Government rejects offer to settle resort lawsuit

Gary Kean
Published on August 23, 2014

The current owners of Humber Valley Resort made an offer last month to settle its lawsuit against the provincial government for less than the $170 million in relief and damages being sought, but that offer has been flatly refused by government.

In documents obtained by The Western Star, 61839 Newfoundland and Labrador Limited — the numbered company that purchased the resort in March 2010 — filed an Order of Settlement document July 16. It stated the company would be willing to drop the legal proceedings launched earlier this year if the province agreed to the conditions outlined in the settlement proposal.

The company said it would accept $40 million, plus the government investing another $10 million in upgrading infrastructure at the resort. In addition, the company wanted government to provide service and road access to all Crown-granted lots sold prior to the new owners taking over the operation in March 2010, which would include lots sold in parts of the expansion lands leased to the resort.

The lawsuit now before the courts revolves around government ending the lease agreement for the remainder of the expansion lands and changing the grants for Crown land sold to get the initial phases of the resort.

The new owners contend the province defied a stay of proceedings issued by the Supreme Court of Newfoundland and Labrador by terminating the expansion land lease agreement in 2008. They also say government never had the right to issue the amended replacement grants after the new owners bought the resort in 2010.

The settlement proposal also says the company would be willing to transfer ownership to government of the privately owned bridge crossing the Humber River — the lone road access to the resort — along with the water distribution system, roads, 18-hole golf course, the Eagle’s Perch clubhouse and other buildings and assets.

The company said it would be willing to then lease back the golf course and other golf-related assets on terms agreeable to both parties.

In a detailed letter sent by Graham Watton — the resort’s lawyer whose wife Katie Watton is listed as co-owner of 61839 Newfoundland and Labrador Limited with Gary Oke — to the provincial government’s legal counsel concerning the settlement offer, Watton stated accepting the offer “could only benefit” government.

Watton stated “ongoing and continuing publicity of the facts in this matter will tarnish the province’s reputation both in relation to its business and investment policies and its tourism sector.”

The province’s legal counsel, the firm of Stewart McKelvey in St. John’s, responded to Watton’s letter about a month later, on Aug. 14. It noted the delayed reply was due to changes in the government departments involved and “normal summer vacation issues.”

Regardless, the brief, four-sentence response indicated the province had reviewed the offer of settlement and that government would not be accepting it.