By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Chief Justice has granted a seven-month extension to an injunction barring a water provider from causing “decimation of the business and residential community of San Salvador” by cutting off supply.

Sir Ian Winder, in an April 3, 2025, verdict extended until early November the “emergency” injunction obtained by the Water & Sewerage Corporation that blocked Aqua Design (Bahamas) from ceasing water production at the reverse osmosis plant supplying all the former’s San Salvador customers over purported “safety risks”. 

The ruling further highlights the long-troubled, strained relationship between the Water & Sewerage Corporation and the private operator that supplies water to its clients from seven Family Island plants located in Exuma, Eleuthera, San Salvador and Inagua. The state-owned water provider obtained the initial injunction just one day before Aqua Design was set to walk away and abandon San Salvador.

Rather than discharge the injunction, as Aqua Design had urged, Sir Ian extended it on the basis that the Water & Sewerage Corporation would clearly suffer the greater harm if operations at the Cockburn Town reverse osmosis plant ceased because then it would be unable to fulfill its “statutory function to supply water” to residents and businesses on San Salvador, which is the Prime Minister’s constituency.

And, in dismissing Aqua Design’s arguments that the Water & Sewerage Corporation had failed to make “full and frank disclosure” in obtaining the injunction, Sir Ian’s ruling also revealed that there is a more than $10.5m ‘gap’ between the two parties over the potential sale of four of the private provider’s seven reverse osmosis plants to the state-owned utility.

The judgment quoted at length from an affidavit sworn by Robert Deal, the Water & Sewerage Corporation’s general manager, who disclosed that it had “entered into negotiations for the sale and purchase” of the four plants. While these locations were not identified, two appeared to be the San Salvador reverse osmosis plant as well as the facility at Waterford in Eleuthera.

Mr Deal said the Water & Sewerage Corporation, on August 9, 2024, wrote to Aqua Design (Bahamas) requesting a list of materials, equipment, parts, chemicals and other goods present at the four plants and their value in accordance with the ‘master agreement’ between the two sides. The plant operator responded on November 10, 2024.

“The defendant [Aqua Design] then extended an offer to the claimant [Water & Sewerage Corporation] for the sale of its businesses for $18.767m,” Mr Deal said. “However, the valuation range obtained by the claimant relating to the market value of the desalination plants is between $5.378m and $8.068m. 

“The substantial difference between the defendant’s offer price and the claimant’s valuation is due to the fact that Aqua Design is purporting to sell an ongoing business for the continued production of water, while the claimant is seeking the sale and purchase of the assets/facilities [at the four plants[, not an ongoing business.”

However, before negotiations could intensify the San Salvador dispute came to a head. Sir Ian, in his ruling, wrote that the ‘master agreement’ governing Aqua Design’s supply of water to the Water & Sewerage Corporation’s customers on several Family Islands was signed on August 12, 2011, under the last Ingraham administration. 

Subsequently, several underlying sub-agreements were signed by the two sides to govern the “design, build, commission and operation” of the Aqua Design reverse osmosis plants. One of these covered the San Salvador plant. The San Salvador deal expired on May 22, 2022, and was extended for several months until December 17 that year.

Following the second and final expiration, Aqua Design has continued to supply the Water & Sewerage Corporation’s clients in San Salvador and receive payment. However, Sir Ian wrote: “Aqua says that since 2022 it repeatedly advised Water & Sewerage Corporation that the San Salvador plant required essential facility upgrades to maintain operational safety.

“The Water & Sewerage Corporation has expressed concerns as to this fact considering that Aqua was obligated by the contractual arrangements to repair and maintain the plant throughout the terms of the contract. Aqua says that it had apprised Water & Sewerage Corporation that the plant needed upgrading but that it would only do so if the costs of the same could be financed by a long-term agreement...

“Water & Sewerage Corporation says that on November 20, 2024, Aqua purported to give notice to it that unless it committed to addressing the safety and contract requirements by November 30, 2024, it would cease operations at the plant.”

In a bid to resolve their differences, a meeting was held at the Ministry of Finance on December 17, 2024. The Government and Water & Sewerage Corporation told Aqua Design that they were “interested” in reaching a deal by January 31, 2025, for it to continue operating the San Salvador plant until end-June this year. Thereafter, the Water & Sewerage Corporation would acquire the reverse osmosis plant.

