Photo: Location of Commerce Bight Port
BELIZE CITY, Thurs. June 15, 2023
The Government of Belize (GoB) is now on the hook for what will likely be a significant payout due to the cancelation of agreements that were signed by the previous Barrow administration with Recological Systems Ltd. just days before the last general elections. The High Court has found the Belize Port Authority (BPA) and the Minister of Logistics liable for the breach of a rental and a lease agreement, respectively signed on November 5, 2020 (6 days before the General Elections that year), and November 9, 2020 (two days before the elections). The 25-year agreements were signed with Recological Systems Ltd. for the possession, development and operation of the Commerce Bight Port located south of Dangriga in the Stann Creek District. The rental agreement for 50.37 acres signed by the BPA was to come into effect on November 9, 2020. The end date of the agreements was set at year 2045.
When the People’s United Party (PUP) administration came to power, Minister Rodwell Ferguson as minister responsible for ports at the time, took a motion to the House of Representatives on May 28, 2021 for the agreements to be disapproved. With House approval, on June 6, the PUP administration declared the agreements a nullity and subsequently evicted Recological Systems from the port.
Recological Systems subsequently took the BPA and Minister to court and during the hearing on December 9, 2022, the company’s two attorneys, one of whom is Senior Counsel Dean Barrow, pointed to extended negotiations with the parties and the signing of several MOUs and in-principle agreements that ultimately led to the rental and lease. The Defendants insisted that the agreements for the public asset with an aggregate value of over $2 million (disputed by the Claimants to be closer to $868,750), were not duly executed. Their arguments were that the signing of the agreements breached Sections 18(1) and 22(1) of the Finance and Audit Reform Act (FARA) requiring National Assembly approval for the disposal of a public asset with an aggregate value of $2 million or more. The Claimants, on the other hand, asserted that the sections cited from the FARA do not apply in this case because the BPA is a statutory body and the sections apply only to the “Government.”
Justice Geneviève Chabot found in favour of the Claimants regarding applicability of the cited sections of the FARA to the BPA. She noted in her judgment dated June 12, 2023 that “government” and “statutory bodies” are not used interchangeably in the Act and where the FARA is intended to refer to statutory bodies, it does so explicitly. Therefore, she ruled that the FARA does not apply to the cited sections of the agreement that require National Assembly approval for the disposal of public assets with an aggregate value of over $2 million.
Whereas the FARA does apply to the minister responsible for ports, Justice Chabot noted that even though one of the three parcels in question was national land and remained a public asset because it was never bought by the BPA, permission to sub-lease was governed by the National Lands Act and not the FARA. She stated, “It may well be that the Government failed to comply with the requirement of the National Lands Act in granting the lease to the Claimant.” However, the Defendants failed to argue a breach of the National Lands Act, and so Justice Chabot affirmed that defense was not properly before the Court. An application by the Defendants to amend their defense to plead the BPA’s lack of authority to sign the rental agreement was denied. Justice Chabot did, however, allow the Government’s application for relief from sanction and admitted into evidence statements from the former Ports Commissioner Major (Ret’d) Gilbert Swazo and Lands Commissioner Talbert Brackett.
Notably, based on evidence introduced, it was learned that the other two parcels, which together with the third were leased by the BPA in 2006 but never purchased, were granted to private persons via Minister’s Fiat in 2008 and 2020.
The Claimants successfully argued that the transaction in the lease agreement regarding disposal or any dealings with national land is exempt from FARA requirements because the land was not more than 500 acres or a Caye. Even so, they argued that “disposal” means the “final alienation” of assets, which, in this case, did not amount to a disposal of the port. The Court only considered that the pier which sits on Parcel 3 fell under the provisions the Defendants cited from the FARA; however, the judge noted that by their own admission, the value, $1,600,000, is below the $2 million threshold which would have triggered the application of Sections 18(1) and 22(1) of the FARA. The Claimants separately asserted that the lease approved by the then minister responsible for ports, Hon. Edmund Castro, was more akin to a license and not a transfer of a public asset.
The agreements could have been terminated for a breach of the terms of the agreement on the part of the Claimant, but the Defendants never argued any such breach. In the case of the lease agreement, that could have also been terminated for any breaches of a law, regulations or by-laws after written notice to the Claimant giving them an opportunity to make representations.
The case now moves to a determination of damages for the wrongful termination of the agreements. Senior Counsel Dean Barrow has said that “will take some doing … It’s not as though this was a going concern the Government took away, and so, it’s not as though Recological would have a history of the profits it was accustomed to make which would have been lost. No. This was a new enterprise. There’s never been a functioning port at Commerce Bight as far as—certainly not in living memory.” He thus explained that Recological will therefore bring in an expert to indicate to the Court “what likely is the kind of moneys that would have been made, what the revenue stream would have been like.” He added that due to the length of the contract, “you can wager, I think, safely, that the damages will be significant.”
At the time that Recological was asked to vacate the property, their Project Manager, Breandon C. Raymond, had told the media that their preparations before the signing of the rental and lease agreements spanned at least three years, including required studies. Cited as the Managing Director for Recological in 2021 was Paul Martin. Alan Gobie was cited as a former director.
The Government was defended in this case by Senior Counsel Douglas Mendes and Iliana Swift.
As to an appeal, Attorney General Magali Marin-Young told us today that they have not yet met with their counsel to decide.