By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian attorney has failed to overturn a “negligence” verdict over a $640,000 loan issued by an insurer whose owners include the PLP’s deputy leader.

Monique Gomez had sought to overturn a default judgment obtained against her in July 2017 by BAF Financial & Insurance (Bahamas), which includes Chester Cooper among its principal shareholders, due to the loss it suffered on a mortgage granted to a Bahamian construction company.

Justice Indra Charles, in a May 25, 2021, ruling noted Ms Gomez’s admission that she had been instructed by BAF Financial to ensure that Kendal Williams Construction Company and its owners, Kendal and Jennifer Williams, had “good and marketable title” to two properties upon which the $640,000 loan was secured.

She was also asked to prepare the mortgage documents, but the insurer said it discovered several years later that Ms Gomez had failed to have them stamped and recorded with the Registry of Records. Thus its security for the October 24, 2008, loan was not perfected, enabling Jennifer Williams to sell one of the two properties just three years later without any hindrance.

And the other had already been mortgaged to Scotiabank (Bahamas), which subsequently foreclosed and sold it to recover its own loan, leaving BAF Financial holding a substantial loss. 

However, Ms Gomez turned around and blamed the Bahamian life and health insurer for the loss. She alleged that it was “negligent” in extending $640,000 to Mr Williams because she had informed it about Scotiabank (Bahamas) mortgage and the associated risks if the contractor defaulted.

Ms Gomez also claimed that BAF Financial had breached its contract with her by not paying the promised $17,236, while arguing that the insurer was responsible for failing to pay the Stamp Duty and recording fees required to perfect its mortgage loan security.

Kendal Williams Construction Company, according to Tribune Business records, was one of the first 13 delinquent Bank of The Bahamas’ borrowers to be transferred to the Government-created bailout vehicle, Bahamas Resolve. Yet, apart from Bank of The Bahamas, it has enjoyed success in obtaining significant sums from other lenders, including Scotiabank (Bahamas) and BAF.

The contractor and its principals also obtained $1.35m from the Bahamas Communications and Public Officers Union’s (BCPOU) pension fund - a loan that ultimately resulted in the then-four pension trustees being declared bankrupt by the Bahamian court system, although this is still being contested.

In relation to the BAF claim, Justice Charles’ verdict recalled how the insurer initiated legal action seeking damages from Ms Gomez, the contractor and its principals over the mortgage loan on April 24, 2017. “BAF claims negligence on the part of attorney Gomez for her failure to complete instructions on its behalf which resulted in loss to BAF,” she wrote.

After Ms Gomez failed to either appear before the court or file a defence to BAF’s claim, despite being served with the action, the insurer filed a judgment in default of appearance against Ms Gomez on July 6, 2017.

Glenda Roker, BAF’s attorney, then appeared before Justice Charles on February 5, 2020, in a bid to obtain an order to enforce the default judgment “after futile efforts were made to settle the matter”. Ms Gomez was present for the hearing, and Justice Charles granted the order sought in requiring that all defendants pay their respective judgments within 90 days.

However, Ms Roker complained “there have been no serious attempts or efforts to pay” this sum by Ms Gomez, who subsequently moved to set aside the default judgment on February 2, 2021 - almost four years after it was obtained by BAF.

Justice Charles said the key to determining Ms Gomez’s application was whether it had any real prospects of success or “does the defence have some degree of conviction”. She noted that the attorney made “no admission” in response to BAF’s claim that the mortgage was secured on two real estate parcels described as the Civic Industrial Property and the Bahamia Property.

While confirming that she was instructed by BAF, Ms Gomez argued that “it was an implied term of the contract for legal services between BAF and herself that BAF would inform her of any steps it intended to take so as to enable her to protect BAF’s interest by rendering advice in respect of the intended actions connected to its intended mortgage”. She also argued that the insurer failed to pay her the agreed $17,236.

Damian Gomez QC, defending Ms Gomez, argued that BAF was instead the one that was negligent in advancing the $640,000 loan despite being aware of Scotiabank (Bahamas) pre-existing mortgage over the same real estate parcel. As a result, BAF “assumed the risk” and consequences if the contractor and its principals defaulted on payments to the bank.

Mr Gomez also argued that BAF’s action was statute-barred by the Limitation Act, on the basis that the insurer’s legal action was launched more than six years after the October 2008 mortgage loan was executed.

“In written submissions, Mr Gomez argues that BAF was negligent in failing to have the mortgage stamped and recorded. He maintains that attorney Gomez’s firm did not receive payment from either BAF or the other defendants for the stamping and recording of the mortgage,” Justice Charles recorded.

“The subsequent Scotiabank foreclosure exercise had nothing to do with her alleged failure to stamp and record BAF’s mortgage deed but BAF’s own negligence. Mr Gomez further submits that, on the admissions of BAF by pleadings and affidavits, it must fail in showing a cause of action in negligence and that BAF’s claim against attorney Gomez ought to be properly struck out.”

Mr Gomez also argued that BAF had failed to show it had suffered damage as a result of Ms Gomez’s alleged inactions or actions. However, Justice Charles dismissed the Limitation Act argument by finding that BAF was well within the timeframe to bring an action because it only became aware the Williams’ had sold the Bahamia property when the conveyance was recorded on February 21, 2012.

And, given that BAF only realised that Ms Gomez had failed to have its mortgage security stamped and recorded when this event occurred, Justice Charles said it could not be accused of being “contributorily negligent” to its own fate.

“In addition, says Ms Roker, attorney Gomez simply did not discharge her duty as a reasonable and prudent attorney acting on behalf of BAF to have the security perfected. To date, she has failed and/or refused to forward original documents and has offered no excuses for the same,” Justice Charles wrote.

“In fact, in a letter to BAF dated October 24, 2008, she acknowledged that once the mortgage is stamped and recorded, it will represent a valid and enforceable security. Yet she failed to do so and now attributes culpability at the feet of BAF when, effectively, it is the other way around. She was attorney acting on behalf of BAF.”

Justice Charles said Ms Gomez’s claim not to have been paid the $17,236 was contradicted by a “statement of account” note signed by a Sandra Stewart from her law firm, and bearing the stamp “paid”, which was addressed to the Williams’ on October 24, 2008. The same sum was involved.

The judge added that near four-year delay in seeking to overturn the default judgment was an aggravating factor that further influenced her decision not to set it aside.