The Allied Trust and Allied Development Partners Ltd v Attorney General and Minister for Home Affairs
| Jurisdiction | Bermuda |
| Judgment Date | 24 August 2015 |
| Neutral Citation | [2015] SC Civ Bda 61 |
| Date | 24 August 2015 |
| Docket Number | CIVIL JURISDICTION 2015: No. 127 |
| Court | Supreme Court (Bermuda) |
In The Supreme Court of Bermuda
CIVIL JURISDICTION 2015: No. 127
In the Matter of the Bermuda Constitution Order 1968
And in the Matter of the Municipalities Amendment Act 2013
And in the Matter of the Municipalities Amendment Act 2014
Sir Jeffrey Jowell QC of counsel and Mr. Eugene Johnston, J2 Chambers, for the Applicants
Ms. Monica Carss-Frisk QC of counsel, Mr. Alan Dunch of, MJM Limited and Mr. Gregory Howard of the Attorney-General's Chambers, for the Respondents
(in Chambers)
The 1 st Applicant (‘the Trust’) and the 2 nd Applicant (‘ADPL’) entered into various agreements with the Corporation of Hamilton (‘the Corporation’) in late 2012 in relation to the development of the Hamilton Waterfront. Under a Cooperation Agreement dated October 31, 2012, ADPL became exclusive development partner. A Development Agreement dated December 21, 2012 between the Corporation, ADPL and the Trust contemplated the grant of a lease. On December 21, 2012, the Corporation granted a 262 year lease to the Trust under an agreement in which ADPL joined as the developer (‘the Lease’).
The Municipalities Amendment Act 2013 (‘the 2013 Act’) took effect on or about October 15, 2013. Section 14 of the 2013 Act empowered the Legislature to reject any agreement entered into by the Corporation after January 1, 2012. On March 7, 2014, the Legislature rejected the said agreements entered into between the Corporation and the Applicants (‘the Agreements’). With effect from March 24, 2014, the Municipalities Amendment Act 2014 (‘the 2014 Act’) introduced a new section 14(A) which provided that any rejected agreements were void.
Section 14 of the 2013 Act provided a mechanism for any person ‘interested in land’ which is the subject of an agreement rejected under the statute, to apply for compensation. In or about March 2014 the Applicants made a claim for compensation to the 2 nd Respondent (‘the Minister’). On May 5, 2014, the Applicants made a formal demand for arbitration and commenced statutory arbitration proceedings (‘the Arbitration’). Thereafter the Governor appointed an arbitration panel chaired by now Justice of Appeal Geoffrey Bell and including two London-based compensation specialists (‘the Tribunal’). The Tribunal gave directions in August. On or about September 26, 2014, the Applicants served their “Claimants' Statement of Case” in the Arbitration. On or about November 14, 2014 the Compensating Authority filed its Statement of Case. On or about December 5, 2014, the Claimants' Reply was served and on or about December 12, 2014 the Compensatory Authority filed its Reply to the Claimants' Reply.
Against this background, the Originating Summons herein was issued by the Applicants on February 11, 2015. The prayer sought the following relief:
‘ 31.1 A declaration that on a proper construction of section 14 of the Municipalities Amendment Act 2013 (both in its original form and in the form amended by the Municipalities Amendment Act 2014) that Act did not have the effect in law of voiding the Agreements which were rejected by the Legislature on 7 March 2014.
31.2 In the alternative, if the said voiding was the apparent legal consequence of the said rejection, a declaration that the voiding was of no legal effect because the voiding violated the Applicants' constitutional and common law rights to property.
31.3 In the further alternative, if there was a valid voiding, the Second Applicant claims compensation in the sum of at least US$ 90,000,000 pursuant to its rights under section 13(1)(c)(ii) of the Constitution.
31.4 In the further alternative, declarations as follows as to the correct legal approach to be adopted under the legislation in the calculation of compensation:
(a) That the Agreements, and/or the holders of the Agreements, should be treated as one.
(b) That the Trust is entitled to recover all consequential loss as a result of the voiding.
(c) That the Government of Bermuda's claimed hostile attitude towards the Waterfront Development is not to be taken into account in assessing compensation.
(d) That matters connected with the rejection are not to be taken into account in assessing compensation.’
