By NEIL HARTNELL
Tribune Business Editor
An ex-Atlantis executive has lost his $335,000 constructive dismissal claim against a cruise tourism destination because its failure to pay his due salary was not the primary reason he resigned.
The Industrial Tribunal found that Henry Bain, formerly director of sales and marketing for the Paradise Island mega resort’s marine and water park operations, failed to establish “a sufficiently compelling reason” why Pearl Island should pay out the remainder of his five-year contract.
Simone Fitzcharles, the Tribunal’s vice-president, in a May 6, 2022, verdict said that while it “does not condone” Pearl Island’s failure to pay Mr Bain his due salary “for a time”, this represented a delay rather than a refusal to make good on what was owed.
Noting that Mr Bain had left Atlantis to become managing director of the cruise excursion destination, located off New Providence’s north-east coast, when it was in its infancy in 2016, she added that he should have been aware of the typical financial risks associated with start-up ventures and the difficulties they often encounter in becoming established.
And Ms Fitzcharles found Mr Bain himself partially responsible for Pearl Island’s initial cash flow difficulties because he was late in seeking to recover a $30,520 debt owed to the company by cruise giant, Royal Caribbean, for use of the destination by its passengers.
She determined that, based on his resignation letter, Mr Bain had decided to move on regardless of whether he was paid his due salary because he informed his employer and a client he planed to “pursue business opportunities globally and locally”. Consistent with this, within three-and-a-half months the ex-Atlantis executive had formed his own rival tour business that was competing directly with Pearl Island for cruise tourism passengers.
“In fact, it appears Mr Bain took less time to get established than Pearl did with its business, which demonstrated a remarkable presence of resources and organisation on his part,” Ms Fitzcharles concluded. “It is noteworthy that Mr Bain stressed that his concern was to get paid, but he left Pearl Island (a start-up venture with all its typical risks) to go into yet another start-up venture.
“A key difference between the two jobs was that the second start-up venture was his. The Tribunal is not convinced that Mr Bain resigned primarily because he was not paid. He may have been influenced by that factor, but the majority of his material representations about why he was leaving Pearl, backed up by his actions at, around and within months after the time of his resignation...... was to pursue good business opportunities.”
The Industrial Tribunal’s finding that Mr Bain resigned, and was not constructively dismissed, also proved fatal to his unfair dismissal claim. The verdict recalled how he was enticed to leave Atlantis, and join the Pearl Island start-up, in 2015 via a contract that stipulated he was to be paid a basic salary of $6,500 per month or $78,000 per annum.
Besides a 2.5 percent annual cost of living adjustment, Mr Bain’s employment terms also provided that he would receive a $2.50 per head commission for all cruise ship passenger sales under 200 persons and $3 per head above that benchmark. Commissions were also due on all other booked visitor business plus harbour cruises, and he was offered a 5 percent equity interest in Pearl Island upon payment of $50,000.
The contract stated that Mr Bain’s employment took effect on January 4, 2016, and “shall apply by way of a fixed term for not less than five years”. He was also required to give four weeks’ notice if he resigned.
Mr Bain’s initial months were spent sorting out VAT, National Insurance Board (NIB) and Business Licence registration. Pearl Island only started catering to cruise passengers, and opened its bank account at CIBC FirstCaribbean International Bank (Bahamas), in July 2016.
“In its starting months, it seems particularly in July through September 2016, the progress was slow and difficult for Pearl, and the company had oftentimes to look to the partners to contribute significant funds to cover payroll and expenses and other bills,” the Industrial Tribunal found.
“A perusal of the bank statement produced in the evidence [of Mr Bain] showed an example of significant funds injected from time to time into the business by one of the shareholders, Olivier Notz. Further, Mr Rebmann [Pearl Island’s managing partner] testified that he injected over $1m into the business and there were 25 investors with an interest.
“He testified that the business eventually overcame its start-up difficulties, became profitable and within weeks after Mr Bain departed, all staff were paid.” The Industrial Tribunal said Pearl Island’s equity investors sought to wean the business off their injections of capital to cover payroll and other expenses once it opened to paying cruise passengers in July 2016.
