Made on behalf of the Applicants Deponent: MacLean First Affidavit of the Deponent Exhibits: 1 a 20" Dated: February 2015 5 IN THE SUPREME COURT OF BERMUDA CIVIL JURISDICTION 2015 NO. IN THE MATTER OF THE BERMUDA CONSTITUTION ORDER 1968 AND IN THE MATTER OF THE MUNICIPALITIES AMENDMENT ACT 2013 AND IN THE MATTER OF THE MUNICIPALITIES AMENDMENT ACT 2014 BETWEEN: (1) THE ALLIED TRUST (2) ALLIED DEVELOPMENT PARTNERS LIMITED Applicants and - (1) THE ATIORNEY-GENERAL OF BERMUDA (2) THE MINISTER OF HOME AFFAIRS Respondents AFFIDAVIT OF MICHAEL RICHARD MACLEAN I, MICHAEL RICHARD MACLEAN, of 7 Marsh Lane, Devonshire, Bermuda DVDS, MAKE OATH as follows: Introduction I am the settler and main beneficiary of the Allied Trust, a trust established under a settlement dated 10 2012. I refer to Exhibit 1" where a true copy of the trust deed is set out. I am also engaged Decembe gs Limited by the trustees to deal with matters related to the Hamilton through my company Holdin Waterfront on behalf of Allied Trust. Allied Trust owns all the shares in Allied Development Partners Limited (ADPL). I am also a director of ADPL, along with my wife. I am authorised by Allied Trust and ADPL to affirm this affidavit on their behalf in their application for constitutional relief against the decisions and actions of the Government of Bermuda ("the 603?) in relation to the Hamilton Waterfront. The facts stated herein are within my knowledge and belief unless stated otherwise. i have had the opportunity of reading the Originating Summons in this action. Insofar as the Summons refers to facts, those facts are within my knowledge and belief and are correct. was born on 1 July 1974 in Kingston, Jamaica. I moved to Bermuda when was 6 years old. When I left High School at the age of 18, I worked for 080 Construction. I was quickly promoted at 0&1 Construction and decided to make construction my career. I left 080 Construction in 2000 and started my own business, called Construction Limited. lam a member of the Bermuda Construction Association. Construction Limited has worked on many large scale projects in Bermuda, including the Tuckers Point Hotel, where we carried out around $34 million of work in around 2006 to 2009, the Hamptons in around 2004 to 2007 and the Works Depot for the Corporation of Hamilton (?the which was carried out in around 2010 to 2012. Smaller scale projects we have undertaken for the included a road expansion at Joell's Alley in around 2005, a refurbishment of the Earl Cameron Theatre at City Hall, demolition of No 1 Shed at the Waterfront in around 2008 and some of the works to facilitate the new x-ray building at the docks in around 2013. loell?s Alley was i think the first contract we did for the it was advertised in the Bermudian press, as tends to be the case. The Earl Cameron Theatre Work was by direct appointment, but the other projects have been competitively tendered. The work of my companies is construction, excavation, maintenance and a quarry materials processing operation, all clone through separate companies. Holdings is the parent company of the group companies. Construction was the first company which i established. The number of employees of the group companies varies according to the workload but has been as high as 120, before the recession. I am also the President of Par-La-Ville Hotel and Residences (St. Regis Bermuda) for which, on 11 April 2012, PLV and the executed a Development Agreement and Ground Lease granting to PLV a 120~year lease over the property, the term of such lease to be increased to a period of up to 262 years provided the Minster issued a sanction authorizing such under section 120(5) of the Companies Act 1981. Allied Trust and ADPL 10. 11. 12. Allied Trust has or had a long leasehold interest from the Col-i in the Waterfront of Hamilton. The ground lease was granted by the to allow the development of the Waterfront. settled Allied Trust as settlor to be the entity which held the assets of the developer for the Waterfront development. initially this was to hold only the shares of ADPL but then later was to hold the ground lease which had been granted by Allied Trust is the parent or holding entity for the Waterfront development. As it held the interest in the land, it would be the overall vehicle for the development, as it would be able to obtain funding against the ground lease. The trustees of Allied Trust are Shane Mora, a good friend of mine, and Matthew Hollis, my brother~in-law. Both had worked for at different times and Shane?s elder brother had been my business partner in for around a decade. ADPL was the operating company which was set?up to manage the Waterfront development. ADPL was originally established as Carpentry but arranged for the name to be changed