The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamians were yesterday warned by the Privy Council to register their land deals with the Registrar General’s Department “at once”, after it gave the developers at the strife-torn Oceania Heights project something to smile about.

The Bahamian judicial system’s highest court ruled in favour of the appeal mounted by Canadian citizen, Howard Obront, and Bahamian attorney, Anthony Thompson, after finding that their February 1996 agreement to purchase the 40-acre Oceania Heights site took precedence over the former owner’s sale of 11 lots because it was recorded first in the Registry of Records.

Therefore, even though the 11 lots were sold prior to Oceania Heights acquiring the property, the Privy Council found the latter deal took “priority”. As a result, it declared the conveyances for those 11 lots “void”, and ordered that either the purchasers or former owner instead formally convey them to Oceania Heights.

But, while Oceania Heights won the appeal, the Privy Council also ruled against it on another point of public policy. Even though the former owner, Willard Clarke Enterprises, had failed to obtain the required governmental subsdivision approvals that would enable it to sell the 11 lots, the UK court ruled that - while this was illegal - it did not invalidate those conveyances.

More importantly, for all future real estate developments in the Bahamas, the Privy Council noted that the current governing legislation - the Planning and Subdivision Act 2010 - provided that conveyances settled before its passing would “not be null and void” if there was no associated subdivision approval.

Tracing the origins of the dispute, the Privy Council said it stemmed from Willard Clarke Enterprises’ decision to sell the 40-acre site, which was divided into 121 lots, to Oceania Heights. The initial September 25, 1995, deal excluded the 11 lots, which Willard Clarke Enterprises said it had already sold.

Ocenia Heights, though, could find no record of these lots being conveyed to purchasers, and was told by the Ministry of Works that their sale had not been approved. Further talks between the two parties resulted in a new sales agreement, which included the 11 lots in the deal. Crucially, this agreement was recorded with the Registrar General`s Department on February 9, 1996.

But, despite the second agreement, Willard Clarke Enterprises then conveyed all the land bar the 11 lots to Oceania Heights on February 29, 2000. Over the following year, those lots were conveyed by the former owner to various buyers.

Oceania Heights won its case at the Supreme Court, after then-Senior Justice John Lyons found that the sale of the 11 lots was “void” because the original owner had not obtained the required approvals from the Government, particularly subdivision approval.

The Court of Appeal, though, overturned this, finding that while Willard Clarke Enterprises (WCE) had breached the law, and was subject to prosecution and fines, this did not render the conveyances invalid.

The Privy Council backed the Court of Appeal findings, saying: “It is well established that the mere fact that a contract is entered into, or any other document is executed, in breach of a statutory prohibition, does not automatically render all consequences of that contract or document void.”

While Willard Clarke Enterprises had committed a “criminal act”, the Privy Council said it was still able to “vest legal estate” in the purchaser. This knocked out that argument.

But Fred Smith QC, the Callenders & Co partner, had more success with his argument that the Registration of Records Act, Chapter 187, gave priority to whichever mortgage, conveyance or real estate agreement was recorded first in the Registry. This was regardless of the date they were signed.

As a result, Mr Smith said the sales agreement that conveyed the 40-acre site to Oceania Heights took precedence over the 11 lot conveyances, even though the latter were agreed first, because the former was recorded with the Registrar General`s Department first.

The lot owners attempted to defeat this argument by alleging it was not raised in the Court of Appeal, but the Privy Council, despite having “considerable sympathy”, rejected it. They noted it was included in the original Statement of Claim and argued in the Supreme Court, and found it was the issue around which the whole appeal revolved.

If Oceania Heights was not allowed to argue this point, the Privy Council found that the wrong party would win. The highest court ruled that, under the Registration of Records Act, the 1996 sales agreement took priority over the 11 conveyances, thus overturning the Court of Appeal verdict.

“The Board considers that it follows from the above analysis that, because it was recorded as registered before the conveyances were entered into by the purchasers, and in the absence of registration of the contracts of sale into which they or their predecessors had entered, the 1996 Agreement has priority over the conveyances,” the Privy Council found.

As for the wider implications for the Bahamas, it said: “The effect of the Board’s conclusion is that anyone who has entered into a contract for the sale, lease or grant of an interest in or over land, or who has bought, leased or been granted an interest in or over land, would be well advised at once to register their contract, conveyance, lease or grant.”

The ruling settles one bone of contention between the Oceania Heights developers and the homeowners with whom they have been in dispute. The latter had complained some of the lots subject to the Privy Council dispute had been sold to buyers, despite their ownership being contested.

While Oceania Heights has been confirmed as the owner, there is still something of a mess to clear up. Those lots now have to be conveyed by either their purchasers, or their former owner, to Oceania Heights before the latter can issue conveyances with good title to any buyers.

The ruling is unlikely to resolve any of the other issues separating the developers and homeowners.