While Aqua Design was also invited to submit a proposal addressing the “safety concerns” at the plant, the company said it became clear “no meaningful agreement” could be reached because the Water & Sewerage Corporation was adamant that it must bear the cost of all repairs and ensuring the plant stays in operation.

“Water & Sewerage Corporation had taken upon itself measures to ‘repair’ the plant. However, Aqua made clear that, as long as it was responsible for plant operations, it would not permit Water & Sewerage Corporation to conduct welding work on the plant’s container because of the associates risks, which rendered replacement necessary,” the Chief Justice wrote.

“On January 27, 2025, Aqua formally notified Water & Sewerage Corporation that the plant was in such a condition as to cause a safety risk to the operators and that Aqua would no longer risk the safety of its workers. Aqua also attached a draft sales agreement offering to sell the plant to Water & Sewerage Corporation for $600,000.

“Water & Sewerage Corporation says that on January 27, 2025, Aqua served notice on Water & Sewerage Corporation that it would cease operations at the plant effective January 30, 2025, triggering the commencement of this action and emergency application for injunctive relief.”

The Water & Sewerage Corporation is seeking Supreme Court declarations that the rights and obligations of both parties are continuing despite the agreements’ expiration; that it has the “right of first refusal” to acquire Aqua Design’s plants as assets, not ongoing businesses, “for a seamless transfer with no interruption in water supply”; and orders requiring Aqua Design to enter sales talks and repair plant deficiencies.

Sir Ian, in his verdict, said the two sides are at odds over clauses in their ‘master agreement’ relating to “the effect of the right of first refusal and the obligation to leave the plant in a ‘neat and tidy’ condition, as well as repairs to plant defects and deficiencies “and whether Aqua should assume responsibility for addressing safety concerns and structural repairs”.

Aqua Design’s position was “there is no issue to be tried” as the ‘right of first refusal’ did not impose an obligation upon itself to sell the plant or that there be a ‘seamless transfer’ to the Water & Sewerage Corporation. Instead, it argued that it merely has to compile a list of the plant equipment and inventory and offer it to the state-owned utility first.

The plant operator said it has also consistently told the Water & Sewerage Corporation it would not invest in plant upgrades without the renewal of a long-term contract, but added that it had continued to make necessary repairs as needed to meet water quality and demand.

The Water & Sewerage Corporation, though, countered that “Aqua cannot simply walk away from the contractual arrangements” even though they have expired and must provide it with adequate notice. Agreeing that there is a “serious issue” to be tried, Sir Ian also noted than an “open-ended” injunction would be “unfair” to Aqua Design.

And, pointing out that the two sides had continued to operate as if bound by the sub-agreement despite its December 2022 expiry, the chief justice added: “It is therefore indeed a real question of how, if Aqua was complying with its obligation under the contract to repair and maintain, how it would be handing over for purchase by the Water & Sewerage Corporation a plant that is in such bad shape?”

Aqua Design argued that the injunction will force it to “continue operating the plant against its will” and “open it up to liability in the event that a workman is injured due to the unsafe conditions at the plant”, while also blocking its ability to “terminate the supply” at any of the four plants it is seeking to sell.

Sir Ian, though, rejected this on the basis that an undertaking by the Water & Sewerage Corporation to pay damages if the injunction was ultimately deemed unwarranted would provide it with sufficient compensation.

“The balance of convenience clearly lies with the Water & Sewerage Corporation,” he ruled, “who will be unable to carry out its statutory function to supply water to the community of San Salvador, the result of which could be the decimation of the business and residential community of San Salvador.”

Sir Ian also dismissed Aqua Design’s allegations that the Water & Sewerage Corporation had failed to disclose all relevant facts in obtaining the injunction, finding that any errors - if they had occurred - were “innocent and not material”. He thus extended the injunction for an additional seven months.

Tara Cooper-Burnside KC and Miguel Darling, of Higgs & Johnson, represented the Water & Sewerage Corporation. Luther McDonald KC, with Keri Sherman and Rashae Newbold, of Alexiou, Knowles and Co represented Aqua Design (Bahamas).