to ADPL on around 22 October 2012. reserved the name ADPL on 11 October 2012. This was because the development proposal I submitted to on 19 October 2012 was going in the name of ADPL. I refer to Exhibit 2" where a true copy of that development proposal is set out. The name change to ADPL was formally registered on 24 October 2012. Allied Trust took ownership of all the shares of ADPL as from 11 December 2012. sole purpose was to arrange the development of the land subject to the ground lease held by Allied Trust. ADPL would be the hub or centre for exploiting the land which had been leased by the This structure of separate entities to hold land and develop land is commonplace in my experience for the development of land in Bermuda. The developer will not usually have an interest in the land. It is also common for the entity which owns the interest in land to be a trust. Allied Trust held the interest in the land and ADPL was to develop the land. Both would have worked as one in order to achieve this objective. ADPL was to manage the development of the land for Allied Trust, being the vehicle through which Allied Trust would plan and carry out the development of the land. For all practical purposes in relation to the use and development ofthe land in this case, the two operated as a single economic unit. Background to the Waterfront agreements 13. 14. 16. 17. In September 2012 the advertised for pmposals for a development partner to work with it in the realisation of the long anticipated development of the land it owned at the Hamilton Waterfront. Discussion of the development of the Waterfront had been underway for years prior to this. In the campaign for the May 2012 electiOn the Team Hamilton group made it clear they wanted to pursue the redevelopment of the Waterfront. I knew that, after the election, the were looking to move forward with the development and were discussing how to do so over the Summer of 2012. The September 2012 advert requested proposals from people interested in progressing the Waterfront development. It said that the successful candidate would be expected to partner with the The advert asked for proposals by Friday 19 October 2012. was aware of a number of previous proposals to develop the Waterfront, by both the and others. For example, in 2003 Sir John Swan sponsored a design competition for the development of the Waterfront. The joint winning design was by Linberg Simmons architects, which involved the relocation of the docks, to one of two alternative sites in north Hamilton, and the construction of cruise ship and marina facilities, as well as commercial, retail, casino and restaurant uses. The had itself undertaken extensive design, feasibility and environmental impact assessment work with consultants such as Entasis and Sasaki. in the period from 2011 to 2012, a Waterfront Development Steering Committee, including both the then Premier and the then Mayor of Hamilton, sought to progress the development. in April 2012 a two-day charrette was held to consider the development of the Waterfront. The attendees included the Premier, various Ministers and Permanent Secretaries, the Mayor of Hamilton and other representatives of the representatives of Bermuda First and prominent individuals including Sir John Swan. Following the charrette, KPMG produced for the Committee a report dated 26 June 2012 on the "Hamilton Waterfront Redevelopment Project?. This report proposed that the redevelopment should be controlled by an 18. 19. 20. 21. agency governed by a board comprised of the 608, the and Bermuda First. Bermuda First was established in around 2008 and involves leaders of government and business organisations in Bermuda. i had worked for the on development projects before, so i decided to submit a proposal in response to the advert. I assembled an international development team and had concept designs and budget costings for the development prepared. A development proposal was submitted to the on 19 October 2012. Following consideration of the proposals and interviews by its consultant engineer, the Col-l resolved at a special meeting on 2d October 2012 to select Allied as its development partner. 