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City’s multimillion-dollar legal fees for takeover challenge and failed hotel

Charles Gosling, the Mayor of Hamilton (File photograph)

Close to $2 million was racked up in legal fees at home and overseas by the City of Hamilton as part of two court battles.

More than $1 million was spent on the City’s fight with the Government over its proposal to change both of the island’s municipalities into quangos.

The fees, posted online under Public Access to Information rules for contracts worth more than $50,000, showed that City Hall paid the cash to law firm MDM.

The bill covered its challenge to the Municipalities Reform Act, which was designed to turn the corporations of Hamilton and St George into unelected quangos.

Charles Gosling, the Mayor of Hamilton, admitted that the money could have been used elsewhere.

But he added: “We are extremely satisfied with the services from MDM.”

The battle started after 2019 legislation that was drawn up to bring the Corporations and their assets under Government control.

The legislation was approved in the House of Assembly, but failed to pass in the Senate.

The Supreme Court has not found the Act to be unconstitutional, but the ruling remains under appeal by the City.

Two more legal bills adding up to almost $780,000 involved the City’s fight over a failed plan under a previous City Hall administration to build a hotel on the site of the Par la Ville Road car park.

Mr Gosling explained the bills were in connection with the legal battle against “Mexico Infrastructure Finance, which we are still engaged in”.

Developers Par la Ville Hotel and Residences obtained an $18 million loan from MIF in 2013 under the “Team Hamilton” administration of Graeme Outerbridge, then the mayor.

The development never went ahead, but the City signed over the car park as collateral for a guarantee on the loan.

Bermuda courts later found the guarantee to be unenforceable.

The car park property went into receivership under professional services firm KPMG after Par la Ville Hotel and Residences failed to pay back the loan by the end of 2014.

The corporation was billed $520,853 by the US-based Morgan Lewis & Bockius LLP, and $257,234 by Blackstone Chambers in London for work done last year on the case.

Mr Gosling said: “We are trying to recover the deeds being held by the receiver for the Par-la-Ville car park, which is all to do with the guarantee for the $18 million loan.

“Is it taking a toll? Yes – but at the same time, if we lost, that would be $18 million out the window.”

Mr Gosling said he hoped City Hall would regain ownership of the car park as early as this year.

But he said even a victory in the courts would leave the City out of pocket.

Mr Gosling added: “If we win, we are not going to be able to go after the costs, but we will certainly be appealing for costs.”

UPDATE: In the print version of this story, we gave the incorrect assumption that the City of Hamilton owes millions in legal fees rather than having already cleared any such debt. The Royal Gazette apologises to the City of Hamilton for any inconvenience caused.

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Published February 14, 2022 at 1:38 pm (Updated February 14, 2022 at 2:46 pm)

City’s multimillion-dollar legal fees for takeover challenge and failed hotel

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