Privy Council rules against THA on BOLT arrangement

The Privy Council has dismissed an appeal by the Tobago House of Assembly (THA), ruling that the THA does not have the legal authority to enter into Build-Own-Lease-Transfer (BOLT) arrangements for construction projects using funds from the Tobago House of Assembly Fund without the approval of the Minister of Finance and Cabinet.

The ruling was delivered on February 11, by Lords Lloyd-Jones, Burrows, Stephens, Reed, and Lady Simler.

The dispute stemmed from a BOLT arrangement the THA entered into with Milshirv Properties Ltd in 2011 for the development of an administrative complex for the Division of Agriculture, Marine Affairs, Marketing, and the Environment.

The deal saw the THA leasing land to Milshirv for 199 years, with Milshirv constructing the complex and sub-leasing it back to the THA for 20 years, after which ownership would revert to the THA.

The arrangement, valued at approximately$310 million, included an annual rental payment of over $14 million, plus VAT, and a hefty 18-month security deposit.

The Attorney General challenged the THA’s decision to enter into the BOLT agreement, arguing that the arrangement bypassed the statutory framework for financial oversight under the THA Act (c 25.03), which requires Cabinet and Parliamentary control over the THA’s expenditures.

In 2013, after the Minister of Finance retroactively approved the BOLT arrangement, the judicial review proceedings were converted into an interpretation summons to address whether the THA had the legal power to enter such agreements without prior approval.

Justice Ronnie Boodoosingh initially ruled that the THA was within its rights to proceed with the BOLT arrangement without the Finance Minister’s approval, as the THA Act did not expressly require such consent.

However, in 2019, the Court of Appeal overturned this decision, concluding that the THA’s revenue and expenditure were clearly meant to be controlled by Cabinet and Parliament to ensure financial stability and accountability. The court ruled that entering into a BOLT arrangement without the proper approvals undermined the statutory framework.

In its unanimous decision, the Privy Council agreed with the Court of Appeal, finding that the THA Act’s financial provisions were designed to ensure that the THA’s spending — particularly on significant long-term financial commitments like BOLT arrangements — was subject to oversight from the Minister of Finance, Cabinet, and Parliament.

The decision, written by Lords Llloyd-Jones and Burrows, rejected the THA’s argument that it could autonomously enter into such arrangements using funds from the THA Fund. Instead, the judges ruled that a BOLT arrangement that commits the fund to long-term expenditure is “akin to borrowing for capital projects” and cannot be undertaken without the explicit approval required by law.

The judges also held that without oversight, the THA could bind the state to substantial financial obligations without Parliamentary knowledge or consent, contrary to the intent of the THA Act.

According to the ruling, the THA cannot enter into BOLT arrangements for capital projects using the fund without prior approval from the Minister of Finance and Cabinet and its financial estimates must include detailed information on proposed projects and their costs to allow Cabinet and Parliament to exercise their oversight functions.

The judges also held that the THA Act’s financial control mechanisms were designed to protect the nation’s financial integrity and prevent the THA from incurring unchecked long-term liabilities.

“In the absence of Cabinet or ministerial consent before such commitments were entered into, Parliament would effectively be committed to very significant future expenditure in later years of which it was unaware and over which there would have been no oversight.

“When the legislative provisions are considered in their entirety, it is clear that they did not empower the THA to commit the State to use of the fund for such large and long-term liabilities, under a BOLT arrangement that is akin to borrowing for capital projects, without the direction or control of the minister or Cabinet, and ultimately, Parliament.

“Put another way, where the minister or Cabinet has not approved a BOLT arrangement for a project, it is outside the powers of the THA to enter into such an arrangement for a project which depends on the use of money from the fund.”