1 received a letter from the Mayor dated 26 October 2012 confirming this in writing. After we were told that we were selected as the development partner, suggested to the that there should be an agreement for the next phase of the work, which gave us exclusivity and also identified the area of the land to be subject to development. Both parties instructed lawyers to advise them in the negotiation of this agreement. A meeting was held towards the end of the week of 22 October 2012 between representatives of the Cell and its lawyers together with me and my lawyer. At this meeting it was agreed what land should be part of the project area and how the relationship between the and us would work. Following the meeting the CoH?s lawyers drew up a draft co?operation agreement which was circulated and agreed by the and ourselves following the discussion. On 31 October 2012 the Cell and ADPL entered into a Co-Operation Agreement pursuant to which ADPL was appointed as the exclusive development partner of the in respect of the Waterfront development. refer to Exhibit 3? where a true copy of the CA is set out. in the CA the and ADPL agreed to co operate to ensure the implementation of a successful development proposal for the Waterfront. The CA recorded in clause 4.3.5 the intention that the ?Exclusive Developer" and the should enter into both a ground lease and a development agreement. After the CA, the and we immediately began negotiation of the substantive agreements for the Waterfront development. Negotiations were conducted in a mix of meetings and telephone discussions. We agreed early on to adapt the form of the agreements used by the Col-l on Par-la-Ville, which had been drafted by Appleby. The negotiations concentrated on tailoring those agreements to the Waterfront project and the development proposal we had submitted. The was represented in the negotiations mainly by the MayOr Graeme Outerbridge and Keith Davis, who was the CoH's lead councillor for the Waterfront project. Negotiations proceeded to allow agreements to be completed in December 2012. The Waterfront agreements 22. 23. 25. On 13 December 2012, the and ADPL entered into a ground lease and a development agreement for the Waterfront. I refer to Exhibit 4" where true copies of those agreements are set out. Following further discussions with the it was agreed to alter the structure and content of the agreements. The and agreed to surrender the 13 December 2012 ground lease and development agreement by way of a surrender agreement dated 20 December 2012. I refer to Exhibit 5" where a true copy of that surrender agreement is set out. Subsequently, new agreements dated 21 December 2012 were entered into. and Allied Trust entered into a ground lease dated 21 December 2012 and the and ADPL entered into a development agreement dated 21 December 2012. refer to Exhibit 6" where true copies of those agreements are set out. The term of the ground lease was 262 years from 21 December 2012. The leased land was more than 20 acres of the Waterfront of Hamilton, from Barr?s Bay Park to include the cargo docks, together with the City Hall Car Park. The recorded in the recitals to the ground lease that it wished to proceed with the development of the land in co-operation with Allied Trust and ADPL and also that ADPL was ?wholly owned and controlled by" Allied Trust. ADPL was a party to the ground lease for the purpose of covenanting to comply with and uphold the terms of the related development agreement insofar as they affected the lease. The recitals to the development agreement recorded that the wanted to proceed with the development of the property in co-operation with Allied Trust and ADPL. The CoH?s planned development of the Waterfrom was to be achieved through both the ground lease and the development, that is through both Allied Trust and ADPL. Relations with the Government of Bermuda 26. My first contact with the new One Bermuda Alliance administration of the Government of Bermuda {(308) was soon after the general election in December 2012. On the Friday evening after the general election, on 21 December 2012 at about 8pm, was called by Alexander (Jerry) Ming and asked to go to the Hamilton Princess 27. 28. 29. 30. Hotel straight away to meet the newly elected Premier Craig Cannonier. Jerry had been part of the team 1 put together for the October 2012 development proposal for the Waterfront. I was told by Jerry that the Premier was interested in meeting me as the developer of the Par-la-Ville and Waterfront projects. I was asked to bring the Waterfront development proposal with me, which i did. When I arrived at the Princess was taken to the Gold Lounge, which is above the reception area of the hotel, to have a private meeting with the Premier and Jerry. This would have been not very long after 8pm that evening. The Premier was celebrating the election victory with family and close friends. Jerry and i explained both projects and our proposals for the Waterfront to the Premier. The Premier took the Waterfront development proposal document, and a shorter summary document I had also brought with me, and my business card, and put them under his jacket when he left the meeting. We had spent perhaps half to three-quarters of an hour discussing the two projects. The next day received a phone call from Stephen DeCosta, the