A NEW court bid to block the payment of a £5m bill to an insurance company connected to the nationalisation of Ferguson Marine shipyard has been lost.
New proceedings have emerged from the English courts over the agreements with Texas-based insurance firm Tokio Marine's subsidiary HCC International Insurance (HCCI) which allowed them to take control of the shpyard at the centre of Scotland's ferry building fiasco.
It comes as ministers previously lost a £5m claim made by HCCI in connection with refund guarantees they said were owed to them as part of their secret deal.
Now it has been revealed that Caledonian Maritime Assets Limited (CMAL), the government-owned company which commissions and owns the nation's ageing ferry fleet sought "rectification" proceedings regarding the overall settlement with HCCI which paved the way to nationalisation.
The shipyard is constructing two ferries which were originally meant to enter service in 2018 but are still unfinished, with delays of over four years and costs spiralling.
The Scottish Government Ministers had ploughed in bailout loans totalling £45m to ailing Ferguson Marine, before it fell into administration two years ago and was subject to a state takeover.
The Scottish Government's secret deal meant that HCCI would not have to pay £25m in default payments in connection with the construction of two lifeline ferries as a result of the collapse of Ferguson Marine Engineering Ltd (FMEL).
The Scottish Government's secret deal meant that HCCI would not have to pay £25m in default payments in connection with the construction of two lifeline ferries as a result of the collapse of FMEL and it would no longer first ranking creditor in any collapsed of FMEL.
Having ploughed over £45m in public money loans to support into Ferguson Marine, ministers became aware that as early as 2017 that HCCI had a legal hold over the assets of FMEL and that could be an issue that would stand in the way of any state takeover if the company collapsed.
Part of the deal involved the release of two refund guarantees worth £25m in return for HCCI's release of their hold over FMEL's assets.
After administrators moved in on October, 2019, ministers used £7.543m of what it was owed to take control of FMEL.
But after the refund guarantees were ripped up, HCCI said it was due £5.047m including costs and expenses which was paid to CMAL under a separate agreement.
In the Court of Session in May, Lord Tyre said in May that HCCI had proved that it was entitled to that £5m.
Now a decision from deputy High Court Judge Simon Gleeson has dismissed CMAL's claim that that separate claim should be invalidated.
Judge Gleeson said: “It is easy to see why this decision seems to have caused so much anger and irritation amongst the Scottish Ministers.
“In paying for the business of FMEL (Ferguson Marine) by reducing FMEL’s liabilities to them, they believed that they were simply transferring their own money from one pocket to another, with the transaction having no impact on their overall obligations.
“The discovery that the choice of transaction structure had resulted in their being required to pay a little over £5 million to a third party must have been highly unwelcome.”
Scottish Ministers, through CMAL, sought to rectify the commercial agreement known as a deed of settlement with HCC.
However Judge Gleeson refused this and granted a summary judgment in favour of HCC.
He noted: “As a result of a series of subsequent developments, the terms of this deed produced an outcome which came as a surprise to all those involved in its negotiation, producing a significant windfall gain for one party at the expense of the owner of the other.”
The judge also noted that CMAL was wholly owned by Scottish Ministers at all relevant times.
A Scottish Government spokesman said: “We are aware of a summary judgment that has been made in the English courts in relation to the claim brought by CMAL against HCCI.”
Ministers have said they believe they were acting in the public interest in taking control of FMEL, as it saved the yard from closure, rescued more than 300 jobs and ensured that the two vessels under construction will be completed.
But the delivery of the vital island ferries at the centre of the row, MV Glen Sannox and Hull 802, is between already up to five years late with the cost of construction now double the original £97m contract agreed in 2015.
In January, last year, opposition parties were united in condemnation over ministers' rejection of the "catastrophic failure" conclusion of an inquiry into the ferries' procurement.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel