By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Court of Appeal yesterday upheld an injunction freezing $2.288m that was paid by a BISX-listed food group to acquire the major asset held by the City Markets employee pension fund.

The appellate court, in a unanimous verdict written by justice Stella Crane-Scott, dismissed in its entirety the appeal launched by Dennis Williams and Rosalie McKenzie, the pension plan’s trustees, to overturn the injunction designed to prevent the purchase price paid by AML Foods from being dissipated.

And, in backing the March 27, 2023, verdict by then-Supreme Court justice, Diane Stewart, the Court of Appeal has also effectively protected the best source for hundreds of the defunct supermarket chain’s long-suffering pension beneficiaries to recover some of their retirement savings more than a decade after its collapse.

The $2.288m represents the net sales price paid by AML Foods, the Solomon’s SuperCentre and Cost Right operator, to acquire the pension fund’s most valuable asset - the former City Markets headquarters building on East-West Highway.

That transaction, agreed more than seven years ago on September 21, 2016, has become embroiled in a furious legal battle stemming from disputes between parties associated with the pension fund. AML Foods, in its substantive claim still to be determined by the Supreme Court, is seeking declarations to uphold and confirm the validity of its purchase or, in the alternative, recover the full $2.438m price that it paid.

The asset freeze only covers $2.288m, rather than the full $2.438m, because the trustees claim they only received the former sum. Appeal justice Crane-Scott, in her written ruling, wrote: “On September 21, 2016, AML Foods entered into an agreement for sale with the appellants to purchase 6.52 acres of land on East-West Highway.

“The property was ostensibly owned by the Bahamas Supermarkets Employee Retirement Fund Trust (BSERF) for which the appellants purported to act as trustees. By a deed of conveyance dated 28 July, 2017, the appellants (in their capacity as trustees of the BSERF) purported to convey the property to AML Foods in consideration of the sum of $2.438m, receipt of which the appellants acknowledged.

“Subsequently, AML Foods became aware that an incorporated entity, ABDAB Properties , claimed to have purchased a part of the property which AML Foods had purchased from the appellants. On 15 February, 2018, AML Foods filed an originating summons in the Supreme Court against the appellants, the BSL Retirement Plan Ltd , Whanslaw E. Turnquest and ABDAB Properties, respectively.”

Then-justice Stewart’s previous Supreme Court decision revealed that a significant amount - some $1.706m of the $2.288m received by the pension fund - may have already been “dissipated” and paid out to unnamed third parties by the trustees for the Bahamas Supermarkets Employee Retirement Fund, as the City Markets employee pension plan was known.

Mr Williams, a former Bahamas Electrical Workers Union (BEWU) president who is now an attorney, and Ms McKenzie “maintain that there is no evidence of any attempts” by themselves “to dissipate any assets or that they are likely to do so... It would be futile to think that funds received as payment for work done as trustees would still be in their account”.

The injunction’s removal, though, was opposed by representatives for the City Markets pensioners, first Whanslaw Turnquest, and then Glen Adderley. Asserting that the former City Markets headquarters building was held in trust by the trustees for the pensioners’ benefit, they alleged they - and the Supreme Court - only became aware of the sale some six months after the proceeds were received and while legal proceedings were ongoing.

Of the $3m gross sum, some $2.288m was paid to the trustees’ attorney, Roger Minnis of Minnis & Co, together with the $150,000 deposit, on September 21, 2016. The $562,242 balance was retained by AML Foods and its attorneys, C. F. Butler & Associates, to cover outstanding real property taxes and Bahamas Power & Light (BPL) bills owed on the headquarters property.

The pensioners’ representatives, as noted by Justice Stewart, are alleging that Mr Williams and Ms McKenzie “have committed breaches of trust and fiduciary duties” over the building’s sale and that the duo “are dissipating the trust funds and that they wish to continue to spend trust funds” that should be used to pay the City Markets beneficiaries what they are owed.

They were joined in their opposition to the injunction’s discharge by both AML Foods and other parties involved in the City Markets pension fund quagmire. The latter included BSL Retirement Plan Ltd and ABDAB Properties Ltd, with ABDAB standing for Associated Bahamian Distillers and Brewers. Both entities are linked to Mark Finlayson and his family, whose Trans-Island Traders vehicle was City Markets’ last ill-fated majority owner before the firm collapsed.

BSL Retirement Plan, in particular, argued that the injunction should remain because neither Mr Williams nor Ms McKenzie was named as a trustee for the East-West Highway property. Instead, it alleged that they were appointed to hold ABDAB preference shares “in order to conclude an agreement for sale” signed by their predecessors and “to hold a revisionary right in 70 percent of the shares in Trinity Ltd”.

This relates to a series of transactions where the Finlayson family exchanged the City Markets pension plan’s interest in the former company head office - its main asset - for preference shares in ABDAB. The back parking lot and delivery area were also split off from the front buildings and allegedly sold to an ABDAB subsidiary.

In return, the City Markets pension fund was to gain shares worth $600,000 in a company called Trinity Ltd, which acted as a holding vehicle for ABDAB’s equity interest in the Trinity Plaza shopping centre on West Bay Street. AML Foods, meanwhile, wants the Supreme Court to determine if it has valid title to the former City Markets headquarters building via a 2017 conveyance, and if not, to order that its purchase price payment be returned.