Premier?s assistant and business manager. He wanted to speak to me about the development proposals. We met later that day at my office. This was the start of a long series of discussions which Mr DeCosta initiated with me about the Waterfront development, and also the Par-la-Ville development, on behatf of Premier Cannonier, and then later also on behalf of Michael Fahy, the Home Affairs Minister, and the then Attorney General Mark Pettingill. in or around early January 2013 was called by Mr DeCosta and asked at short notice to join the Premier and Michael Fahy at Chopsticks restaurant for dinner. At that meeting we discussed the Waterfront and the 608?s consideration of the position in relation to it. They were personally supportive of the development and spoke even of using me as a "poster boy" for the DEA, to show that they give people like me opportunities, as they had been criticised in public for not doing so. Subsequently, I had a meeting with the Premier and Bob Richards, the Finance Minister, at the Cabinet Office, also in or around early January 2013, in the evening. This was to discuss matters related to a possible guarantee for financing Par?la~Ville, which the previous (508 administration had proposed to give to the Par-la-Vilie project, At the end of that meeting, as was leaving, the Premier came out with me and explained that there might be some difficulty with the Waterfront development as well as Par-la-Ville because Bob Richards had a problem with me. 31. 32. 33. 34. Throughout 2013, from January through to December, I had many conversations with the Premier and Michael Fahy, and Stephen DeCosta who was acting on their behalf, about what they wanted me to do in order to secure the Cabinet?s support for the Waterfront development. Later, in or around September 2013, these discussions also included suggestions by them that 1 could sell the lease to the (308, or surrender it to the 608, for the payment of various sums of money. Mark Pettingill, the then Attorney General, also started to feature in these discussions around this same time. These discussions were initiated by them and not by me. Although Mr DeCosta was facilitating the contact with me, on an almost daily basis, it was always on behalf of these Ministers. The Premier himself was calling me on almost a bi-weekly basis throughout 2013. Mr Fahy also regularly called or sent messages to me, again almost on a bi-weekly basis as well, and we would meet probably every couple of weeks on average. Despite the discussions with these particular Cabinet Ministers that they pursuing with me, the (308 was adopting a different position in public. Before the public presentation of the Waterfront development pmposals at City Hall on 28 January 2013, Michael Fahy had said in public that the (308 could not support the development. This was reported in the press on 24 January 2013. Michael Fahy was reported as saying that "a project as important to Bermuda?s future must be in partnership with the Government?. There was a formal meeting between 608 Ministers and the Allied development team on the morning of Monday 28 January 2013, following an email request from (308 the Sunday morning immediately before. That meeting was called by the (308 at the last minute. The Allied team were present in Bermuda because of the public presentation at City Hail due to take place that day at 12 noon on 28 January 2013, followed by a scheduled press meeting at 3pm the same day. Ministers had been invited to attend the meetings on 28 January 2013. it is clear to me that the 608 intended to disrupt these events by issuing an email deliberately scheduling a meeting for 2.30pm on 28 lanuary 2013, knowing of the planned meetings at City Hall. I believe it was a deliberate effort on the part of the (308 to try to prevent our meeting and the press conference from taking place that day at City Hall. in answer to the 608 request by email for a meeting, we attended a meeting at the 51" floor board room of the Dame Lois Browne-Evans Building. Present at the meeting for 608 were Michael Fahy, Grant Gibbons, the Minister for Economic Development, and Shawn Crockwell, the Minister of Tourism and Transportation, along with a number of officials. From Allied, there was me, Alex DeCouto, Ted Wood, Chuck Guy of Vecron, Victor Webb of Marston Webb, Steve Milner of Kier, Michael Murphy of 35. 36. 37. 