A New York court has agreed to help get evidence from a former Hamilton councillor as legal dispute over an $18 million loan intended to kick-start a hotel development in Hamilton continues in the United States.

Mexico Infrastructure Finance, which provided the loan, urged the District Court for the Southern District of New York to assist it receive testimony from Keith Davis.

The request by MIF said: “Mr Davis was an elected member of Hamilton’s City Council at all relevant times.

“Based on evidence adduced during the course of these proceedings, Mr Davis is believed to have played an integral role on behalf of Hamilton in connection with the events described in MIF’s complaint.

“The purpose of this request is to obtain testimonial evidence from Mr Davis, who is a non-party to this action and is believed to be a resident of Bermuda, for use as evidence in a trial in this action and in support of the facts pleaded in the complaint.”

In a decision written last month, US District Judge Vernon Broderick agreed to pass the request to the Bermuda courts.

“This court expresses its appreciation for this assistance and states that the courts of the United States are authorised by statute to extend similar assistance to the tribunals of Bermuda, and shall be ready and willing to provide reciprocal assistance in a similar case when required,” he wrote.

“The court extends to the judicial authorities of Bermuda the assurances of the highest consideration.”

The legal dispute centres around a loan made by MIF, a company based in Florida, to Par-la-Ville Hotel and Residences, also known as PLV, in 2014.

The loan was guaranteed by the Corporation of Hamilton, but PLV defaulted on the loan in December that year.

The Corporation at first said it would honour the guarantee, but later argued in court that it had not had the power to make it, so it was unenforceable. The legal dispute went to the Privy Council in London, Bermuda’s final court of appeal, which found in favour of the Corporation.

MIF launched a series of legal actions to recover the lost money – including $12.5 million handed over to Gibraltar-based investment firm Argyle in a bid to raise more funds.

A judge at the High Court in London ruled in July 2017 that Robert McKellar, the director of Argyle, had engaged in “unjust enrichment” and had spent the money. While some of the missing cash had been recovered, the recovery costs had almost “wiped out” any benefit.

In one of several ongoing legal arguments, MIF launched a lawsuit in New York against both the Corporation of Hamilton and the Bank of New York Mellon over the release of the loan funds from an escrow account.

In a request for judicial assistance submitted to the US District Court, MIF said that sworn testimony provided by Graeme Outerbridge, the former Mayor of Hamilton, Mr Davis had knowledge that was “highly relevant” to the case.

“According to Mr Outerbridge, Mr Davis was Hamilton’s ‘point person’ with respect to various aspects of the PLV development project.

“Mr Outerbridge also testified that Mr Davis would be one of the individuals at Hamilton who was most knowledgeable about the negotiation, execution and requirements of the Escrow Agreement, including the requirements set forth in Section 3.3.

“That section sets forth certain prerequisites to the release of most of MIF’s funds from the escrow account held by BNY Mellon.”

The letter said that under the agreement, the it had to receive documents to demonstrate an acceptable loan of $225 million and equity investment of $100 million had been agreed.

The funds were released shortly after Hamilton received a “Trade and Profit Share Agreement” with Argyle Limited.

“Mr Outerbridge testified that Mr Davis is one of the individuals most knowledgeable about the Argyle Agreement and the terms contained therein, as well as the diligence performed on Argyle,” the request said.

“MIF is continuing to collect evidence for use at trial to support its claims in this action.

“Based on the facts set forth above, MIF believes that Mr Davis has knowledge that is highly relevant to the claims in this action.”

• It is The Royal Gazette’s policy not to allow comments on stories regarding court cases. As we are legally liable for any libellous or defamatory comments made on our website, this move is for our protection as well as that of our readers.