A bid by the Corporation of Hamilton take back control of its finances has been refused by Chief Justice Ian Kawaley.

This means Home Affairs Minister Michael Fahy continues holding the City’s purse strings — although Mr Justice Kawaley called the situation “unprecedented”.

Senator Fahy declared on December 20 that Government was taking over the financial affairs of the Corporation’s team under mayor Graeme Outerbridge, using powers approved under the Municipalities Amendment Act 2013, in the wake of a report by Ombudsman Arlene Brock criticising the City’s administration.

The Minister’s side is currently amassing evidence to justify that move, which comes up for judicial review in April.

“The Minister has taken the view that interim stewardship is required, in order to ensure that what he sees as abuses in the past are not allowed to continue,” lawyer Alan Dunch told the court, warning that “the potential for harm, if the stay is granted, is very real indeed”.

Mr Dunch also argued that the seizing of financial and treasury control hadn’t impeded the Corporation’s ability to do business.

“What has been removed is the ability of certain personages to impose their will on others, with a will to extracting Corporation funds for improper purposes.”

Citing last October’s decision by the “Team Hamilton” administration to pay themselves for attending meetings, Mr Dunch said the evidence showed that “actual pressure was exerted upon members of the Corporation staff to pay, in circumstances the staff themselves thought wrong — and where they expressed it was wrong, were told ‘If you don’t approve it, you will be fired’. That’s the kind of abuse that should continue to be prevented.”

Sen Fahy himself will give evidence in court — some of it deriving from “hundreds of pages of e-mails sent to the Minister by persons within the Corporation that are highly germane to the matter”.

Corporation lawyer Eugene Johnston responded that the material had been leaked.

Mr Johnston also attacked the notion that Sen Fahy’s actions hadn’t inflicted harm on the Corporation’s day to day affairs, telling the court the Minister’s actions had been unlawful.

“We would describe it as draconian,” he added — a position for which Mr Justice Kawaley expressed some sympathy.

“It’s one of those situations that gets into the financial affairs of a public body that exercises elected powers — these are people who have responsibilities to their constituents,” Mr Johnston said.

“The Minister has provided nothing — not a shred of evidence — as to why he has exercised these powers. There’s the Ombudsman’s report, and then the authorisation of payments.

“That’s all the court has in front of it. Two statements that don’t even come close to when the power can be exercised lawfully.”

He added: “There must be something — you can’t say one elected member can sweep in and sweep away the rights of another elected body on the basis of these two very bold statements.

“I am simply trying to get the court not to assume too much about the Minister’s position.”

Mr Justice Kawaley noted that it was “not obvious that the power was properly exercised” and added: “It does seem to me that the court should put some pressure on the Minister to expedite the hearing.”

Sen Fahy’s side has 56 days by law to compile evidence from the launch of the suit — meaning the Government side has until March 18 — and Mr Dunch argued that with the opening of Parliament tomorrow and the Budget next week, it would be difficult to abridge that time.

Among the items going before MPs at tomorrow’s opening session of the House of Assembly will be the Corporation’s controversial lease and development agreement for the Hamilton waterfront, which the defence touched upon in yesterday’s hearing.

Mr Dunch told the court: “We can go back as far as 2012, when the Minister asked the very proper question of the mayor, ‘Can you please explain the circumstances of this 262-year lease of the Hamilton waterfront’ — and what he got was a letter that basically told him where to go.”

Ultimately, Mr Justice Kawaley opted to order the defence to have their evidence compiled in time for Friday, March 14.

However, in considering whether Sen Fahy ought to have produced more evidence before taking fiscal control, the Chief Justice observed: “It’s assumed that discretion will be used wisely — and it’s not easy to simply say at this stage that there has been such a clear misuse of that power that the court should stop the Minister from exercising regulatory powers.”

The Corporation’s application for a stay was refused, with costs to be reserved.

Dates for the judicial review are to be settled by March 21.

“The case will be heard in open court, within the first two weeks of April, and is estimated to take two days.