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Appeals delay $500m water lawsuit

Published:Thursday | January 21, 2016 | 11:50 AMMcPherse Thompson
Entrance to National Water Commission’s main complex at Marescaux Road, Kingston.

One appeal over legal costs and a lawyer's conduct has been resolved in hotel management company VRL Operations' favour in a half-billion dollar lawsuit filed against the State's monopoly water distributor, but other appeals are pending before the case returns to trial in the Supreme Court.

In this latest appeal, National Water Commission (NWC) is challenging the admissibility of some of the evidence in a ruling by trial judge Justice David Batts that favoured VRL. Other defendants are cross-appealing.

Trial of the substantive matter has been on hold in the Supreme Court awaiting the outcome of the appeals, NWC's attorney Kevin Williams told Sunday Business. The trial is expected to continue on May 2.

The lawsuit is ongoing for more than six years. It dates back to 2009, when VRL sued National Water Commission over 'turbid' water supplied to the former Hedonism hotel in St Ann. The term turbid relates to sediment-filled water.

In the most recent developments, the Court of Appeal has reversed a Supreme Court ruling that VRL Operations pay NWC's legal fees in a matter that dealt with the water commission's attempt to disqualify the expert witness - civil engineer Barry Walton, who was appointed by the court to prepare a report on issues arising in the case.

NWC and others had filed an application in the Supreme Court to disqualify Walton on allegations that the junior lawyer for VRL had improperly communicated with the court-appointed expert witness and had accused Walton of not being impartial.

Supreme Court Justice Bertram Morrison denied the application to disqualify Walton, but also cited one of VRL's lawyers for misconduct over improper communication with Walton.

According to court papers, in May 2014, Justice Morrison awarded costs in favour of NWC, the Attorney General, National Works Agency (NWA), Stanley Consultants, and Frederick Rodriques & Associates on their application filed six months earlier in November 2013. Attorneys Dr Lloyd Barnett, QC, and Weiden Daley represented VRL, while Kevin Williams and Colin Alcott appeared for NWC.

The substantive lawsuit filed by VRL Operations in the Supreme Court over six years ago initially claimed damages for negligence against the NWC and the Attorney General of Jamaica only. VRL subsequently amended its claim to include NWA, Stanley Consultant and Frederick Rodriques & Associates.

VRL claims that it incurred considerable loss and damage from NWC's supply of turbid water, and water with low pressure or no water at all between March 2 and 5, 2005 at Hedonism III, Runaway Bay, St Ann.

The hotel company is seeking up to $544.78 million against the NWC, NWA and others for negligence comprising special damages of $135 million and/or general damages of approximately $409.78 million with interest.

Justice Morrison noted that the nub of VRL's complaint was that on or about March 2, 2005 agents of the Government, acting under the auspices of the NWA, carried out works on the north coast Highway in the vicinity of the hotel, of which VRL was its lessee and engaged in its management and operation.

The NWC informed VRL of the water lock-off, at which point the hotel company switched to its own tanks to serve Hedonism.

VRL alleged that after NWC restored water supplies via VRL's tank, the hotel discovered that the water was discoloured and turbid. That spawned a dispute as to which of the parties was responsible for contaminating the water and it was in that context Walton was appointed expert witness by the court to resolve it.

VRL Operations claimed that the turbid water supply arose from road-improvement works, which involved modifications to the water lines, conducted on the Northern Coastal Highway from Montego Bay to Ocho Rios, the main road through Runaway Bay being a part of that project.

Subsequent to Walton's appointment, NWC and other respondents contended that VRL's junior lawyer had communicated with Walton in relation to "substantive aspects of the evidence".

As a result of that communication, NWC and other respondents applied for Walton to be disqualified as expert witness.

Justice Morrison denied the application to disqualify Walton, but found that VRL's lawyer was guilty of misconduct due to his 'irregular' communication with the expert witness. In addressing what he described as "the vexed question of costs", the Supreme Court judge held that the applicants, as the successful parties, were entitled to recover costs from the hotel company.

VRL successfully appealed the ruling.

Court of Appeal Justice Frank Williams concluded that one main flaw in Justice Morrison's approach was the finding that VRL lawyer's communication with the expert witness via email amounted to misconduct in the form of an irregularity.

Justice Williams found that the communication did not breach any rules contained in the Court of Appeal Rules or otherwise. He said the Supreme Court also erred in its finding that NWC and other respondents were the successful parties when there was evidence to show that the attempt to obtain an order disqualifying the expert witness was one of if not the main prong of attack by the respondents.

"In fact, looking at the matter in its entirety, I am of the view that the most appropriate order in the circumstances of this case, in which the appellant (VRL) was successful on some points and the respondents were successful on others, would be for each party to bear its own costs," Justice Williams said.