Gorstew Ltd and Another v Contractor-General

• Jurisdiction: Jamaica
• Judge: Fraser J
• Judgment Date: 30 January 2013
• Neutral Citation: [2013] JMSC Civ 10
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2012 HCV 04918
• Date: 30 January 2013

[2013] JMSC Civ 10

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE CIVIL DIVISION

CLAIM NO. 2012 HCV 04918

Between

Gorstew Limited

1st Applicant

and

Hon. Gordon Stewart O.J.

2nd Applicant

and

The Contractor-General

Respondent

Mr. Hugh Small QC, Mr. Ransford Braham QC and Mr. Jerome Spencer instructed by Patterson Mair Hamilton for the Applicants.

Ms. Jacqueline Samuels-Brown QC and Ms. Tameka Jordan instructed by Firm Law for the Respondent

Application for leave to apply for judicial review — Whether Contractor-General acted ultra vires in seeking to investigate divestment — Application for Orders of Prohibition and Certiorari and for Declarations — Whether grant of leave to operate as a stay of proceedings — If stay inappropriate should interim injunction be granted

Fraser J

THE BACKGROUND TO THE APPLICATION

1 The Office of the Contractor-General (OCG) was established in Jamaica by The Contractor-General's Act (The Act) which came into force in 1986. The OCG is a special commission of Parliament and a dedicated anti-corruption body. It was established to monitor on behalf of Parliament, the award and implementation of government contracts to ensure those processes are impartial, based on merit, and reflect propriety. Concomitantly the OCG also carries out investigations in support of its monitoring functions. The introduction of this statute was an attempt to directly address concerns about corruption.

2 The Urban Development Corporation (UDC) is a statutory body established by the Urban Development Act. The National Investment Bank of Jamaica (NIBJ) is a registered company in which the Accountant General and other public Officers hold shares on behalf of the Government of Jamaica. Gorstew Limited the 1 ^st applicant is a private registered company totally owned by the 2 ^nd applicant.

3 In or about 1990 the government of Jamaica, via public bodies, made available to the 1 ^st applicant by way of a lease and sale agreement, lands located at Ackendown in the parish of Westmoreland. The agreement specified that the 1 ^st applicant was to have commenced construction of a 200–300 room hotel on the property by June 1991 to be completed by November 1992. The construction was to be at the 1 ^st applicant's own cost. The agreement further made provision for termination, in the event that the lessee/purchaser failed to honour the terms of the agreement. The hotel was not constructed in the time stipulated.

4 In or about 2001, the 1 ^st applicant, the UDC and the NIBJ entered into a joint venture agreement for the construction of a 360-room hotel onthe said lands located at Ackendown in the parish of Westmoreland covered by the initial agreement between the Government of Jamaica and the 1 ^st applicant in 1990. This new agreement provided that upon completion of construction, the hotel, to be known as Sandals Whitehouse, was to be leased to the 1 ^st applicant for a period of 20 years and operated under the 1 ^st applicant's Sandals brand.

5 The property upon which the hotel was constructed was owned by Ackendown Newtown Development Company Limited (ANDCo). The ordinary shares of ANDCo were subscribed in the following proportions:

• a. UDC — 861 shares or approximately 37.43% of the ordinary shares;

• b. NIBJ — 689 shares or approximately 29.96% of the ordinary shares;

• c. Gorstew —750 shares or approximately 32.61% of the ordinary shares.

6 The construction was undertaken by ANDCo. The initial costing for the construction of the hotel was projected at US$60 million and was financed largely by Government of Jamaica injected and sourced capital. The financing was apportioned as follows: US$30 million — external debt , US$15 million — NIBJ , US$10 million — UDC , US$5 million — 1 ^st applicant . However, the final cost for the construction of the hotel, completed on or about April 26, 2011, was almost double at approximately US$110 million.

7 The construction was beset by several problems including cost overruns, delayed completion and substandard construction. As a result, the 1 ^st applicant alleged that it sustained significant losses and commenced legal proceedings in the Supreme Court of Jamaica against ANDCo, UDC and NIBJ. These court proceedings were later discontinued and the issues in dispute referred to arbitration.

