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Par-la-Ville hotel case against law firm allowed to proceed

Prime site: a drawing of the never built Par-la-Ville hotel project (File image)

A legal battle between a finance company and a law firm over the failure of the Par-la-Ville Hotel project is set to continue after the Supreme Court refused to strike out the case.

Mexico Infrastructure Finance, which provided an $18 million bridging loan to Par-la-Ville Hotel and Residences for the project, has blamed Wakefield Quinn and Johann Oosthuizen, a lawyer, for what it says was the improper release of the funds.

MIF claimed that Mr Oosthuizen, as an employee of Wakefield Quinn, had assisted PLV secure the release of the funds and said that a “reputable project finance company” had been engaged.

A total of $12.5 million of the money was handed over to Gibraltar-based investment firm Argyle, however the funds were never invested on PLV’s behalf, and the company soon defaulted on the loan.

While the defendants argued the case against them should be struck out on the basis that there was not a reasonable cause of action against them, Puisne Judge Shade Subair Williams ruled that the case could be amended and proceed.

She said MIF had alleged that the defendants had induced or procured contractual breaches of the credit agreement and escrow agreement, or that they dishonestly assisted in carrying out the breaches.

“These are claims which, on the face of it, are recognised causes of action triggering established legal principles,” she said in a written decision.

“It follows that the defendant’s application is more of an invitation to this court to find that the plaintiff is unable to prove these causes of action because the legal or factual basis upon which they are brought is unarguable.”

While Mrs Justice Subair Williams said that the element of “intention” was not expressly included in the pleadings, the issue could be addressed by an amendment.

She also said amendments could be made to clarify their allegation that Mr Oosthuizen had “turned a blind eye”.

The legal action is one of several surrounding the July 2014 loan, which was intended to jump-start financing to build a hotel on the site of the Par-la-Ville parking lot.

PLV defaulted on the loan in December 2014, and the company was wound up.

MIF subsequently initiated a series of legal actions to recover the lost money, including $12.5 million handed over to Argyle.

A judge at the High Court in London ruled in July 2017 that Robert McKellar, the director of Argyle, had engaged in “unjust enrichment” and had spent the money.

Argyle was liquidated in 2019 to recover the cash, which Mr McKellar spent on an Aston Martin sports car, an engagement ring, and two properties in the UK, Overton Grange and Rystwood Farm.

While some of the missing cash was recovered, it was reported that the recovery costs had almost “wiped out” any benefit.

The Corporation of Hamilton had guaranteed the loan and, when PLV defaulted, initially said it would honour the guarantee.

However, the corporation later argued in court that it was unenforceable because the body did not have the power to make the guarantee.

The legal dispute went to the Privy Council in London, Bermuda’s final court of appeal, which found in the corporation’s favour.

MIF has launched further legal actions against the Corporation of Hamilton over Par-la-Ville car park, arguing that the mortgage for the property was valid and the firm had “good equitable title” for the lot.

They have also accused Terra Law of negligence over a legal opinion that said the Corporation of Hamilton could guarantee the loan.

MIF has also initiated a lawsuit in New York against both the Corporation of Hamilton and the Bank of New York Mellon over the release of the loan funds.

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