Turnquest: I am vindicated

A Supreme Court judge found that while veteran accountant K. Peter Turnquest (who later became deputy prime minister and minister of finance) breached his statutory fiduciary duty to Alpha Aviation Limited, which brought the legal action, the company failed to prove conspiracy to defraud on the part of Turnquest and the other two defendants, Captain Randy Butler and his wife, Larona Butler.

Turnquest was manager and director of the company.

In a judgment delivered yesterday, Supreme Court Justice Carla D. Card-Stubbs also ruled that Alpha Aviation Limited – beneficially owned by Fredrick Kaiser – did not suffer a measurable loss as a result of Turnquest’s breach of duty. As a consequence, damages as pleaded were not awarded.

In a statement last night, Turnquest said, “I am pleased The Bahamas Supreme Court has rejected the claims against me by Mr. Fred Kaiser and Alpha Aviation.

“I have emerged victorious against their baseless allegations of conspiracy.”

He said, “Despite also facing an unjust breach of fiduciary duty claim, the court’s decision not to impose any financial penalties on me serves as a resounding affirmation of my defense.”

Turnquest added, “Whilst disappointed with the court’s characterization of my testimony concerning the breach of fiduciary duty claim, I maintain, and continue to maintain, that I gave truthful testimony under oath.”

Alpha Aviation had alleged that Turnquest and the Butlers conspired to defraud it of the outstanding balance owed under a mortgage agreement, and that Turnquest as manager and director of the company, breached his fiduciary duty by executing a deed of release in relation to the said mortgage without first securing payment of the money owing under the mortgage.

On January 7, 2005, the company lent the sum of $279,000 to the Butlers, which was to be repaid at a rate of four percent per annum over 20 years and secured by a mortgage over the property in Winton Heights Estate subdivision.

On March 28, 2007, Alpha Aviation lent a further sum of $120,000 to the first defendant (Turnquest) and the second defendant (Captain Butler), which was referred to as a further charge over the property.

Alpha Aviation was the mortgagee of the Winton property. The Butlers were the mortgagors of the property.

On December 17, 2008, the Butlers executed a conveyance of the fee simple of the Winton property to a Mr. & Mrs. Smith by way of sale.

Turnquest and the Butlers executed a deed of release dated March 15, 2017.

Turnquest was a director and manager of Alpha from about November 1998 to May 2017.

He was in those positions at the time that the loans under the mortgage and further charge were made and at the time that the deed of release was executed.

Alpha Aviation alleged that the Butlers conspired to defraud the company by purporting to convey the Winton property without the knowledge or consent of the company.

Alpha Aviation alleged that the conveyance did not reflect a mortgage in favor of the company and that the proceeds of sale were not used to redeem the mortgage.

The company also alleged that at the time of the execution of the deed of release, there was a significant sum of money owing under the mortgage.

It alleged that Turnquest and the Butlers knew that at the time of the execution of the deed of release there was a significant sum of money owing under the mortgage, and that they conspired to defraud the company.

For his part, Turnquest alleged that the mortgage and further charge were made on Kaiser’s instructions. They were to be made on the condition that they were secured by way of mortgage over the Winton property.

Turnquest alleged that he was informed by Captain Butler in 2012 that the Winton property had been sold to Mr. & Mrs. Smith and that the proceeds of sale would be used to pay off a mortgage on their new home.

He alleged that Captain Butler also informed him that he and his wife would execute a mortgage over the new home as security for the money due and payable under the previous mortgage and further charge of the Winton property, viz that they had agreed to substitute the security.

Turnquest alleged that thereafter, also in 2012, he was contacted by the lawyers for the mortgagee Mr. & Mrs. Smith, purchasers of the Winton property. The lawyer also acted for the purchasers’ mortgagor. The lawyer requested that Alpha Aviation execute a deed of release.

Turnquest alleges that he denied the request but executed the deed in 2017 following an in-person meeting with Kaiser, who concurred to the execution of the deed of release.

But Alpha Aviation claimed that the Butlers purported to convey the Winton property without the company’s permission, that the conveyance to the Smiths did not reflect the Alpha mortgage, that the sale proceeds were not used to redeem the mortgage and further charge, and that the defendants executed the deed of release, thus extinguishing the company’s security.

Alpha Aviation submitted that the defendants, by the signing of the deed of release, must have had a meeting of the minds with the clear intention of causing damage, and did so by defrauding the company since they knew that the debt was outstanding and did not take steps to pay it off.

The company submitted that they caused it financial loss in the amount outstanding under the mortgage and further charge.

Turnquest submitted that Kaiser, the beneficial owner of Alpha Aviation, approved the execution of the deed of release.

Turnquest also submitted that Kaiser was very informal in his business dealings with him and that there were no director’s meetings, minutes or resolutions in connection with the deed of release. He contends that Kaiser was aware of the agreement for the sale of land and the deed of release prior to the execution.

The judge determined that in his capacity as manager and director of Alpha Aviation, Turnquest had the responsibility of the day-to-day management of Alpha Aviation.

The court noted that Turnquest held a key position within the company and assumed a fiduciary duty requiring him to act honestly.

“The first defendant owed Alpha Aviation a duty of fidelity,” the ruling states.

“It is my opinion that a director in exercising ‘the care, diligence and skill that a reasonably prudent person’ in the carrying out of the affairs of the company, would have seen to it that the requisite permissions were obtained if indeed the company was to facilitate the sort of lending that he, Mr. Turnquest, the first defendant, as a director accommodated.”

The ruling continued, “It is curious that Mr. Turnquest, the first defendant, made no attempts personally or through the company’s lawyers to protect its assets. I adopt the description of the witness that this constituted a ‘gross omission’ and I also find that it was a breach of the fiduciary duty of the first defendant.”

The ruling also states, “... a prudent director acting in the best interest of the company would have either sought to ensure that the loan was paid off at the time of the execution of the deed of release, or that substitute collateral had been secured. Indeed, this is what the first defendant (Turnquest) indicated that he attempted to do. This is what he did not do.

“I find that the first defendant in procuring the execution of the deed of release, and in executing same himself, acted against the company’s best interest. As a result, I hold that the first defendant failed in his fiduciary duty to the company to act in its best interest.

“Additionally, the first defendant by his own admission was aware that the plaintiff (Alpha Aviation) did not have the requisite approvals and permits to carry on the business of lending/investments in The Bahamas and any investments made must have received approvals of The Central Bank of The Bahamas.

“However, the first defendant proceeded with Mr. Kaiser to enter into a mortgage agreement with the second and third defendants (the Butlers) which also amounted to a breach of both his fiduciary duty and his duty to exercise due care, diligence and skill.”

In his statement last night, Turnquest said he felt vindicated.

He said, “This victory not only vindicates me, but also stands as a testament to the enduring power of truth and integrity in the face of adversity.

“I remain committed to serving my community with honor, transparency and unwavering dedication. I am happy to put this matter behind me and look forward to moving on.”

Turnquest, who was deputy prime minister, resigned from the Minnis Cabinet in November 2020, amid allegations that he helped to defraud Alpha Aviation Limited and Advanced Aviation Limited of around $28 million.

He was not named as a defendant in that particular lawsuit.

Turnquest called the claims unfounded and untrue, but said he did not want a private business dispute, which occurred prior to him taking public office, to become a distraction to the Minnis administration.