Secretly government-settled lawsuit with debt collection company – The Royal Gazette


Updated: 09 Jul 2022 08:10

Gina Stableford, owner of OARRS Inc (Facebook photo)

The government secretly settled a lawsuit brought against him by a company it authorized to collect taxes on its behalf without a license.

Oarrs Inc filed a civil suit against the Office of the Tax Commissioner in July last year, alleging that it owed it nearly $2 million for tax collection services it provided in connection with a contract he had with the government.

The local company said in its statement that the CTO’s “unlawful and unfair conduct” led directly to it exhausting its available funds and firing its three Bermudian employees.

The OTC fought back, alleging in its defense to the lawsuit that the company had committed a crime by collecting the tax without a license, so its contract was terminated.

But Oarrs founder and chairman Gina Stableford insisted in an affidavit that the tax commissioner told her a license was not required and that termination of the contract was being considered due to the amount of money owed to the business.

Oarrs ended his lawsuit in May this year. Any settlement amount paid to him by taxpayers remains secret after the government blocked questions this week.

The government has not released how much it paid Oarrs Inc to settle a civil lawsuit seeking nearly $2 million in damages.

The Supreme Court filing for the case reveals only that the company was granted leave by Puisne Judge Larry Mussenden on May 15 to drop its suit.

But any payment would come from the public purse, so taxpayers could expect David Burt, the prime minister and finance minister, to split the amount.

The disclosure could come from a ministerial statement or in response to parliamentary questions in the House of Assembly; it was not shared in response to a request from the Gazette.

Although the Office of the Tax Commissioner was represented by a private law firm, Trott & Duncan, it is a public authority and there will be public records detailing the terms of the settlement agreement.

The Public Access to Information Act may not apply to records if they were “obtained or created” by the Attorney General’s office, according to Section 4 of the Act.

The Royal Gazette requested under Pati in April last year for all records on the contract Oarrs held with the OTC and all reports it had provided to the government under the contract.

Tax Commissioner Derek Rawlins revealed that $12,717,099 had been recovered by the company between September 2020 and April 2021 and the company had been paid “$99,826.61 to date”.

He said his office receives monthly collection reports, summary data collection reports, and monthly performance reports — although in its defense to the lawsuit, the CTA claimed that Oarrs “n ‘provided no adequate report’ in violation of his contract.

Mr. Rawlins did not provide the actual records and reports requested by the Gazette we therefore appealed his decision to the Permanent Secretary of the Ministry of Finance.

She said last October the records were exempt while the civil case was active, adding: ‘Once the case is fully decided, the department will deal with the claim appropriately.’

The Gazette appealed his response to the Information Commissioner’s Office and has now asked the PS again for the records.

Former finance minister Curtis Dickinson also cited the lawsuit as a reason for not answering a question in parliament in February about how much Oarrs recovered and how much was owed.

The company, founded and run by Gina Stableford, alleged in its statement that the CTA refused to pay its bills, despite collecting $13.5 million in unpaid property taxes for the government between September 2020 and June. 2021.

The Office of the Tax Commissioner, in a defense filed with the Supreme Court by the law firm Trott & Duncan, claimed that the contract it had with Oarrs could not be performed because the firm was performing the service of debt collection without a license and therefore had “committed a criminal offence”.

The defense said: ‘The contract was terminated because it became known that the plaintiff was unauthorized…and was performing the contract in a manner that was both prohibited and criminal…’

Ms Stableford countered in an affidavit that it had been established in calls and emails with the Tax Commissioner in December 2019 and February 2020 that “Oarrs would act as the Tax Commissioner’s agent and, upon this base…Oarrs didn’t need a license…”

Tax Commissioner Derek Rawlins (Photograph by LinkedIn)

She said the tax commissioner again confirmed in the summer of 2020 that “no license was required” under the Debt Collections Act 2018.

Ms Stableford said government officials had made public statements ‘confirming that Oarrs did not need a licence… for work done for and on behalf of the Commissioner of Taxes’.

Government Senators Lindsay Simmons and Ernest Peets both told the Upper House last July that Oarrs was not a debt collection company.

Their comments contradict the CTA’s defense, filed last September, which asserted that Oarrs was “at all material times a debt collection company.”

The court file consulted by the Gazette shows that the civil litigation was resolved on May 16 of this year, but does not reveal why or how it was resolved.

The government and Ms Stableford did not respond to questions from the newspaper.

Walkers law firm, which represented the plaintiff, said yesterday it would not comment.

The Royal Gazette first disclosed on April 7, 2021 that Oarrs was collecting $1 million in unpaid property taxes for the government without a debt collection license and without the contract having been tendered.

The Debt Collections Act 2018 had come into force early the previous year, requiring those engaged in the debt collection business to be licensed.

Initially, the government would not comment on the potential violation of its own law by a company to which it had given a contract.

But on April 26 last year, a spokeswoman admitted: “The Department of Finance is currently reviewing this contract, and the matter is being investigated by Consumer Affairs, as the authority responsible for debt recovery”.

There was no response to a request from Gazette for an update on this investigation in July last year.

Oarrs filed its lawsuit the same month, seeking damages arising from the OTC’s alleged breach of contract.

The contract Oarrs had with the government stipulated that he would receive 15% of all recovered property tax arrears.

The statement said the company only received $99,829 of more than $2 million owed to it.

“Despite numerous requests and several months of delays, defendant has refused to pay plaintiff’s bills,” the writ states.

“The basis for the defendant’s refusal to pay is unclear and, in any event, inexplicable and inexcusable.”

Ms Stableford said in her affidavit that Oarrs was a “small company that has exhausted its available funds to complete the work under the contract without compensation and to fund the early stages of this process.

“Oarrs’ financial difficulties are the direct result of defendant’s refusal to pay amounts due under the contract.”

In March of this year, the government refused to give Gazette a point on its review of the contract, its investigation into the question of the license, or even on the Oarrs lawsuit, specifying that the latter was “currently before the courts”.

Ms Stableford is not believed to have been charged with any offenses relating to the licensing issue.

And today the police confirmed that they had not received a criminal complaint.


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