The Tribune

An $11.5 million deal to purchase the 25,000 acre property that was once Long Island’s largest employer cannot be concluded because there was never “an enforceable sales contract”, the Privy Council ruled yesterday.

The Bahamian judicial system’s highest court brought an almost 10-year dispute over the former Diamond Crystal Salt Company site to an end by affirming rulings in the lower courts that favoured its current owner, Maritek Bahamas.

Its verdict ends the prolonged fight mounted by businessman Peter Hall, who repeatedly alleged he had a legally binding contract to acquire the 24,682 acre property.

It is unclear what will now happen to the former Diamond Crystal site, but the dispute’s end unlocks at least one obstacle to the property’s potential redevelopment and revival of Long Island’s wider economy.

Mario Cartwright, the former Long Island Chamber of Commerce president, told Tribune Business in 2012 that the dispute had effectively tied-up some 20 miles of the island’s coastline.

He added that the land was ripe for being divided up and sold to facilitate resort, second home and other real estate-based developments.

Setting out the background to the dispute between Mr Hall and Maritek Bahamas, the Privy Council said the two parties negotiated the property’s sale/purchase over a five-month period between August and December 2002.

That was just after the first Christie administration took office, and Mr Hall was employing Vincent Peet & Company, the law firm of then-minister of labour and immigration, Vincent Peet, as his attorneys.

Mr Peet would not have been involved in the transaction, having resigned from all matters involving his law firm due to his Cabinet post. Maritek Bahamas was represented by Donna Harding-Lee.

Mr Hall made his first offer to acquire the former Diamond Crystal property on August 12, 2002, and he both signed and returned a draft sales contract sent to him by Maritek’s Bahamian realtors, Sunshine Real Estate.

Mr Hall followed up on October 20 that year by sending a draft sales contract to Sam Shen, a shareholder and former Maritek Bahamas director.

This set the $11.5 million purchase price, and stipulated that Mr Hall would pay a 10 per cent deposit, worth $1.15 million, that would be held by his attorney or bank.

Other terms contained in the draft contract made the purchase conditional on Mr Hall, as a non-Bahamian, receiving all the necessary Government approvals to conclude the deal.

And Maritek Bahamas was also entitled to retain his deposit if Mr Hall, despite receiving government approval, failed to close the deal and comply with any ‘notice of completion’ that was served upon him.

The Privy Council ruling noted that Mr Hall’s bank, Credit Lyonnais Suisse (Bahamas), on October 11, 2002, had established an account in Vincent Peet & Company’s name specifically to receive the 10 per cent deposit.

The total sum transferred to the account was $1.24 million, with the $90,000 balance payable to Vincent Peet & Company. The latter than informed Mrs Harding-Lee that the account had been established, and deposit duly paid.

“There followed some discussions between Mr Hall and Mrs Harding-Lee about her wish for some form of time-limit [to close the deal],” the Privy Council said.

“He indicated that he was keen for matters to proceed quickly, but was unsure how to ‘frame a reference to a time limit which allowed for dilatoriness on the part of the Government’.”

Mrs Harding-Lee sent amendments to Mr Hall on October 19, containing a proposed ‘completion clause’, prompting him to respond with changes of his own.

Mrs Harding-Lee then wrote to Vincent Peet & Company on November 8, 2002, including with her letter the sales contract signed by both Mr Hall and Maritek’s president, Phylo Chiang. Also enclosed was Mrs Harding-Lee’s proposed ‘completion clause’ amendment, rather than the one containing Mr Hall’s changes.

Amid the ongoing negotiations, Mr Hall faxed Mrs Harding-Lee on December 3, 2012, agreeing that the sales contract “could have been drawn more tightly” and contained her amendments.

He then agreed to withdraw his offer to replace it with “tighter wording”, and said that from the following week all his communications were to be taken as ‘subject to contract’. The sale would only be “legally binding” once Maritek Bahamas received a ‘signed hard copy’ from Mr Hall, duly witnessed.

Mrs Harding-Lee then expressed concern on December 5, 2002, that Mr Hall had failed to apply for government approvals, although she confirmed there was “a binding contract” between the two sides.

Mr Hall replied on December 10, 2002, adding that he could not have signed the amendment allowing Maritek Bahamas to withdraw from the deal and take his deposit.