38. Smallwood Reynolds, and Varojuan Hagopian, the Col-J?s consultant engineer. We presented our development ideas to the Ministers, who said very little in response. attended another meeting with Ministers Fahy, Gibbons and Crockweil on 29 January 2013 at the board room of the Global House. was accompanied by my lawyers Michael Smith and Johann Oosthuizen. This meeting was primarily to discuss the Par-la?Ville project but the Waterfront also came up. At that meeting Grant Gibbons was quite insulting about me personally. it was clear that he did not think i should have the opportunity of carrying out these two projects. Following the public presentation of the Waterfront development proposals at City Hall on 28 January 2013, I called Sir John Swan and asked if i could discuss the project with him. i was encouraged to meet Sir John by various people, including the Mayor of Hamilton, due to his longstanding interest in the Waterfront. i was keen to meet him because I had been told by the Premier and Stephen DeCosta that he had been persistently lobbying the 608 behind the scenes to have the 608 dismantle the agreements with Allied. was aware that Sir John had written to the copied to the Finance Minister Bob Richards, stating that ?the Waterfront is a valuable asset that belongs to the people of Berm uda". I met with Sir John at his offices on Front Street, Seon Place. There was just the two of us present. The meeting overall lasted half an hour at the most. I explained my background to Sir John, the Waterfront development pmposal and the arrangements with the Col-i. i asked him if he wanted to participate in the project with me, rather than continue as he had been doing. Sir John said that the land really belonged to the country, not the and that he wanted me to give up the project- I explained that I had a lease with the and that the project documentation was secure. Sir John said that he would use the (308 and the media to make sure that the project did not go ahead. lam aware that Sir John has very good connections with (308 Ministers, including in particular Bob Richards. in around mid January 2013 i had found out from Stephen DeCosta that the Cabinet was working on a plan to block the Allied Waterfront development. This included considering whether the lease from could be cancelled. was told by the Premier and Mr DeCosta that, although some Ministers were supportive of the development, others, including Bob Richards, Grant Gibbons and Trevor Moniz, now the Attorney General, were against. 39. 40. i1. 42. On 13 March 2013 Alex DeCouto and had a meeting with Michaei Fahy. Mr Fahy was again personally supportive of the development and the meeting was promising. in private, Michael Fahy said that he was not against us or the development, but that he was not happy with the Cot?i and how they were conducting themselves. Mr Fahy appeared to be personally keen that we should be allowed to progress with the development. He said to me on various occasions that the problem was other Cabinet members and in particular Bob Richards. Michael Fahy was seeking a copy of the lease between the Col?i and Allied, which the would not give him. I provided him a copy of the lease shortly after that meeting via Stephen DeCosta. On 20 March 2013 the Ombudsman for Bermuda issued a media release announcing an investigation into the CoH?s governance, particularly regarding the Waterfront development project. refer to Exhibit 7" where a true copy of that media release is set out. The Ombudsman stated that her investigation was an own motion investigation, but this was contradicted by Councillor Larry Scott by his claim in an article in the Royal Gazette in May 2013 entitled "Scott took concerns about City governance to Ombudsman? that he was the source of the complaint to the Ombudsman. i refer to Exhibit 8" where a true copy of the press report is set out. i had a number of meetings with the Ombudsman and her investigators. i had concerns about the Ombudsman?s jurisdiction to do what she was doing but i was prepared to co-operate as I had no concerns about the validity of the process. However, judging by the conduct of the investigation, her line of questioning and the content of her preliminary report, it became apparent that we were not going to be given a preper Opportunity to explain the background to the Waterfront agreements. was told by Stephen DeCosta that the (308 wanted the Ombudsman?s repert to give them a reason they couid use in pubiic for biocking the Waterfront development. it certainly seemed to me like a witch hunt, and a done deal, rather than a genuine, open and unbiased investigation. On 21 March 2013, at my invitation, i met Grant Gibbons at my office to discuss the Par-la-Ville and Waterfront developments. The purpose of the meeting was for him as the Economic Development Minister to get sight of the Waterfront agreements which the 608 was maintaining they had not seen and could not support. This was a gesture of good faith to try to reassure the Minister that there was no cause for concern about the agreements. 10 43. 44. 45. 