Legal dispute over $18m hotel loan deal continues in New York court – The Royal Gazette

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Created: Sep 17, 2022 07:56

Artist’s impression: architectural drawing of the hotel project at the Par-la-Ville car park (File photo)

A New York court has agreed to help secure evidence from a former Hamilton adviser as the legal dispute over an $18 million loan to launch a hotel development in Hamilton continues in the United States.

Mexico Infrastructure Finance, which provided the loan, urged the District Court for the Southern District of New York to help it receive testimony from Keith Davis.

The MIF request stated: “Mr. Davis was an elected member of Hamilton City Council at all relevant times.

“Based on the evidence presented during these proceedings, Mr. Davis allegedly played a vital role on Hamilton’s behalf in connection with the events described in the MIF complaint.

“The purpose of this application is to obtain testimonial evidence from Mr. Davis, who is not a party to this action and who is purported to be a resident of Bermuda, to be used as evidence at a trial in this action and to supporting facts pleaded in the complaint.

In a decision written last month, U.S. District Judge Vernon Broderick agreed to send the request to the Bermuda courts.

“This court expresses its appreciation for this assistance and declares that the courts of the United States are authorized by law to provide similar assistance to the courts of Bermuda, and will be ready and willing to provide reciprocal assistance in a similar case if necessary” , he wrote.

“The tribunal extends to the judicial authorities of Bermuda the assurances of the highest consideration.”

The dispute relates to a loan made by MIF, a Florida-based company, to Par-la-Ville Hotel and Residences, also known as PLV, in 2014.

The loan was guaranteed by the Corporation of Hamilton, but PLV defaulted on the loan in December of that year.

The Company initially said it would honor the warranty, but later argued in court that it had no authority to do so, so it was unenforceable. The legal dispute went to the Privy Council in London, Bermuda’s final court of appeal, which ruled in favor of the company.

The MIF has launched a series of legal actions to recover the lost money, including $12.5 million given to Gibraltar-based investment firm Argyle in a bid to raise more funds.

A London High Court judge ruled in July 2017 that Robert McKellar, the manager of Argyle, engaged in “unjust enrichment” and spent the money. While some of the missing money had been recovered, the costs of recovery had almost “wiped out” any benefit.

In one of many ongoing legal cases, the MIF has filed a lawsuit in New York against the Corporation of Hamilton and the Bank of New York Mellon over the release of loan funds from an escrow account.

In a request for legal aid submitted to the US District Court, the MIF said the sworn testimony provided by Graeme Outerbridge, former Hamilton Mayor Mr Davis had knowledge “highly relevant” to the case.

“According to Mr. Outerbridge, Mr. Davis was Hamilton’s ‘contact person’ for various aspects of the PLV development project.

“Mr. Outerbridge also testified that Mr. Davis would be one of the people in Hamilton who was most knowledgeable about the negotiation, execution and requirements of the escrow agreement, including the requirements set out in section 3.3.

“This section sets forth certain conditions precedent to the release of most MIF funds from the escrow account held by BNY Mellon.”

The letter said that under the agreement, he was to receive documentation proving that an acceptable loan of $225 million and a capital investment of $100 million had been agreed.

The funds were released shortly after Hamilton received a “profit and trade sharing agreement” with Argyle Limited.

“Mr. Outerbridge testified that Mr. Davis is one of the most knowledgeable people about the Argyle Agreement and the terms therein, as well as the due diligence performed on Argyle,” the application reads.

“The MIF continues to collect evidence to use at trial to support its allegations in this action.

“Based on the facts set forth above, the MIF believes that Mr. Davis has knowledge highly relevant to the claims in this action.”

He is The Royal GazetteIt’s policy does not allow comments on stories about court cases. As we are legally responsible for any libelous or defamatory comments made on our website, this decision is for our protection as well as that of our readers.

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