That same day, Mr Hall faxed Credit Lyonnais Suisse (Bahamas) to inform them that Maritek Bahamas had not accepted his October 11, 2002, offer. He asked the bank to keep the $1.15 million deposit in the account as both sides worked on a new agreement.

The Privy Council was quick to dismiss Mr Hall’s contention that a binding contract existed between the two parties.

His attorneys attempted to argue that by returning the October 11 sales contract on November 8, 2002, Maritek Bahamas had “accepted his offer on its own terms”, and that the amendment did “not undermine that acceptance”.

Finding that this was merely “a hook” for Mr Hall and his attorneys to “hang [their] submissions” on, the Privy Council found: “Although Mrs Harding-Lee’s letter of November 8 might have been more clearly expressed, there was nothing in it to indicate an intention to conclude the contract in unamended form.

“The company was not seeking an indulgence, but was looking for further protection for its own benefit in the form of a time-limit. This had been recognised by Mr Hall in the preceding exchanges. He had no reason to think that the company would be willing to accept the contract in its present open-ended form.

“Furthermore, the return of the proposed amendment in its original form, and the implied rejection of his suggested amendments, can have left no doubt as to the importance attached to this issue by the company. Indeed, it is apparent from Mr Hall’s subsequent fax to his own bank that he fully understood the significance and legal effect of the company’s counter-offer.”

Negotiations between Mr Hall and Maritek continued through 2003, with the businessman agreeing to pay $100 per hour until he performed certain conditions.

He also pledged to transfer $25,000 every three months to Maritek if there was no completion due to government approvals date.

Some $50,000 was ultimately paid into Mrs Harding-Lee’s trust account, but Maritek executives refused to sign the amended sales contract during a meeting on July 17, 2003.

Mr Hall kept insisting that a binding contract had been agreed on October 11, 2002, but in January 2004, Maritek Bahamas’ parent was acquired by EMC International.

Subsequently, Maritek Bahamas’ new solicitors told Mr Hall that the contract was rescinded because no deposit had been paid - something that the latter disputed.

Maritek’s directors, at a special Board meeting on June 7, 2005, authorised the sale of part of the ex-Diamond Crystal property to a vehicle owned by one of its directors, a Mr Young.

Mr Hall, after the Court of Appeal ruled against him, obtained the ‘minutes’ of this Board meeting and related documents, and appealed to the Privy Council that this was fresh evidence to support his case.

There were five different versions of these minutes, and Mr Hall’s attorneys argued that these showed “a move from the view that there had in autumn 2002 been a binding contract with Mr Hall, to the view, reflected in the final, approved version, that there had been merely an offer and counter-offer.

“The timing of the changes is said to be particularly significant, in that the final version was approved almost four months after the June meeting, but only two weeks before the commencement of these proceedings,” the Privy Council added.

“The inference, it is said, is that the record was ‘deliberately falsified’ by the company’s new directors in the light of a new analysis of the legal position provided by their lawyers.”

The Privy Council, though, said it added “nothing new”, as the ‘minutes’ indicated some Maritek directors may have previously thought there was a contract with Mr Hall before “becoming alive to the argument that there had been a mere offer and counter-offer”.

The directors in question were not involved in the negotiations with Mr Hall, and the Privy Council said his suggestion that Mrs Harding-Lee, in a December 10, 2002, phone conversation told him Maritek was prepared to proceed with the October 11 contract without the amendment, was not supported by the documentary record.

“Even accepting, as he says, that his conversation with Mrs Harding-Lee came later in the day, it is extraordinary that he did not find it necessary to make a formal record of the changed position, for himself, the company, and the bank,” the Privy Council said.

“The Board is unable to see how the new evidence, if available at the trial, could have helped Mr Hall to surmount these hurdles.”

The 25,000 acres subject to the dispute were once the main driver of Long Island’s economy, providing the biggest source of employment on the island. Diamond Crystal opened its plant in the 1970s and, after it closed due to its US parent filing for bankruptcy, was taken over by World Wide Protein (Bahamas), a shrimp farming company.

That venture, too, failed with the shrimp farming closing after several years of operations in the mid-1980s. World Wide Protein is understood to be the predecessor to Maritek Bahamas.

This dispute is arguably yet another example where large, prime tracts of valuable Bahamian real estate seemingly become bogged down in never-ending fights involving overseas investors, depriving this nation and its people of its potential use and economic benefit.