The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Three leading attorneys and a top property developer have seen the Court of Appeal back a verdict that threw out fraud claims made against them by rival real estate moguls, Tribune Business can reveal.

The appellate court approved of the decision by Justice Stephen Isaacs to strike out a writ filed by West Island Properties, a company controlled by Dale Bronstein, the developer of the Charlotteville and Turnberry communities, and Schooner Bay developer Orjan Lindroth, in relation to a dispute relating to land in Old Fort Bay.

The action was filed against Gruntsfield Ltd, a company controlled by Bahamian property developer Lester Smith, and three prominent Callenders’s & Co attorneys - managing partner, Colin Callender; Michael Scott (who has since left the firm; and Sarah Farrington-Smith.

Another defendant was Sabre Investments, a company controlled by Leonard Smith and Stephen Mruz.

Outlining the background to the case, which involved West Island Properties’ desire to develop a parcel of land in western New Providence’s Old Fort Bay community, the Court of Appeal said it was claiming “various breaches” regarding a sales agreement.

Gruntsfield, the judgment said, had agreed to sell various land parcels to West Island Properties under a September 17,1996, option agreement.

The three attorneys, sued in their capacity and practicing as Callender’s & Co, had acted for Gruntsfield in the deal and “at some point” also represented West Island Properties.

“Under the option agreement, the appellant [West Island] was entitled to exercise the option of purchasing specified plots of land from Gruntsfield over a five-year period at a fixed price, on the condition that the appellant met minimum annual purchase quotas,” the Court of Appeal said.

“The option agreement seemingly required that the appellant subdivide the aforesaid property, install infrastructure, and sell the lots to sub-purchasers as home and lot packages.

“Accordingly, the appellant was expected to complete construction of a house on the lots, or have entered into a construction contract to build a residence thereon prior to the sale of the said lots to sub-purchasers.

The option agreement was amended on November 26, 1997, to reduce the number of lots in the development from 55 to 45.

Its terms were also changed again in September 1999 to give West Island Properties the option of varying the sales agreement, and it was agreed that Ms Farrington-Smith would handle all legal work relating to the lot sales.

The Court of Appeal noted that in March 2002, West Island Properties retained a new attorney and agreed to release Sabre Investments and Callender’s & Co from ‘all actions, proceedings, demands and claims’ relating to its agreements with Gruntsfield and Callender’s & Co.

In its ruling, written by court president, Justice Anita Allen, the Court of Appeal found that Justice Isaacs in the Supreme Court was correct in striking out West Island Properties’ claims against Sabre Investments on the grounds it “disclosed no reasonable cause of action and was an abuse of the process of the court”.

The Court of Appeal backed his finding that West Island Properties had failed to specify the particular fraud allegations it was making against Sabre Investments.

West Island Properties had alleged that Sabre Investments had said it, too, held an option on some of the real estate Gruntsfield was offering to sell.

As a result, West Island alleged that it paid $300,000 to buy out Sabre Investments’ option based on a “deceit and/or misrepresentation”.

But the Court of Appeal said West Island Properties had produced nothing to show Sabre Investments’ option claim was untrue, only supplying evidence that it had paid $300,000 to buy it out.

After backing the decision to strike out the claim against Sabre Investments, the Court of Appeal also supported Justice Isaacs’ findings that West Island Properties’ allegations against Gruntsfield and Callender’s were “frivolous and vexatious”, and an abuse of court process.

The Supreme Court had, once again, noted that there were no particulars to support the fraud allegations against the two companies. He also ruled that the March 2002 deeds of release were binding.

West Island Properties had claimed that an access road and right of way that Gruntsfield purported to own actually belonged to New Providence Development Company, and that Callender’s had “either overlooked or failed to disclose the title defect to the land” on previous buyer conveyances.

West Island alleged that this forced it to redesign three lots, but the Court of Appeal said it provided no particulars to prove Gruntsfield had committed fraud or deception over the right of way.

It was not disputed that Gruntsfield had a right of way, the judgment said, although New Providence Development Company in late 1999 was saying the company could not transfer this to West Island Properties or sub-purchasers.

Ultimately, a solution was found by providing a new access route to those lots, something that the Court of Appeal said “restored their commercial viability”.

The Court of Appeal also noted that West Island Properties failed to give specific, particular allegations of fraud against Callender’s & Co and the three attorneys.

And it also rejected West Island Properties’ assertion that the deeds of release against Callender’s were “executed under duress arising from commercial pressure”.

In particular, it noted a March 15, 2002, letter from the company’s new attorney, Ferron Bethel at Harry B. Sands & Lobosky, confirming that West Island Properties would indeed execute the release exempting Callender’s, its partners and associates from all claims.

Gail Lockhart-Charles represented West Island Properties, while Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, acted for the defendants.