“The company had problems in the flow of finances because, among other reasons, Royal Caribbean had patronised the island but owed [Pearl] a relatively large debt of some $30,520,” the verdict added. “Mr Bain was responsible for the collection of these funds and promised the partners on August 8, 2016, that he would ‘follow up with them to determine when’ Pearl would be paid.”
Royal Caribbean was supposed to pay within two to three weeks of the relevant tour/excursion experience being provided to its guests, and Pearl Island was supposed to inform it immediately if no payment was forthcoming within 20 days of an invoice. Both Mr Bain and Pearl Island, via Mr Rebmann, acknowledged there were delays in paying employees at the outset but attributed this to different causes.
Mr Rebmann “felt Henry Bain, having promised Pearl’s partners he could produce $1m in revenues, did not produce the level of cruise business (up to the time he resigned) that was needed to get the operation functioning smoothly,” the Industrial Tribunal added.
Mr Bain, though, argued that Mr Rebmann’s decision to rely solely on the cruise business to cover payroll was at the root of the problem given that this was then generating insufficient revenue. “The Tribunal is of the view that having only had roughly two months of meaningful commercial activity by mid-September, it is clear that Mr Bain would have to strive with the company for a longer period to bring the dream of profitability to reality,” the verdict read.
“The Tribunal accepts that there was some local and touristic business apart from the cruise business, but based upon the bank records produced Pearl did not generate sufficient earnings from these non-cruise passenger activities to cover all expenses and payroll in the difficult July through September 20-16 period.
“Demonstrably, from a study of the bank statements produced at trial, the funds Pearl earned from non-cruise passenger business, such as were generated from events involving local guests, were not sufficient on their own to keep the business afloat. At trial, [Mr Bain] admitted it was fair to say that Pearl’s business model anticipated that its bottom line would be rendered by cruise passenger business.”
Mr Bain sent Mr Rebmann, Mr Notz and Stephen Bellot, Pearl Island’s chief executive, an August 8, 2016, e-mail where he raised several “urgent” concerns. These included rental fees for use of the island and its facilities that were owed to the landlord/owner, ALCO Holdings, a company owned by Bahamian businessman, Al Collie, plus a suggestion that the company was over-staffed and “terminations should be carried out”.
Many of these concerns were rejected by Mr Rebmann that same day, who argued that “double staff” were needed to avoid paying overtime. He added Royal Caribbean’s failure to promptly pay what was owed was “disastrous”, while Pearl Island needed four cruise lines to be profitable. The managing partner said the destination also needed to do a better job getting its brand identity and name out among hotels, boat captains and tourists.
“We have a one of a kind product. All it takes is getting the word out. This we will not be able to do in 90 days. We already have 5,700 Facebook likes; we are on the right route. I will try to raise further money to support us,” Mr Rebmann said.
A September 12, 2016, meeting was held to discuss the issues raised in the e-mail exchange. Several Pearl Island investors, including Mr Notz and Alain Bureau, were present and one said some $650,000 had been invested in the project over the the three months since July that year and they wanted a better accounting of how it had been spent. Total monthly expenses for the development were pegged at between $200,000 to $250,000.
The Industrial Tribunal found Mr Bain said nothing at the meeting about his outstanding salary, yet he submitted his resignation the very next day giving only three days’ notice when the contract required one month. He also agreed, during the trial, that Pearl Island had paid around $45,000 of the $52,000 salary due to him when he resigned, leaving a balance of just $7,125 that was unpaid.
Pearl Island conceded that Mr Bain was entitled to his salary and commissions earned prior to his September 16, 2016, departure. The Industrial Tribunal agreed, awarding him the $7,125 plus $2,065 in commissions for the 826 cruise guests brought to the destination at $2.50 per head. A further $4,875 was awarded for accrued vacation pay, and $1,733 for holiday pay, taking Mr Bain’s total compensation to $15,798.
However, he was “not entitled” to the $335,000 claimed for constructive dismissal on the basis that he resigned and did not give the one month’s notice as required under his contract.