By NEIL HARTNELL
Tribune Business Editor
The ruinous financial impact of the late Sir Jack Hayward's battle for control of the Grand Bahama Port Authority (GBPA) has been exposed by the $4m legal bill still owed by his estate over a decade later.
The fight with the late Edward St George's estate, and the financial shockwaves it sent through Sir Jack's empire some 13 years ago, has helped set the stage for another present-day legal contest between the latter's heirs that threatens to further strip the GBPA's 50 percent owner of millions of dollars at a time when Freeport desperately needs every investment cent it can get.
For legal papers filed in the south Florida federal courts, which have been obtained by Tribune Business, reveal that two of Sir Jack's children are poised to sue his estate for £2.862m on the grounds that it has failed to live up to previous promises to subsidise the operational, maintenance and repair costs related to the Hayward family's UK landholdings.
Rick Hayward and Susan Heath, Sir Jack's son and daughter, on August 21, 2020, are seeking a court order to force Sir Jack's long-time partner and the executrix of his estate, Patricia Bloom, to give evidence and testimony surrounding the negotiations and developments that led to the undertakings given in relation to the family's Lydhurst and Dunmaglass estates.
This latest dispute, according the draft statement of claim, traces its roots directly back to Sir Jack's four-year battle with the St Georges over the GBPA's ownership which was finally resolved around Easter 2010. The fight saddled the businessman, known as Union Jack, with millions of dollars in legal fees that neither himself nor his business interests can afford to pay.
"Sir Jack was engaged in litigation against the estate of Edward St George who had, like, Sir Jack, held through trusts an interest in shares of the Grand Bahama Port Authority and related companies, which were perceived then to have a value in excess of $200m," Rick Hayward and Susan Heath's statement of claim details.
"In the litigation, Sir Jack had claimed that the shares' ownership was 75:25 percent [in his favour] in contrast to the 50:50 percent in which the dividends had been distributed over the years, and contrary to many statements made by Sir Jack on important occasions - including a police statement made under penalty of perjury, and in statements made to Jonathan Adkin QC, who took a witness statement from Sir Jack when investigating the entitlement of the St George Estate."
The impact, the legal filings reveal, saddled the late Sir Jack - and now his estate - with bills they have taken more than a decade to pay. "Millions of dollars had been expended by Sir Jack in legal costs which, by mid-2007, Sir Jack was unable to pay. Even as at 2020 there still appears to remain unpaid approximately $4m," the legal filings add.
These financial difficulties compelled Sir Jack to seek an exit route from Wolverhampton Wanderers (Wolves), the UK professional soccer club he had "poured substantial family wealth into" over a period of 17 years since 1990.
Some £50m had been injected into the club by 2007, a year when the GBPA battle with the St Georges was most intense. UK soccer clubs are notorious loss makers, one observer pointed out yesterday, with players' wages often exceeding 100 percent of a team's income alone, and they frequently multi-million dollar injections from rich owners to keep them solvent.
At least some of Sir Jack's profits and dividends from the GBPA, Port Group Ltd and its associated companies are likely to have been used to prop up Wolves rather than reinvested in Freeport's growth and development. However, Sir Jack, realising the extend of his financial pressures, sought to sell the club for a nominal price to a buyer prepared to invest £30m to restore it to former glories.
This did not sit well with Sir Jack's children, who believed it would be a "breach of trust" to sell Wolves at a "give away" price when the club's market value was between £5m and £10m. A family dispute erupted over this feared loss of inheritance, and was only resolved after long negotiations.
This saw Rick and Susan, Sir Jack's children, agree to Wolves' sale under the terms their father wanted in return for "contractual undertakings to pay the ongoing upkeep costs of two estates located in the United Kingdom".
The two estates in question are the Lydhurst Estate, a 222-acre tract in south-east England, and the 14,000-acre Dunmaglass shooting estate in the Scottish islands. However, from inception both estates have suffered from the same problem - an income that is vastly exceeded by operational and upkeep costs.
"In 2007, and at all relevant times thereafter, the two estates were owned by companies whose respective shares were held in trusts for the benefit of Applicants, among other beneficiaries," filings on Rick Hayward and Susan Heath's behalf allege.
"Sir Jack defaulted on his payment obligations under the contracts before he died in 2015. Applicants intend to initiate a proceeding in England or The Bahamas against the executrix of Sir Jack’s estate, Ms Bloom, in which applicants will seek specific performance under the contracts to pay the trustee of the trusts and/or the companies that owned the estates.
"That is, applicants will seek the estate’s satisfaction of the over £2.8m in maintenance and repair costs that Sir Jack was obligated to pay under the contracts, as well as accrued interest on the defaulted amounts."
The damages claimed, as well as the associated legal costs, threaten to distract the Hayward estate and embroil it in another expensive court battle just when the GBPA and Port Group Ltd need its attention and investment the most as Freeport battles for its economic survival and future amid the COVID-19 pandemic.