46. On 1 April 2013 there was a formal meeting at City Hall with Michael Fahy and the then Attorney General Mark Pettingill. There were a number of Col-l councillors present, and representatives of their lawyers from J2 Chambers, as well as members of the Allied team {Alex DeCouto, Ted Wood, Jessica Mello and me) and our lawyer Johann Oosthuizen. At that meeting Mr Fahy was pressing the Col-t for a copy of the lease, even though he had received a copy unofficially from me via Stephen DeCosta. The refused to provide a copy. The Ministers? position in that meeting was that the waterfront is a national asset, even though it was actually owned by the in July 2013 Sir John Swan presented his own plans for the development of the Waterfront. The Royal Gazette new5paper at the time reported that it had been suggested that it was part of an attempt to derail the Waterfront development agreements between the and Allied and quoted Sir John as suggesting that he considered that it was his "job is to look out for the pubiic interest?. I refer to Exhibit where a true capy of this newspaper report is set out. Around July 2013, the discussions with Stephen DeCosta, Craig Cannonier and Michael Fahy began to include discussion of a sovereign guarantee that the (308 might offer in support of the Par-la-Ville development. This was to be given in exchange for me giving up the Waterfront lease. The guarantee would provide a financial benefit to Par-la?Ville and allow that development to move forward more easily. could have borrowed against the guarantee which would have been under-written by the 608. By this time it was very clear that the (308 was going to block the Waterfront development. The Premier told me that i should accept this proposal as it was the best result I was going to get from the 608. Stephen DeCosta had made it clear to me that the view of Craig Cannonier and Michael Fahy was that I should surrender the lease to the 608. Mr DeCosta came to my office on Monday 2 September 2013 in the morning. He dictated to me the language of a letter he told me Craig Cannonier and Michael Fahy wanted me to send to them at the Cabinet Office the following day. He had with him a handwritten note of a letter, from which be dictated to me what Craig Cannonier and Michael Fahy wanted me to write to them. The letter was intended to offer to relinquish the Waterfront agreements for a sovereign guarantee on Par-la~Ville for between $45 million and $50 million. From the way the letter was worded it appeared to have been written by a lawyer. I told Mr DeCosta that I wanted to rephrase the letter and to make it clear that the proposal was in exchange for givmg up the Waterfront agreements. 11 47. 48. 49. 50. Stephen DeCosta stated that he wanted to show the new version of the letter to Premeir Craig Cannonier and Michael Fahy before it was sent. He went away and i called him later after i had re-drafted the letter as he had requested. He then came back and collected the re?drafted letter. He returned to my office later that day with my draft letter, with further handwritten amendments on it. This included a figure of $55 million to $60 million. i refer to Exhibit 9" where a true copy of this draft letter with handwritten amendments is set out. i made those amendments to the draft on my computer. Mr DeCosta then told me to deliver the letter by hand the following day, Tuesday, at 9am to the Cabinet Office. did this, with one version addressed to the Premier and one version addressed to Michael Fahy. I got a reply to that letter from Mr Fahy?s office dated 11 September 2013 saying that the offer was under consideration. refer to Exhibit 10" where a true copy of this letter is set out. i then had a follow-up conversation with Stephen DeCosta a few days later. He told me that the Cabinet wanted the Waterfront agreements relinquished but that in Cabinet Grant Gibbons, the Economic Development Minister, had said that the figure was not reasonable. was told that it had been referred to a Mr Cottle in the Attorney-General?s Chambers for advice on what the figure for the sovereign guarantee should be before a decision was made by Cabinet. heard nothing further from the 603 in response to this offer i had been encouraged to make. Although i had known since early 2013 from Stephen DeCosta and elsewhere that the 608 was considering proposals to block the Waterfront development and to cancel the lease from the the first i heard about the 2013 Municipalities Amendment Bill was from the Col-l. It was clear from the public and press debate at the time that the part of the Bill on disposal of land was intended specifically to be used against the Waterfront lease. Michael Fahy was quoted in the Bermuda Sun on 18 September 2013 saying that the 2013 Bill ?would have prevented what has happened regarding the waterfront". refer to Exhibit 11" where a true copy of this newspaper report is set out. Mr Fahy was also quoted in the Royal Gazette on 18 September 2013 as saying that the "Government had to have a say in the progress of major developments in Hamilton, such as the waterfront redevel0pment project.? i refer to Exhibit 12" where a true copy of this newspaper report is set out. The waterfront also featured heavily in the Second Reading debate on the Bill on 2 October 2013, even though the Ombudsman?s report on the Waterfront was not published until 13 December 2013. 