The Tribune

By NEIL HARTNELL Tribune Business Editor A FULL-scale civil war is raging between the developers and numerous residents of a $40 million Exuma-based real estate project, Tribune Business can reveal, the latter alleging there are difficulties with obtaining title documents to their properties and due Stamp Duty payments to the Treasury. Indeed, attorneys purporting to represent residents who own more than one-quarter of the 125 lots at the upscale Oceania Heights development, in a letter to the Prime Minister complaining about the actions of the project's principals, Nassau-based Bahamian attorney Anthony Thompson and Canadian citizens, Howard and Donna Obront, warned that the saga could "damage" the Bahamas' reputation as an attractive investment destination. But, in return, the Obronts and Mr Thompson have accused what they say are a 'small minority' of Oceania residents of pursuing "a smear campaign" against them in a bid to seize control of the development and force them out (see other article on Page 1B) Attorneys for the Obronts, in a letter seen by Tribune Business, said both they and Mr Thompson "deeply resent the way you [the Oceania residents] have portrayed them as crooks, refusing to pass deeds to your clients........" The Obronts' attorneys and Mr Thompson are also questioning why, if the Oceania residents have such a strong case, they have not taken their complaints to the Supreme Court via a civil action. Both the Obronts and Mr Thompson have denied to Tribune Business allegations they have failed to pass conveyancings and title documents on to Oceania Heights property purchasers, or that they have not passed Stamp Duty -worth up to possibly $3 million - due on these sales to the Public Treasury. Tribune Business has exclusively obtained voluminous documents detailing the increasingly bitter, long-running dispute between the Obronts and Mr Thompson on one side, and a group of at least 14-20 Oceania Heights homeowners on the other. The dispute between them dates back to at least 2009, according to the documents seen by this newspaper. Other alleged causes of complaint from the Oceania homeowners include: * That Mr Thompson, while representing both purchaser and vendor (the Oceania Group of Companies) in the real estate transaction, did not pre-disclose that he had a beneficial ownership interest in the development. This has been denied by Mr Thompson and the Obronts. * That two lots at Oceania were each sold to different buyers, who were then charged annual maintenance fees for the same piece of Bahamian real estate. Tribune Business is in possession of all the sales agreements and maintenance fee invoices for the two Oceania lots in question, Lots 39 and 104. In their response to Tribune Business's questions, the Obronts admitted to one instance where the same Oceania lot was sold to two separate buyers. They pledged, though, that they were working to resolve the situation. Conceding that this occurred in 2000, the Obronts, via an e-mailed response put through their attorneys, said: "It was a clerical mistake. We are working with that buyer to either refund his dollar or obtain a credit for the purchase of another lot in Oceania or in another development. And, any payments made on maintenance will be either credited or refunded." Without resolution, the Oceania affair has embroiled numerous state bodies and officers, not least the Prime Minister, the Attorney General's Office, the Royal Bahamas Police Force and two noted Bahamian QCs acting for the Obronts and Mr Thompson, namely Fred Smith and John Henry Bostwick. The crux of the Oceania residents' concerns is summarised in on a November 8, 2011, letter to Prime Minister Hubert Ingraham, pleading for his intervention in the matter after their efforts to resolve the situation appeared to hit a dead end. Andrew O'Brien, attorney and partner at Glinton, Sweeting & O'Brien, stating he represents 14 property owners who have collectively bought 34 of Oceania Heights' 125 lots, told the Prime Minister that an investigation by the Attorney General's Office/Royal Bahamas Police Force into his clients' complaints appeared to "have reached a road block". "While our clients have a variety of complaints, three of the most easily discernible concerns are that, one, many have paid in full for their properties but the Oceania entities will not issue conveyances, stemming from disputes over legal fees and costs, which we feel arise from Mr Thompson's conflict of interest in these transactions (being officer, director and beneficial owner of the vendor company, as well as attorney for both purchaser and vendor)," Mr O'Brien wrote. "Two, that several purchasers have paid in full for their lots, including Stamp Duty and legal fees to Mr Thompson's office without receiving conveyances; and three, that the Oceania entities have been responsible for selling lots for which they do not have legal title, and only a claim to equitable title." The last issue raised refers to 11 Oceania lots caught up in a legal battle that is expected to be heard shortly by the London-based Privy Council. When asked about this by Tribune Business, the Obronts described it as "a non-issue", calling upon their opponents to prove the lots in question had been sold on. "We won at the Supreme Court and had a right to sell," Howard Obront said. "Then we unfortunately lost at the Court of Appeal, which then put the title to 11 lots in question. Now we are on way to the Privy Council, where we hope the Court of Appeal will be reversed. "There is nothing illegal or fraudulent going on. Eleven properties were held back; in one of these properties I built a home for myself and my family." As for the other allegations made by the Oceania residents, a March 9, 2011, letter from the Obronts' Canadian attorney, Stephen Hart, to Mr O'Brien, said: "I spoke with Anthony Thompson and Howard, and both confirmed that each of your clients was well aware from their first dealings with Oceania Heights that