The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Electricity Corporation (BEC) was yesterday ordered to pay more than $540,000 in damages to a western New Providence developer for trespassing on its land.

Justice Anita Allen, in a ruling backed by her two fellow Appeal Court judges, overturned Chief Justice, Sir Michael Barnett’s, finding that Delta Properties was neither entitled to damages for the loss of its property, not damages “in lieu of an injunction”.

Delta Properties had spent $100,000 on acquiring 16.3 acres of vacant land in western New Providence, with plans to develop it into an 18-lot subdivision, the Court of Appeal noted.

Despite obtaining approvals in principle for the project, Delta Properties eventually abandoned the subdivision project, only for BEC - without its permission - to install electricity infrastructure, including poles, lines and wires, on a 1.197 acre strip of the property.

It took Delta Properties some nine years to file an action against BEC, seeking damages for trespass. This was eventually done on October 22, 2007, with BEC abandoning its original defence that it had an easement right to erect the poles and power lines on the property.

The state-owned power monopoly, in the words of the Chief Justice, “conceded the acts of trespass”.

Sir Michael found that the action was not statute barred, but ruled that Delta Properties would have been adequately compensated by payment of a sum equal to that which BEC should have paid to acquire the property under the Acquisition of Land Act. He also found that interest payments should be limited to one year under the Limitation Act.

Both Delta Properties and BEC agreed that Sir Michael’s decision to limit damages and interest to one year was incorrect, the developer arguing that the clock started running from the date the trespass started, while the Corporation alleged they should be limited to six years’ prior to the writ’s issue.

Justice Allen and the Court of Appeal agreed that trespass damages should be limited to six years, but Delta Properties then argued that these should be based on the land’s letting, rather than its market, value.

The developer alleged it should be awarded damages from 1998 until November 2012, and that the Chief Justice had accepted a valuation from appraiser Anton Rodrigues that the land was valued at between $6 -$8 per square foot.

The Court of Appeal, taking $7 per square foot, said this placed the damage for trespass at $36,498 per year or $510,984 for the total 14-year period.

BEC, though, said the Chief Justice never accepted Mr Rodrigues’s valuation, and alleged that the only factual evidence used at trial came from its own appraiser, Peter Galanos.

The Corporation argued that damages should be based on the reduction of the land’s value to Delta Properties.

Using Mr Galanos’s estimation, it claimed that the full value of a subdivision constructed on that property would be $6 million, with $2.4 million in development costs giving a net market value of $3.6 million. But, with BEC’s poles also providing the developer with certain benefits, Mr Galanos estimated that the reduction in land value was only $98,232.

The Court of Appeal said BEC’s position “cannot be accepted”, and turned to two other appraisals to determine the “reasonable rental rate” for the affected 1.197 acre strip.

The two appraisers, James Newbold and Mr Galanos, priced Delta Properties’ land at $150,000 per acre. This meant that the impacted land was worth close to $180,000.

Mr Galanos pegged the investment return from leasing this land at 6-8 per cent per annum, with Mr Newbold sticking at 6 per cent.

“Taking the median point in the range stipulated by Mr Galanos, the annual rental value of the tract of land, between October 2009 and November 2010, the dates of respective appraisals, would be $12,569,” the Court of Appeal said.

BEC, though, alleged that while property values had increased by an average of 10 per cent between 1998 and 2008, they fell by 20-25 per cent per annum between 2009 and 2012.

However, the Court of Appeal said there was “a considerable disparity” between the appraisers’ value of $180,000 and BEC’s, which valued the 1.197-acre tract at $161,445 in 2009 and $129,156 in 2010.”

Justice Allen said BEC provided no evidence to support such claims, and accepted the $179,550 valuation and 6-8 per cent investment return. This led to trespass damages of $14,364 per annum, and discounting 5 per cent for land value fluctuations, the Court of Appeal awarded Delta Properties $151,468 in total for the six years.

And the appeal court agreed that the developer should be compensated for BEC’s “continuing acts of trespass, which the court has opted not to restrain”.

Delta Properties had sought $2.5 million, while BEC said these damages should be restricted to $100,000-$200,000. Taking Mr Rodrigues’s report, the Court of Appeal said he found that the total property in 2007 was worth $4.085 million, valuing the 1.197-acre tract at $299,067.

“We are of the view that it can be reasonably be said that [BEC] received a benefit of 30 per cent of the value of the property,” Justice Allen ruled. “Keeping in mind that as a result of its trespass, [Delta Properties] has effectively attained both de jure and de facto ownership of the tract, we award the appellant $388,787 as damages in lieu of injunction.”

The Appeal Court ordered that interest at 7 per cent run from the date of judgment until payment, with the 1.197 acre tract to be conveyed to BEC.