The Tobago House of Assembly cannot lawfully enter into special financing arrangements for major construction projects using State funding without the permission of the Minister of Finance.
Five Law Lords of the United Kingdom-based Privy Council stated the position earlier this week as they dismissed the final appeal over an interpretation lawsuit brought by the THA.
The lawsuit stems from a Build, Own, Lease, Transfer (BOLT) agreement signed by the THA in 2011 for a $142 million Milshirv Administration Complex in Shirvan, Tobago.
BOLT agreements are a form of non-debt-based financing where a client gives permission to a company to use its money to construct a facility on their land (client).
The client then repays the construction costs by entering into a lease with the company for renting the facility for a prescribed period.
Upon the completion of the lease, the ownership of the facility will be transferred to the client.
Such arrangements are used to allow the client to fund the project using recurrent expenditure rather than an upfront lump sum payment.
A judicial review claim was filed by the Attorney General’s Office after former prime minister Kamla Persad-Bissessar took issue with it in the run-up to the 2013 THA elections.
The lawsuit was eventually converted to a statutory interpretation claim after the then-Finance Minister granted retroactive approval for the Milshirv agreement.
In 2014, former High Court Judge and current Appellate Judge Ronnie Boodoosingh ruled that the THA did not need Cabinet’s approval to enter into such financing arrangements.
He also ruled that BOLT arrangements still require a competitive tendering process under the Central Tenders Board (CTB) Act.
In late 2019, the Court of Appeal overturned the decision and ruled that approval was necessary.
In determining the final appeal, this week, Lords David Lloyd-Jones and Andrew Burrows agreed with the findings of the Court of Appeal after considering the provisions of the THA Act.
They said: “When the legislative provisions are considered in their entirety, it is clear that they did not empower the THA to commit the State to use of the Fund for such large and long-term liabilities, under a BOLT arrangement that is akin to borrowing for capital projects, without the direction or control of the Minister or Cabinet, and ultimately, Parliament.”
“In the absence of Cabinet or Ministerial consent before such commitments were entered into, Parliament would effectively be committed to very significant future expenditure in later years of which it was unaware and over which there would have been no oversight,” they added.
However, they admitted that the THA is permitted to enter into such an agreement provided that such would be funded through grants from international agencies and not the THA’s annual budgetary allocation.
They also pointed to Section 51 of the legislation, which provides the THA with a limited provision for overdraft borrowing and requires the minister’s approval for loans.
They said that a BOLT arrangement achieves the same objectives of a loan.
“In the Board’s view, a BOLT arrangement is akin to a borrowing for capital projects and yet circumvents the requirement under section 51(b) for the approval of the Minister,” they added.
The THA was represented by John Jeremie, SC, and Robert Strang, while Howard Stevens, KC, and Daniel Goldblatt represented the AG’s Office.
