has been successful in defending the appeal by Mexico Infrastructure Finance regarding the $18 million guarantee entered into in support of the Par la Ville Hotel & Residences, the Mayor of Hamilton said.

Mayor Charles Gosling said, “I am pleased to report the Privy Council ruled this morning that the Corporation of Hamilton has been successful in defending the appeal by Mexico Infrastructure Finance regarding the $18 million guarantee entered into in support of the Par la Ville Hotel & Residences Limited.

“This action has gone through 3 courts, the Supreme Court and Court of Appeal in Hamilton and now the Privy Council in London. All three have now confirmed the guarantee was beyond the legal capacity of the Corporation.

“This Council [elected in 2015] inherited this regrettable situation. The new Council had been advised since election that this was a debt that was due and owing and was accordingly doing the best it could to make arrangements to finance this crippling burden.

“Unknown to the Council, an opinion had been received in 2013 from Charles Flint QC of Blackstone Chambers, a highly regarded UK QC on such matters, stating that the Corporation was not empowered to enter into that sort of business relationship.

“All parties involved were fully aware of this issue during the financing arrangements, which is why Government the following year made an amendment to the Municipalities Act allowing the Corporation to issue guarantees. Not one of these parties took it upon themselves to see if this actually fixed the ultra vires issue. They simply proceeded.

“On assuming office, it took almost a year of trying to get the support of the government at that time to assist in our ability to acquire and repay a loan, by providing legislative support in regaining the lost income from hemorrhaging parking revenues. While the Corporation received Letters of Support and Comfort from the prior Government; neither lived up to their name.

“The Corporation was just about to sign off on loan facilities to finance this debt, when the Council learned of the existence of the 2013 Flint opinion, and concerns were raised as to whether the Government’s amendments to the Municipalities Act had cured the ultra vires problem.

“With the advice of our lawyers, it was decided to seek a new opinion. Once this was obtained and we were told nothing had happened to change the QC’s original opinion that the guarantee was ultra vires, we decided to challenge its validity through the courts.

“If we had not challenged the guarantee the City Rate Payer and anyone using City services would have had to shoulder, in large part, the funding for the financing of the debt, which [with financial and other charges] could conceivably have totaled close to $30 million.

“The city also took it upon itself to instigate proceedings against Argyle Ltd., Argyle UAE, and Robert McKellar who was the ultimate recipient of the monies from Par la Ville Hotel & Residences Limited.

“This necessitated winding up those companies and going after the personal assets of McKellar. This action proceeds but as the courts have decided in CoH’s favour in relation to the guarantee, we have played a lesser role as our potential losses are secondary to the lost investment.

“There remains an action in the New York courts and a civil and criminal case in Bermuda and on those we cannot comment further.

“The Corporation would like to thank Ronnie Myers at Marshall Diel & Myers Limited for his work, guidance & support throughout these series of actions, as well as our leading counsel, Michael J. Beloff QC.”

The full judgement follows below [PDF here]:

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