Part of a legal action against the Bermuda Government over the Hamilton waterfront has been struck out by the Supreme Court.

Waterfront developers Allied Development Partners Ltd (ADPL), headed by Michael MacLean, launched legal action against the Minster of Home Affairs and the Attorney-General after their lease for the property was voided.

While the legal action alleged that the voiding of the lease was unconstitutional and sought compensation, an application was made by lawyers for the government ministers to strike out parts of the claim on the basis that the developers had accepted the validity of the voiding during arbitration.

In a judgment released this week, Chief Justice Ian Kawaley partially struck out the developer’s legal action, finding that ADPL had not seriously sought to unwind the voiding process and instead focused on getting compensation.

The hearing on the matter, which took place last month, led to the release of a series of affidavits containing allegations that three people — Senator Michael Fahy, MP Craig Cannonier and former Attorney-General Mark Pettingill — had solicited bribes.

All three produced their own sworn affidavits fiercely denying the allegations.

The court had heard that ADPL and the Allied Trust had entered into a series of agreements with the Corporation of Hamilton to develop the city’s waterfront.

In December 2012, the discussions culminated in the Trust being granted a 262-year lease for the property.

However, subsequent amendments to the Municipalities Act, passed in October 2013, gave the legislature the ability to reject any agreements made by the corporation after January 1, 2012.

The waterfront lease was debated and rejected on March 7 last year. The legislation included the option for affected parties to appeal the voiding of an agreement or negotiate a settlement, potentially leading to arbitration, within 42 days. ADPL and Allied Trust took the matter to arbitration, but in January the developer sought a declaration from the court that the voiding had not been valid or constitutional or, in the alternative, that the developers were owed $90 million in compensation.

In a written judgment, dated August 24, Mr Justice Kawaley found that ADPL had clearly indicated that they were seeking compensation rather than appealing the decision to void the lease.

Mr Justice Kawaley wrote: “Not only did they positively assert that the agreements had been voided in their carefully drafted statement of case, their initial pleading actually contained an express reservation of the right to seek constitutional relief, which was clearly limited to challenging the adequacy of the compensation recovered in the arbitration.”

The Chief Justice said that contention was supported by transcripts from conversations, purportedly recorded by Mr MacLean and presented before the court.

He wrote: “In a transcript exhibited to the second affirmation of Mr MacLean purportedly recording his own subsequent discussions with the minister in April, Mr MacLean indicates that in the absence of a quick settlement he is leaning towards ‘taking my chances in arbitration’.

“However, remarkably, in an earlier transcript purportedly recording his discussions with Mr DeCosta on September 24, 2013, when the 2013 Act was about to be passed, Mr MacLean, in apparently discussing a draft of section 14, is focused solely on the compensation remedial option, ‘but how much I’m willing to settle for is the question’. This supports the other more formal evidential record in demonstrating that for the applicants, the loss of their rights under the agreements is ‘all about money’, and has never seriously been about seeking to reverse the voiding process.”

Mr Justice Kawaley said there was no evidence before the court that ADPL did not have adequate time to consider its options within the 42-day time limit, and Mr MacLean’s affidavit expressly stated that arbitration was abandoned only because of the vigour with which the Government fought the claim.

As a result of the facts of the case, he found that the developers had abandoned their right to challenge the validity of the voiding process, and it would be an abuse of process for them to seek relief on those grounds.

The Chief Justice further found that it was too late for ADPL to seek to unwind the voiding of the agreements, but that the right to seek appropriate constitutional relief at the appropriate time was not being denied.

The judgment concludes: “The applicants can no longer seek to challenge the validity of the voiding of the agreements and may only seek constitutional relief with a view to obtaining adequate compensation.

“Such relief can only be pursued on the basis that, having exhausted their statutory remedies in the arbitration under the 2013 Act, the relief obtained falls short of the constitutional standard or they are for other reasons entitled to additional constitutional compensatory relief.”

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• To read the full ruling, click on the PDF under “Related media”