The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Court of Appeal has removed one obstacle to the potential sale of a multi-million dollar Paradise Island condominium project, upholding the grant of a key easement right to it.

The appellate judges dismissed an action brought by Paradise Harbour Ltd as “misconceived”, finding that its grant of ‘easement’ rights over lot 13 to the neighbouring Ocean Place development, and its property owners, could not be taken away.

The ruling’s significance lies in the fact that it removes one more potential obstacle to a sale of Ocean Place, and its 57 unsold units - more than 70 per cent of the inventory - by the receivers.

The KPMG accounting firm was appointed as Ocean Place’s receivers/managers on November 19, 2012, by CIBC FirstCaribbean International Bank (Bahamas), which wanted to realise the security (collateral) for a $37 million construction loan.

Tribune Business understands that the receivers have found a potential purchaser for Ocean Place and its remaining unsold units, but the dispute over the easement and other outstanding issues need to be resolved before any deal can be consummated.

The KPMG receivers, Simon Townend and Nicholas Brearton, have also encountered stiff resistance to their efforts from Ocean Place’s original developer, Al Ballard and his Peace Holdings company.

Mr Ballard, who previously mounted a failed bid in the Bahamian courts to overturn the receivership, is now understood to be opposing any sale - an effort likely to result in all parties incurring more legal costs.

Mr Townend did not return Tribune Business messages seeking comment before press time, but victory in the Paradise Harbour Ltd case eliminates (although this may be subject to further appeal) a potential difficulty for both the receivers and current Ocean Place residents.

This is because the property subject to the easement action, Lot 13, hosts both Ocean Place’s chillers and generators, and its dumpster.

The Court of Appeal verdict revealed the difficulties caused when Paradise Harbour Ltd, immediately following KPMGs appointment, began claiming Lot 13 for itself.

It ultimately erected a “gateless chain link fence around Lot 13” on January 11, 2013, an action that caused the receivers and Ocean Place residents “serious inconvenience” seven days later when the chillers failed.

Setting out the case, Appeal Justice Christopher Blackman said Paradise Harbour was seeking to appeal a Supreme Court verdict “respecting the validity” of the grant of easement rights.

Justice Milton Evans, in the lower court, ruling in favour of the KPMG receivers, had also granted them a declaration that the denial of access to Lot 13 “was unlawful” and took away the grant deed that provided the easement rights.

Justice Blackman relied heavily on Mr Townend’s Supreme Court affidavit, which described how CIBC FirstCaribbean International Bank (Bahamas) security covered all easements benefiting Ocean Place.

These easements for the nine-storey property, which dwarfs all others on Paradise Island’s southern shore and dominates the skyline in that area, were alleged to include Lot 13 at Ocean Place’s rear.

The May 11, 2005, Deed of Easement was alleged by Mr Townend to have been executed by Hans Peter Kugler, Paradise Harbour’s then-president, with the company’s seal affixed to the documents and witness affidavits confirming the execution.

Getting to the crux of the matter, Mr Townend alleged: “In or about 2010, Peace Holdings installed on Lot 13 the generator and chillers for Ocean Place.

“The generator and chillers are expensive and important items of equipment, and are the only generator and chillers providing back-up electricity and air conditioning to the 79 units within Ocean Place.

“This equipment not only requires frequent maintenance to ensure that the likelihood of equipment failure is minimised, but also immediate repair in the event of malfunction or failure.”

Mr Townend said their installation, together with the dumpster, were “plainly visible, open and obvious”, with Paradise Harbour doing nothing to prevent this.

He alleged that it was only with the receivers’ appointment that Paradise Harbour began to claim ‘exclusive rights’ to Lot 13, resulting in the ‘chain link fence’ episode and chiller failure.

Justice Blackman noted that Paradise Harbour Ltd and its attorney, Craig Butler, “essentially abandoned” their 17 grounds of appeal when the Court of Appeal began to ask whether a grantor could “derogate” (take away) its grant.

Mr Butler, though, argued that the easement’s cope effectively ousted his client, as owner, from legal possession of its land.

And he claimed that a 2009 agreement, whereby Paradise Harbour would sell Lot 13 to Peace Holdings, showed that both sides intended to allow the latter to have “the full free rights, use and enjoyment”.

As a result, Mr Butler argued that the easement deed was “invalid and void”.

“Mr Butler submitted that when the factual circumstance of the instant matter is examined, it would be apparent that the rights of the appellant as to the fee simple were totally excluded, and that it could not, and was not, the intention of the parties that there be exclusive/joint occupation of the land,” the Court of Appeal said.

But the receivers’ attorney, Brian Simms QC of Lennox Paton, said the easement deed favoured both parties equally.

Joining Justice Blackman in dismissing the appeal, fellow appeal judge, Abdullah Conteh, branded Paradise Harbour’s arguments as “unsustainable and misconceived” given the easement deed’s purpose.