The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

SuperClubs Breezes and Baha Mar are embroiled in a furious legal battle over a land swap agreement that is critical to the $2.6 billion Cable Beach redevelopment, with replacement of a “toxic” wastewater treatment plant at the dispute’s heart.

Supreme Court documents obtained by Tribune Business reveal that Breezes and its parent company, PPL Ltd, are alleging that for 18 months Baha Mar has “continued to fail or refused” to complete the land transfers envisaged in the two sides’ September 18, 2011, agreement.

The Issa-family owned Superclubs is also claiming that Baha Mar trespassed on land that it currently leases from the Hotel Corporation, and that there were numerous leaks and design flaws in the new wastewater treatment plant that the Cable Beach developer had built on Breezes’ behalf.

To compound the divide between the two parties, Breezes’ Statement of Claim, filed on December 5, 2013, is alleging that Baha Mar breached their agreement by allegedly decommissioning its old wastewater treatment plant too early.

This, Breezes and PPL are claiming, has left them exposed to “a potential claim” by FirstCaribbean International Bank (Bahamas) for breaching the terms of a mortgage the institution holds over the site of the former wastewater treatment plant.

And SuperClubs is also alleging that Baha Mar’s August 2, 2013, plans to build a public car park opposite its hotel is a “drastic departure” from what was understood at the 2011 agreement.

As a result, Breezes is claiming a variety of alleged “damages” against Baha Mar, including compensation for trespass and breach of the 2011 agreement, and for the premature “destruction” of the old wastewater treatment plant.

Not surprisingly, Baha Mar “categorically denies” all Breezes/PPL allegations in its December 20, 2013, defence and counterclaim (see other article on Page 1B).

The Cable Beach developer, which has recently become embroiled in a separate legal battle with one of its hotel operating partners, Morgans Hotel Management Group, denied that it attempted to “hide” the demolition of the former Breezes treatment plant from its fellow resort.

It also rejected the assertion that there were “design flaws or problems” with the new plant, and said the conveyancings related to the land parcel transfers were awaiting “Breezes’ ability to perform its obligations for the exchange of documents”.

Baha Mar also wants the Supreme Court to consolidate the Breezes/PPL action with one it had filed earlier, and for that to be the “lead”.

Central to the dispute is the 2011 agreement that will see Breezes swap the 0.66 acre parcel upon which its initial wastewater treatment plant stood for land, of the same size, upon which Baha Mar will build it a replacement plant at the latter’s expense.

The swap is a key part of the Baha Mar jigsaw, given that Breezes’ first treatment plant and the land sit at the heart of the developer’s $2.6 billion project and construction site. Any dispute, and corresponding court-related delay, could thus have a major impact.

The legal battle is being seen by some observers, speaking to Tribune Business on condition of anonymity, as Breezes and the Issas signalling that they will not be ‘pushed around’ by their giant neighbour or squeezed into a tiny, unseen corner of Cable Beach.

The 2011 deal, according to Breezes/PPL’s statement of claim, also involves Baha Mar’s golf course-owning affiliate, BMP Golf, transferring another 2.27-acre parcel to it. And the 140,000 square feet parcel currently leased by Breezes from the Hotel Corporation will also be “reconfigured” to conform with Baha Mar’s development plans.

The agreement was designed to ensure SuprerClubs Breezes’ operations were not interrupted during the Baha Mar construction phase, and PPL Ltd alleged that no land transfers were to take place until both parties had fulfilled their respective agreement obligations.

This meant both sides were to retain ownership/possession of the respective land they started with, the handover being the final act under the agreement, but Breezes/PPL is alleging that Baha Mar has failed to “carry into effect and complete the exchanges of the freehold lands, and the reconfiguration of the leasehold premises”.

Baha Mar, though, is alleging that there was nothing in the agreement to prevent either side taking possession of the other’s land parcels prior to completion.

And it is also countering Breezes’ claim that the old wastewater treatment plant was prematurely decommissioned prior to the 30-day testing period on its replacement being completed - an alleged “breach” of the 2011 agreement.

And PPL is also claiming that Baha Mar “actively hid” the June-July 2013 demolition of the old plant.

“The unlawful and clandestine demolition of the existing wastewater treatment plant has placed PPL in breach of the terms of the mortgage with FirstCaribbean International Bank in particular,” Breezes alleged in its statement of claim.

“First, the covenant by PPL to maintain, secondly the covenant by PPL not to dispose of the whole or any part of its assets except where such disposal is made in the ordinary course of business.”

Baha Mar, though, countered by alleging that Breezes has had “continuous use and benefit” from the new wastewater treatment plant since March 11, 2013.

The developer alleged that it had to move quickly to demolish the old wastewater treatment plant because it contained contaminated soil, something it said Breezes should have known.

“In or about July 2013, Baha Mar lawfully entered into possession of the existing wastewater treatment plant parcel to abate a private nuisance,” the developer alleged.

“In e-mail from Baha Mar’s general counsel to Breezes’ legal counsel, dated June 18, 2013, Baha Mar stated that toxins existed upon the existing wastewater treatment parcel which were necessary to be terminated.

“Moreover, in the said e-mail Baha Mar’s general counsel [Uri Clinton] emphasised that (given the tight schedule for the construction project) timing was of the essence and critical.”

Alleging that Breezes made no remediation itself, its rival hotel owner claimed that the old wastewater treatment plant was allowed to “sit unused, unattended and it became derelict”, half-full of unprocessed sewerage and wastewater.

Baha Mar said the situation “posed environmental and public health risks, and a real likelihood of exacerbation of those risks existed by the contaminants leaching into the groundwater supply during the rainy season”.

It added: “Baha Mar was at risk of possible adverse impact by publicity of the existence of toxins within the core area of the future hotel site.....

“Baha Mar’s construction project workforce and the public generally in the Cable Beach area were at risk, as the sitting exposed sewerage and wastewater and stagnant rainwater presented a potential breeding ground for disease (dengue) bearing vectors during the mosquito breeding season”.