The present application was commenced when the Respondents on March 12, 2015 filed a Strike out Summons which was issued on March 16, 2015. It sought to strike out all of the Originating Summons save for paragraphs 28(1) and 31.3 which sought relief on the hypothesis that the Agreements were, contrary to the Applicants' primary complaint, validly voided.
In essence, the Respondents contended that it was an abuse of process for the Applicants to seek to challenge the validity of the voiding of the Agreements, having accepted their validity in the context of the Arbitration for two related reasons. Firstly, they should be bound by their election and, secondly, the relief being sought was contrary to the public interest in that it cast doubt over the title to property which was an important national asset due to be used in October in the first event of the America's Cup.
The First Affidavit of Michael Fahy, the 2 nd Respondent (‘the Minister’), firstly explains the background to the controversial voiding of the Agreements by the Legislature in March 2014. The Minister was appointed to the Senate and as Minister of Home Affairs on December 21, 2012 after the December 17, 2012 General Election. In the course of January, 2013, he met with the Mayor and other officers of the Corporation of Hamilton (‘the Corporation’) and requested to review the documentation relating to the Waterfront Redevelopment Project before the Corporation announced its plans in this regard.
The ultimate refusal of this request prompted the Government to propose amendments to the Municipalities Act 1923 to require approval of any leases with terms in excess of 21 years. The Government's concerns about the Project arose against the backdrop of the Ombudsman's Report published in 2013 which, the Minister deposed (at paragraph 19), ‘ in the course of finding extensive maladministration, made scathing remarks about the process followed in respect of the tendering’ for the Project.
By a letter dated ‘March 2014’, exhibited to the Minister's First Affidavit, the Applicants through their then attorneys Wakefield Quin wrote to the Minister making ‘ a claim for the purposes of section 14(7) of the Municipalities Amendment Act, 2013’. The letter reserved the right to make additional claims under the Acquisition of Land Act 1970. Also exhibited is a March 19, 2014 letter from J2 Chambers on behalf of the Corporation to the Applicants indicating that the Corporation was considering challenging the constitutionality of the purported voiding of the Agreements and seeking clarification of what position the Applicants would take in relation to such a challenge.
The Minister further exhibits the pleadings in the Arbitration and letters written on behalf of the Applicants in May, 2014 to the Governor urging the expeditious constitution of the tribunal. In the course of argument, Ms Carss-Frisk QC placed particular reliance on the second of those letters (dated May 16, 2014) and the first two substantive paragraphs therein:
‘ Firstly it is not the case that the House of Assembly rejected the various agreements which are the subject of our clients' claims. Indeed, as provided for in the relevant legislation, the agreements were voided “ab initio”.
It is common ground between the parties that this matter should now be referred to arbitration as provided for.’
As far as the Applicants' Statement of Case in the Arbitration is concerned, Ms Carss-Frisk QC placed reliance on the following averments:
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(a) paragraph 21 avers that the Agreements were rejected by the Legislature on March 28, 2014 (after being rejected earlier by the House of Assembly-March 7- and the Senate-March 21) and concludes with the following words: ‘ such rejection has the effect of retrospectively voiding the Agreements’;
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(b) paragraph 22 avers that section 14(10) of the 2013Act applied the provisions of the Acquisition of Land Act 1970 to ‘ compensation for the voiding of agreements under section 14’;
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(c) paragraph 83 concludes by asserting that if Government asserts that any of the Claimants' ‘ costs and losses’ were not recoverable in the Arbitration, the Claimants reserved their right to pursue ‘ other remedies…including a constitutional challenge.’
The Respondents' counsel argued that this reservation of rights merely signified the right to pursue other remedies, including a constitutional challenge, in respect of the compensation claim being asserted in the Arbitration. The Applicants' counsel submitted it was intended to reserve the right to seek unlimited constitutional relief.
The Compensating Authority's Statement of Case effectively submitted that the Agreements had only nominal value so that only nominal compensation of $1 was due. Ms Carss-Frisk QC also relied on the concluding averments of the Claimant's Reply: ‘ For the avoidance of doubt, given the case pleaded by the Government of Bermuda, the Claimants reserve their rights to pursue other remedies against the Government, including a constitutional challenge.’ She contended that this did not say what Sir Jeffrey Jowell QC contended it said, namely that in light of the Government case a constitutional challenge is being pursued instead.
The Minister's Affidavit made the following averments under the heading ‘Delay’:
‘ 44. The “Waterfront which is the subject of the Agreements comprises some of the most...
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