Anthony Thompson was the president of Oceania Heights, and had a financial interest therein. In fact, they were comforted to know that their initial deposits were being retained by Anthony Thompson in his trust account." And Mr Hart added: "Both Anthony Thompson and Mr Obront deeply resent the way you have portrayed them as crooks, refusing to pass deeds to your clients or misappropriating maintenance fees...... "By doing so, you have misled your clients into thinking they have been wrongly dealt with by the Oceania Group of Companies, not only with respect to the passing of deeds but also on the issue of maintenance fees. In effect, you have stirred up enough crap that most of the home and land owners have revolted to the overall detriment of the project." However, Mr Hart's letter strongly suggests that land title documents and conveyancings were not being passed to Oceania clients as a means of deferring, or avoiding, due Stamp Duty and real property taxes - although he alleged this was done in accordance with purchaser wishes. He wrote to Mr O'Brien: "As you well know, once the client paid for their property, Oceania Heights has always been ready, willing and able to pass title to the clients. "However, in such cases the client would have to pay the Stamp Duty, the [real] property tax and Anthony Thompson's fees for passing the deed. In most instances, the client preferred to defer the passing of title to their property." These explanations, though, were rejected by Mr O'Brien in a March 29, 2011, letter. He argued that that his Oceania homeowner clients "unanimously and without qualification" refuted the notion that Mr Thompson had disclosed his beneficial ownership interest in the project prior to acting on their real estate transactions. And, when it came to passing conveyancing and title documents to Oceania homeowners, Mr O'Brien alleged: "Contrary to your assertion, most of the clients now seeking conveyances from Oceania came to us only after despairing of ever receiving title in the manner contemplated by the contract. "Oceania and Mr Thompson's refusal of and/or failure to respond to requests for title is well documented." Responding to Tribune Business's inquiries, the Obronts said all Oceania homeowners had "crystal clear" title to their respective properties, good enough to enable them to leverage the equity in the real estate for bank borrowings. However, "errors" were again acknowledged. Demanding that their opponents provide specifics, and say how many of Oceania's 125 lot owners did not have correct title documents, the Obronts said: "Every matter has its own peculiarities or distinctions. "Every homeowner has crystal clear title to their property. If they would want to borrow from local banks they could, with no problems guaranteed by their property titles. "They make these wild and spurious allegations. If we are in breach of contract, or have given defective title, or have failed to provide them with appropriate papers, why not take appropriate action?" However, they then added: "Ninety-nine per cent of the properties were sold with eight to 10 years financing, and title is only passed after the purchase price is paid in full. In the last 15 years, there were one or two errors, and they are being rectified as we speak." Mr O'Brien, though, in his November 8, 2011, letter to the Prime Minister, expressed concern that by not bringing conveyancings forward for Stamping at the Registry of Records, the Oceania project was avoiding the payment of due Stamp Duty and real property tax. "The Oceania entities appear to be [avoiding] the payment of Stamp Duty and real property taxes by not recording conveyances," Mr O'Brien wrote. "They have promoted the Bahamas as a 'tax free' jurisdiction to our clients for the purpose of attracting sales, then they have left many of our clients in the precarious position of having no deed to confirm their ownership of property after full payment for the same." Then, expressing concern about the potential wider ramifications of the Oceania dispute, Mr O'Brien told the Prime Minister: "The practices of the Oceania entities are misleading and injuring well-intentioned investors, keeping funds from the Public Treasury, and damaging the reputation of the Bahamas. "The development practices of the Oceania entities are damaging well-intentioned investors in the Bahamas and the reputation of our nation." The Obronts, though, in their response to Tribune Business, denied that Stamp Duty and other tax payments were being withheld from the Treasury and, by extension, the Bahamian people. A summary of properties sold at Oceania Heights shows that some $33.194 million worth of real estate at the development has been sold. Yet a column entitled 'Stamp Tax paid' shows that only two buyers have 'paid' Stamp Duty, while conveyancings have been issued to just 23 of 101 lot 'buyers'. Some the latter total are said to have not fully paid for their real estate. The sales spread sheet also refers to a December 15, 2010, letter sent out to all Oceania real estate owners who do not have a conveyancing. Tribune Business has obtained a copy of this letter, sent out by Mr Thompson, which appears to be an attempt to regularise Oceania's affairs. Writing on behalf of Oceania Properties, Mr Thompson said: "[We] have been informed by our client that the Government of the Bahamas has advised that effective immediately, all outstanding government fees relating to purchases in the Oceania Heights subdivision, Great Exuma, must be paid in full." As a result, all title deeds had to be handed to purchasers when the full price for their lots was paid. These deeds, Mr Thompson said, had to be Stamped and recorded with the Registry of Records, and made available for real property tax declaration and assessment. In common with the Obronts' reply, Mr Thompson said conveyancing documents had not been provided to certain Oceania buyers because legal fees and other payments relating to the sale remained outstanding.