Brown asks to be left out of Port Royal lawsuit
Businessman Wendall Brown asked a judge yesterday to throw out a lawsuit brought against him and one of his companies by the former One Bermuda Alliance government.
The civil action accused Mr Brown and Zane DeSilva, a Progressive Labour Party MP, of profiting from their former positions as trustees of Port Royal Golf Course by “causing or permitting” construction contracts at the publicly owned facility to be awarded to their own companies.
The case, involving a taxpayer-funded $24.5 million refurbishment of Port Royal, was filed by former Attorney-General Trevor Moniz in February 2017, when the OBA was still in power.
It has been under review since the summer by Kathy Lynn Simmons, who replaced Mr Moniz as Attorney-General after the PLP’s General Election win, with some speculating that the case could be dropped. A chambers hearing before Puisne Judge Stephen Hellman dealt only with Mr Brown’s strikeout application, which was opposed by Norman MacDonald of the Attorney-General’s Chambers.
A lawyer for Mr DeSilva was present but did not make representations.
Saul Froomkin, representing Mr Brown and his firm SAL Ltd, said his client, as chairman of Port Royal’s board of trustees between 2007 and 2009, did not owe a fiduciary duty to the Government, as alleged in papers submitted to the court, but to the board itself, a body corporate with the power to sue.
He said if a person was hit with a golf ball on a publicly owned golf course, they should sue the board of trustees of the course, not the Government, for compensation.
Mr Froomkin argued the board of trustees should have brought an action against Mr Brown — if there was a case to bring.
But Mr MacDonald said that the Attorney-General could be sued on behalf of the Government or another public authority, if a complainant was not sure of the correct name to bring the action against.
The two attorneys also locked horns over whether the board of trustees of Port Royal was actually a government board.
Mr Froomkin said it was not because “government board” did not appear in the Golf Courses (Consolidation) Act.
Mr MacDonald said Mr Froomkin’s argument was “gobbledegook” and added it was the very definition of a government board as set out in the Interpretation Act.
The lawsuit involves a contract for the construction of cart paths at Port Royal, awarded to a company called Richold Construction in 2008.
Richold used concrete supplied by SAL Ltd and it is alleged in the writ that Mr Brown did not disclose his interest in SAL to the Government or withdraw from discussions about the contract. SAL is accused of “dishonestly assisting” Mr Brown to “secure the award of contracts to it”.
Mr Froomkin said the board of trustees did not enter into any contract with SAL and Mr Brown had no interest in Richold. He added that SAL was 100 per cent owned by a company called Phillips Holdings and Phillips Holdings was owned by two other companies, which were themselves owned by other companies.
Mr Justice Hellman suggested that Mr Brown, who is president and a director of SAL, could have an “indirect beneficial interest if, at the end of the ownership chain, he is the ultimate beneficial owner”.
Mr Froomkin said: “It would be so indirect as to not be beneficial.”
Mr MacDonald pointed out that Mr Brown was also president and a director of Phillips Holdings.
He said: “If he is the president and the director of the company that essentially owns SAL, that’s enough. I shouldn’t have to go any further.”
He added: “It would be in Mr Brown’s interest to get the best possible deal for SAL.”
Mr MacDonald said the case should be allowed to proceed to the discovery stage, when the beneficial ownership of SAL would be revealed, and potentially to trial. Mr Froomkin told Mr Justice Hellman that the profit on the cart paths contract was about $20,000.
But Mr MacDonald said: “Even if it was only one dollar’s worth of profit, then we are entitled to have that one dollar handed over.”
Island Construction, owned by Mr DeSilva and also listed as a defendant in the case, is accused of “dishonestly assisting” Mr DeSilva to “secure the award of contracts to it”.
The politician was deputy chairman of Port Royal’s board of trustees at the time.
A fifth defendant, former trustee Delano Bulford, is accused of receiving a “secret commission” of $10,000 — described as a “finder’s fee” — from the board of trustees in connection with a contract awarded to a company called Miracle Steel.
Mr Brown and Mr DeSilva are alleged to have “caused or permitted” Mr Bulford to receive the payment. Mr DeSilva, who resigned as a Cabinet minister in January, has pledged to fight the lawsuit “to the end” and has said the board of trustees “did everything by the book”.
Mr Justice Hellman reserved judgment on the strikeout application and his decision will be handed down at a later date.
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