The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BAHAMIAN attorney's bid to reclaim a $320,000 deposit from a failed real estate transaction has been rejected by the Court of Appeal, which found the earlier verdict "unassailable".

Gregory Cottis, who acted for the purchaser in a $6.4 million deal, alleged that the deposit was "payable to his order" and therefore "returnable at his request".

However, the Supreme Court ruled that Mr Cottis's allegation that the deposit belonged to him was "not proven", and he had "no liability" in the transaction given that both purchaser (his client) and vendor had agreed the deposit should be forfeited.

The attorney challenged Senior Justice Stephen Isaacs' ruling on several grounds, but the Court of Appeal's October 24 ruling found rejection of his arguments was "the only conclusion open to" the Supreme Court.

Dame Anita Allen, the Court of Appeal's president, in a unanimous written verdict supported by her two fellow judges, drew on the Supreme Court's factual background as to how the dispute arose over a failed real estate transaction involving land at Kemps Bay, Andros.

Jonathan Leopold, the vendor, signed an August 20, 2007, agreement to sell various parcels of land to Duff Young, Mr Cottis's client. The $6.4 million deal required an initial $128,000 payment, followed by "monthly option" payments of $64,000 that were to start 60 following the agreement's execution.

A deposit of $320,000 was to be held in escrow with Alexiou, Knowles & Company, Leopold's attorneys. Leopold confirmed that the initial $128,000 payment was made to his account, with Young confirming that Mr Cottis would provide the $320,000 deposit. This was paid by cheque on September 25, 2007, with Mr Cottis requesting that it "be held to his Order".

Leopold alleged that while all land title issues were subsequently agreed as having been resolved, Young failed to perform in terms of the agreement's payment schedule. While a $64,000 payment was made in January 28 for a one-month extension, Leopold alleged that the purchaser ended up owing him more than $768,000 through various extensions.

He then claimed that Young conceded the deposit should be forefeited, and that he had advised Mr Cottis to tell Alexiou, Knowles & Company that it should be released. However, the attorney "has failed or refused to do so".

Justice Isaacs said there was e-mail evidence to support Leopold's assertion on the deposit's non-release, and also noted that he made a second agreement with Young on February 7, 2009. That involved the latter purchasing more land, with the $320,000 to be used as credit towards that deal.

"Cottis, by his affidavit filed February 6, 2013, took the position that he transferred $319,975 in escrow, which sum is payable to his order and returnable at his request," Justice Isaacs recorded.

He added that the attorney raised questions about title and the "validity" of the sales agreements, with "acrimonious" correspondence previously exchanged between Mr Cottis and Leopold's counsel.

"Cottis' position remained that the funds were held in escrow to his firm's order," Justice Isaacs found. "He offered his opinion that the first agreement is invalid on the basis that it was executed by [Leopold] and not by Andros Ocean Ridge Development Company.

"He also opined that the legal description is inadequate to create an enforceable agreement for sale in the absence of a proper survey plan attached. He concluded that the question of forfeiture of deposit could not arise since title was never adduced.

"Although Cottis obviously has no instructions to pursue the deposit, he concluded his affidavit by stating that all funds paid to Leopold should be returned to him forthwith."

In reaching his verdict, Senior Justice Isaacs said there was "no evidence" that Mr Cottis was retained to give a title opinion, and only sought to investigate this once Leopold initiated a Supreme Court action seeking a declaration that the $320,000 was a deposit to which he was entitled.

The Supreme Court judge also referred to an e-mail concerning the February 7, 2009, sales agreement in which Young said Cottis "had become an obstacle to closing the deal" and that the $320,000 was to be released to Leopold immediately.

Outlining the rationale for his verdict, Senior Justice Isaacs wrote: "The letter of September 21, 2007, from Cottis enclosing the deposit states that the funds were to be held to 'our order'. Cottis himself has no personal claim to the deposit.

"Even Cottis' notion that the funds did not belong to Young alone is not proven, and is therefore not a reason to make a demand for the return of the deposit. I note that Young undertook to replace these funds. It seems that Young gave the undertaking in order for the deposit to be released to Leopold in the face of resistance by Cottis to Young's instructions.

"In my judgment Cottis never had instructions, much less a claim, to the deposit and he bears no liability. The vendor and purchaser have always been in agreement that the deposit was forfeited."

Mr Cottis, in his appeal, argued that there was nothing for the courts to rule on as there was no dispute between Leopold and Young. The Court of Appeal, though, swiftly rejected this, finding that there was "a live dispute" as to whether the $320,000 held by Alexiou, Knowles & Company was a deposit under the first sales agreement.

Mr Cottis also challenged the Supreme Court's finding that he did not have the necessary standing to raise issues regarding Leopold's right to sell the Kemps Bay property, and entitlement to the deposit.

This was also shot down by the Court of Appeal, which said Mr Cottis had presented no evidence to overturn these findings. It also pointed out that, as neither purchaser nor vendor, the attorney was not a party to the transaction.

"After a consideration of the evidence before him, Justice Isaacs' holding, in my view, is unassailable and indeed was the only conclusion open to him," Dame Anita found.

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, represented Mr Cottis. Luther McDonald, of Alexiou, Knowles & Company, represented Leopold.