1 refer to Exhibit 13" where a true copy of the Ha nsard record for the relevant debate on 2 October 2013 is set out. 12 52. 53. S4. 55. The 2013 Act caught three sets of agreements in its retrospective provisions. One was a sale of [and relating to a porch at 68 North Street. The second was the Par?la?Ville lease and development agreement. And the third was the Waterfront agreements. All three sets were put before the Legislature at the same time, on 22 November 2013. The first two sets were approved on 11 December 2013. refer to Exhibit 14" where a true copy of the Hansard record for the relevant debate on 11 December 2013 is set out. The Senate approved these agreements on 16 December 2013. Consideration of the Waterfront agreements was delayed- I attended a meeting on 23 October 2013 to discuss with the 608 the effect and consequent delay of the 2013 Act on the Paola-Ville agreements at the Ministry of Economic Development. i was accompanied by Johann Oosthuizen. Present for the 608 were Craig Cannonier, Michael Fahy and Grant Gibbons. Michael Fahy said at that meeting that the Act was not meant to affect any agreement other than the Waterfront agreements. In around the latter part of October 2013 I met Michael Dunkley at my office, as Mr Dunkiey was my constituency representative. He was then the Minister of National Security. I showed him the Waterfront agreements but he declined to read them, saying that it was a matter for Michael Fahy as the Home Affairs Minister. My next conversation about the Waterfront with Mr Dunkley was on the telephone one day seen after he took over as Premier in May 2014. On 6 February 2014 i had a meeting with Michael Fahy in his Ministerial office, which was one ofthe long series of meetings and discussions he had had with me during 2013 about the Waterfront development. I suggested that, instead of voiding the lease as I knew was the 608?s intention, the 608 should just purchase the lease from Allied. He said that he would need to take advice from the Chambers about this. The consideration of the Waterfront agreements was delayed until well into 2014. Michael Fahy called me to a meeting on Thursday 20 February 2014. I asked Mr Fahy to ensure that the Premier, Craig Cannonier, also attended, which he did. The meeting was in the board room of the Home Affairs Ministry. was told at that meeting that they had not been able to get the support of the Cabinet for the Waterfront agreements and that they would be voided. was told after this meeting by Stephen DeCosta that the agreements were to be voided because Craig Cannonier and Michael Fahy had not been able to get what they wanted. 13 56. 57. 58. 59. 60. i understand that the next morning Michael Fahy sent a message to the Cabinet to say that the 2014 Municipalities Amendment Bill had to be passed as soon as possible so that the Waterfront lease could be voided properly. laiso understand that shortly following this there were discussions in Cabinet to decide to void the Waterfront agreements. I had a meeting with Michael Fahy at his office on 24 February 2014 where we discussed compensation for the voiding. At that meeting he agreed to me appointing HVS to provide a valuation of the Waterfront agreements. He told me that would be paid what i was entitled to as compensation and would be paid quickly. I instructed HVS to do the valuation on 28 February 2014, before the debate in the Legislature on 7 March 2014, as I knew that the agreements would be voided. The Municipalities Amendment Bill 2014 was considered by the House of Assembly on 7 March 2014. immediater following the vote to approve the Bill, motions to reject the three Waterfront agreements were moved by the Junior Minister for Home Affairs, Sylvan Richards. The vote to reject the Waterfront agreements was split on party lines, with all PLP MP5 and one independent voting against rejection and all the DEA MP5 who were present voting for rejection. In an article in the Royal Gazette following the decision it was reported that the voiding motion ?passed only by the governing One Bermuda Alliance's majority" and that at "around 1am, the motion was narrowly affirmed by an 18 