8 Early in 2011, after the reference of the disputes between the parties to arbitration, and before the hearing of any evidence in the arbitration, the parties to the joint venture agreement, with the sanction of the Government of Jamaica, agreed to amicably resolve the issues in dispute. This resolution included an agreement between the 1 ^st applicant and ANDCo for the 1 ^st applicant to purchase ‘the Hotel’ known as Sandals Whitehouse constructed on two parcels of lands, specifically ‘all that parcel of land part of Ackendown in the parish of Westmoreland comprised in the Certificate of Title registered at Volume 1325 Folio 14 of the Register Book of Titles and all that parcel of land part of Ackendown in the parish of Westmoreland comprised in the Certificate of Title registered at Volume 1373 Folio 429 of the Register Book of Titles.

9 The sale of the Hotel including the land, the building, the fixtures, fittings, furniture and equipment was completed on April 26, 2011 and transferred to the 1 ^st applicant's nominee, Sandals Whitehouse Management Limited. The sale was at a price of approximately US$40million which was financed in part by a vendor's mortgage from the Government of Jamaica. The sale therefore represented a divestment of State assets.

10 Earlier, on or about the 19 ^th of January 2011, the OCG had invoked its statutory powers to commence an investigation into the divestment of the said assets. Pursuant to the said investigation, several Requisitions were issued to various persons and entities by the OCG which were complied with.

11 On or around June 20, 2012, the Contractor-General issued a Requisition by letter to the 2 ^nd applicant containing over 30 requisitions/questions related to the 1 ^st applicant's purchase of Sandals Whitehouse Hotel. The letter stated inter alia :

Re: Notice of Formal Requisition for Information and Documentation to be supplied under the Contractor General Act-Special Statutory Investigation — Concerning the divestment of Government of Jamaica owned assets-Allegation of secret talks for the sale of Sandals Whitehouse Hotel to Gorstew Limited .

The Office of the Contractor General (‘OCG’), acting on behalf of the Contractor General is continuing its Special Investigation into, inter alia, the allegations of secret talks, discussions and/or negotiations which concern the sale of Sandals Whitehouse Hotel, which was a public majority owned asset, to Gorstew Limited….

In the discharge of the mandates of the Contractor General under the Contractor General Act and in furtherance of the express powers which are reserved to him by the Act, the OCG, acting on behalf of the Contractor General, now hereby formally requires you to fully comply with the below mentioned requisitions by providing all of the information and documentation which is demanded of you and to supply same in a sealed envelope, marked ‘confidential’ and addressed to the Contractor General.’

12 The letter continued to set out the thirty-eight (38) requisitions/questions, which include several sub-parts.

13 The 2 ^nd applicant initially agreed to respond to the Requisition but through his Attorneys-at-Law asked for time to do so as he needed to retrieve documents from his archives, and as he had ‘programmed’ business trips abroad. Subsequently after receiving further legal advice, the applicants sought to obtain leave for judicial review to challenge the legality of the OCG's requisition sent to the 2 ^nd applicant.

THE APPLICATION

14 The applicants initially filed a Notice of Application to apply for leave to seek judicial review on September 7, 2012 supported by an affidavit of the 2 ^nd applicant. By Amended Notice of Application filed September26, 2012 supported by the second affidavit of the 2 ^nd applicant, the applicants sought the following Orders:

• (i) The applicants be granted leave to commence judicial review

• proceedings within fourteen (14) days. (ii) The time within which to make the application for permission to commence judicial review proceedings be extended, if necessary. (iii) The grant of permission to commence judicial review proceedings shall operate as stay of:

  • a) the special investigations into allegations of secret talks, discussions and or negotiations which concerned the sale of the Sandals Whitehouse Hotel pending the determination of the application for judicial review or further order;

  • b) the special investigations into allegations of secret talks, discussions and or negotiations which concerned the sale of the Sandals Whitehouse Hotel to include the Applicants pending the determination of the application for judicial review or further order.

• (iv) Further in the alternative, an interim injunction be granted to restrain the Contractor-General, whether by himself, his servants and/or agents from:

  • a) requiring the Applicants to respond to the requisitions/questions contained in the letter dated June 20, 2012; and/or

  • b) pursuing the special investigations into allegations of secret talks, discussions and/or negotiations which concerned the sale of the Sandals Whitehouse Hotel to include the Applicants, until the determination of the application for judicial review or further order.

• (v) Costs of the application to be costs in the judicial review proceedings.

15 The Amended Application outlined the details of the relief sought as:

• (i) A declaration that the letter of June 20, 2012 from the Contractor-General to the Honourable Gordon Stewart, O.J., Chairman,...