Senior Justice Deborah Fraser last week ruled that cross-examination be allowed in a matter between Sterling Asset Management and Sunset Equities regarding their legal dispute involving the Marriott Courtyard Downtown Hotel.

Sunset Equities filed an application requesting cross-examination of deponents at trial, to which Sterling Asset Management "vehemently" opposed.

The issue began in March 2013 when Sterling loaned Sunset $12.5 million through several credit facilities to assist it in financing and purchasing 1.349 acres and 1.069 acres respectively, situated at the southwestern junction of West Bay Street, and the beachfront resort hotel formerly known as the Nassau Palm Resort.

The funding also included the costs of redevelopment of the property, which was eventually branded as Marriott Courtyard Downtown Hotel, according to the court document.

"Under the credit facilities, Sterling became a shareholder of Sunset (a shareholder's agreement was subsequently executed by the parties). It is alleged by Sunset that, it sought to explore other financing opportunities to satisfy Sterling's loan and obtain funding elsewhere to complete construction and renovations for the redevelopment project. It is also alleged by Sunset that Mr. David Kosoy, chairman and chief executive officer of Sterling, was informed of Sunset's intention to pay off its loans with Sterling and that Mr. Kosoy, as lender, had no objection to Sunset seeking financing from third parties to satisfy the loan," the judgement read.

"Sunset further alleges that Mr. Kosoy sought to introduce a new obligation that Sunset would, in addition to paying off the loans, have to pay Sterling for the 15 percent equity, which it owned (by this time, Sterling claimed to be entitled to a further five percent equity in addition to the initial ten percent that it received at the time that the shareholder's agreement was signed). This, Sunset alleges, was the first time such a term was introduced. Sunset claims that Sterling did not provide terms that were better than terms Sunset received from third party lenders. In any event, the loan from Sterling to Sunset was ultimately satisfied."

The judgement explained that Sunset alleged things changed, in July of 2016, when Sterling put forward a commitment letter requiring that $1,830,000 be deducted from a proposed $6,030,000 credit facility to be paid to Sterling to repurchase its equity in Sunset that Sterling had received as a condition of its initial financing arrangement.

"It is further alleged by Sunset that, in addition to insisting on a $1,830,000 claw back of the proposed loan proceeds for the repurchase of Sterling's equity in Sunset, Sterling also sought to make Sunset bound to it for future financing by making the July 2016 loan commitment conditional on the 'agreement of the borrower to provide the lender and/or an affiliated company with the right of first offer and/or the right of first refusal to refinance the project at any time'. Sunset claims that, at every turn, Sterling has attempted to prevent Sunset from seeking financing from any third parties and that Sterling is attempting to make Sunset subservient to it," the judgement said.

"Prior to July of 2016, Sterling received monthly reports of operations of the hotel from Sunset. Sterling alleges that, since July of 2016, Sunset ceased providing Sterling with financial information relating to Sunset. Sterling further alleges that it was also denied access to the books and records of Sunset and continues to be denied such access."

Sterling, according to the court document, alleged that Sunset appeared to be insolvent after having allegedly defaulted under the terms of a mortgage with SF IV BE LP and asserted that Sunset's main asset, the Courtyard Marriot Hotel, was recently sold.

The company also alleged that the details of the sale were never made available to it.

"In accordance with the loan agreement entered between Sunset and SF IV BE LP, Sunset received $2,300,000.00, the proceeds of which have been allegedly allocated to all of its shareholders, save and except Sterling. Sterling also claims that no accounting of this transaction was ever provided to Sterling. Sterling then commenced winding up proceedings by petition against Sunset on the basis that Sunset was insolvent," the judgement explained.

"After a myriad of litigation, Sunset withdrew its petition for winding up. Following a ruling made by the Court of Appeal, where it indicated that section 68 of the International Business Companies Act, 2000 is the correct mechanism to seek inspection of books and records of Sunset, Sterling then made a request (pursuant to section 68 of the act) by letter dated 11 March 2022 to Sunset. On 28 March 2022, Sunset denied the request on the basis that such request was not made in good faith or for a proper purpose."

In moving forward with the case, attorneys for Sunset argued that cross-examination would be essential because the issue is not straight forward and "without deponents being called for cross-examination, the use of affidavits alone would be problematic, as it allows the deponent to manipulate the evidence in his/her favor, without facing scrutiny.

Attorneys for Sterling, however, opposed the cross-examination, arguing that the matter should be dealt with in the least expensive manner and expeditious manner.

Sterling was represented by Ramonne Gardiner with Wilfred P. Ferguson Jr., and Sunset was represented by Gail Lockhart-Charles, KC with Charles McKay.

The post Cross-examination allowed in legal dispute involving Marriott Courtyard Downtown Hotel appeared first on The Nassau Guardian.

The post Cross-examination allowed in legal dispute involving Marriott Courtyard Downtown Hotel appeared first on The Nassau Guardian.

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