to 14 vote?. 1 refer to Exhibit 15" where a true copy of the Hansard record for the relevant debates on 7 March 2014 on the 2014 Act and the voiding motions is set out. The motions to reject the Waterfront agreements were passed by the House of Assembly on 7 March 2014, before the Senate had approved the 2014 Act, which it did on 21 March 2014, and before the Act received the Governor's Assent on 26 March 2014. Section 2 of the 2014 Act, which amended section 14 of the 2013 Act, only came into operation on 26 March 2014. The Senate subsequently also rejected the Waterfront agreements on 21 March 2014. Michael Fahy himself presented the three Waterfront agreements to the Senate for consideration on 19 March 2014 and gave notice of the motion that the agreements be voided. Mr Fahy then spoke on the motion and moved that the agreements be voided on 21 March 2014. The motion was affirmed by 8 votes to 3. refer to Exhibit 16" where a true copy of the Senate Minutes for 19 and 21 March 2014 are set out. 14 61. i am aware that the have commenced an action for constitutional relief against the (308 in relation to the voiding of the Waterfront agreements. I refer to Exhibit 17" where a true copy of the First Affidavit of Keith Davis dated 16 December 2014 is set out. Losses incurred by ADPL 62. 63. 64. 65. As a result of the voiding, ADPL has lost the ability to carry out the Waterfront development under the development agreement with the and earn the profit that it would have been able to earn. ADPL would have been able to carry out the development, directly, in joint venture arrangements or through contracts with secondary developers, or a combination of these. in all these cases ADPL would have made either a development fee or a development profit from the development. The gross development value of the Waterfront development would have been around $1,800,000,000. A conservative allowance for the profit which would have been made from the development by ADPL would be This would produce a profit of $90,000,000. This is a conservative approach in my view because ADPL would in reality have been able to extract a greater level of profit from the development. The valuation agreed to be sought between Allied and the 608 was produced by HVS on 21 March 2014. it valued the leasehold interest at $156,200,000. HVS placed the most weight on the Income Capitalization Approach, which is one of a number of different valuation approaches which can be adopted, to determine the value of the leasehold estate. This formula gains its results by taking the fee simple estate value and deducting the leased fee estate. I refer to Exhibit 18" where a true copy of the HVS report is set out. in my experience on the Par-la-Ville hotel development project i had numerous valuations and feasibility studies carried out on the freehold and leasehold interests. Based on the location it is clear to me that the Waterfront site would be more valuable per acre than the Par?la-Ville site. By applying the same rate per acre stated in the Par?la-Ville valuation by CBRE of December 2012, it is clear that the HVS valuation was also conservative. I refer to Exhibit 19" where a true copy ofthe CBRE report is set out. ADPL has also suffered other losses. Some of these have been claimed in the arbitration but the 608 is denying that any of them can be recovered. refer to Exhibit 20" where true copies of the feur sets of pleadings in the arbitration (dated 26 September 2014, 14 November 2014, and 5 and 12 December 2014) are set out. 15 66. There are also other costs and losses. For example, i have had to borrow money both to try to progress the project and then to deal with the consequences of the voiding, for example in legal and valuation fees. Interest is accruing on that borrowing in addition to the costs themselves. I am not presently in a position accurately to quantify these costs and losses, not least as they are continuing to be incurred. AFFIRMED by the above-name MICHAEL RICHARD MACLEAN at the City of Hamilton in the islands of Bermuda this 9 day of Eda ?log-k 2015 A V1.1 RICHARD MACLEAN BEFORE ME: Tiffany Boys Commissioner for Oaths Canon's Court 22 Victoria Street P.O. Box HM 1179 Hamilton HM EX Bennuda oate?l Eat)ng r306 16 IN THE SUPREME COURT OF BERMUDA CIVIL JURISDICTION 2015 NO. IN THE MATTER OF THE BERMUDA CONSTITUTION ORDER 1968 AND IN THE MATTER OF THE MUNICIPALITIES AMENDMENT ACT 2013 AND IN THE MATTER OF THE MUNICIPALITIES AMENDMENT ACT 2014 BETWEEN: (1) THE ALLIED TRUST (2) ALLIED DEVELOPMENT PARTNERS LIMITED Applicants -and- (1) THE 0F BERMUDA (2) THE MINISTER OF HOME AFFAIRS Respondents AFFIDAVIT OF MICHAEL RICHARD MACLEAN WAKEFIELD QUIN LTD. Victoria Place 31 Victoria Street HAMILTON HMIO Attorneys for the Applicants Ref: