The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A local realtor has hailed his "victory for the Bahamian businessman", after the Supreme Court rejected a foreign developer's bid to bar him from operating at its multi-million dollar project.

James Malcolm told Tribune Business that Justice Ian Winder's Friday ruling against Schooner Bay Ventures, developer of the 220-acre South Abaco project that shares the same name, had "established my legitimate right to operate" at the development.

He was contacted by this newspaper after the Supreme Court refused to grant the Schooner Bay developer's application for an injunction that would have prevented Mr Malcolm and his company, Destination Schooner Bay (Bahamas), from engaging in real estate sales, property management and vacation rentals at the property.

Schooner Bay's US-based principals, Dr David Huber and Tina Gascoigne, had alleged that Mr Malcolm and Destination Schooner Bay (DSB) were in violation of a clause in the project's founding covenants that purportedly gave the developer an eight-year exclusivity on all real estate sales, property management and vacation rentals.

That exclusivity expires on March 22 this year, but Mr Malcolm and DSB countered that this provision violates both Schooner Bay Ventures' licence and Bahamian real estate law. They argued that Schooner Bay Ventures' developer's licence did not permit to it engage in real estate sales and property management - something that was subsequently confirmed to Tribune Business by Bahamas Real Estate Association (BREA) president, Christine Wallace-Whitfield.

Justice Winder, in rejecting the injunction bid, said Schooner Bay Ventures' had failed to even make out even "the low bar of a good arguable case".

He ruled that an injunction would interfere with Mr Malcolm's lawful right "to ply his trade" as a BREA-licensed broker and salesman, and his clients' ability to use and promote their homes as short-term vacation rentals.

Mr Malcolm told Tribune Business that the effect of Justice Winder's ruling was to confirm that Schooner Bay's covenants, especially the real estate 'exclusivity', "do not supersede Bahamian real estate laws".

"It's a victory for us for sure," he said of the judgment. "Justice Winder has effectively established my right to operate in Schooner Bay. It's good that after all these years of trying to stand my ground, and trying to support my legitimacy, the court has supported me in this.

"I'm glad to see the court has looked at the law, looked at the merits of each side, and ruled in favour of the Bahamian business. This is about the right of a Bahamian citizen to engage in activities he's licensed for under the law. We just want to have our right to operate established under the law."

Mr Malcolm said he and DSB meant no ill towards Schooner Bay Ventures, and suggested the developer's hostility towards him had backfired because it meant there was less sales and vacation rental activity at the south Abaco project, which in turn was hindering its development.

"We don't want to harm or hinder Schooner Bay in the progress of their development," he told Tribune Business. "My company was formed to increase the traffic and activity to the destination, which will spur more sales.

"It was a good day. It's a victory for Bahamian businesses. Bahamian businesses tend to get squashed by the bigger person, and this was a day for the little guy. All we're trying to do is create economic activity down there, rent homes and let the development progress.

"It's a victory for the Bahamian businessman; the legitimate, hard-working Bahamian businessman. That's all it's about."

Tribune Business previously exposed how Schooner Bay Ventures was seemingly violating the terms of its Crown Land licence from the Government, which covers the 100-acre tract on known as The Commons.

And this newspaper also revealed complaints about how the developer has been violating Bahamian real estate laws, particularly the Real Estate (Brokers and Salesman) Act, through running its own property sales, management and vacation rental business.

Foreign developers, under the Real Estate (Broker and Salesman) Act, can only sell and manage the real estate that they own. Once such property is sold to third-party buyers, the Act prevents them from engaging in re-sales of that real estate, and operating their own property management/vacation rental businesses.

In Schooner Bay's case, it has only sold lots to home buyers who were then responsible for vertical construction on their properties. Thus it cannot get involved in managing these homes and/or renting and leasing them out.

Justice Winder's ruling, which has been obtained by Tribune Business, discloses Schooner Bay Ventures' determination to completely shut down Mr Malcolm's business and drive him off the project.

The developer's July 14, 2016, summons sought damages for alleged "tortious interference and malice", and breaches of Schooner Bay's covenants, in addition to a 'permanent injunction' against DSB conducting business without a 'Business Licence' issued by the project's Board.

Schooner Bay also sought to bar Mr Malcolm from listing or advertising home sales or rentals, and brokering such activities, until its March 22, 2018, exclusivity expired.

The developer then sought a May 19, 2017, injunction that sought to take the bar on Mr Malcolm and DSB a step further, prohibiting them from taking photos/images of homes and common areas in Schooner Bay and/or posting promotional videos on the Internet.

Ms Gascoigne, Schooner Bay's in-house attorney, alleged that as a Schooner Bay homeowner himself, Mr Malcolm had breached the project's Declaration of Covenants and the clause granting the developer an eight-year exclusivity on all real estate activity generated at the project.

Mr Malcolm's defence, though, pointed out that this exclusivity violated both Schooner Bay Ventures' licence from BREA and the Real Estate (Broker and Salesman) Act. "The plaintiff is not licensed under the Act to engage in the practice of real estate business in the capacity of a real estate broker or a real estate salesman," he said. "The plaintiff is operating in breach of the aforesaid statutory provisions."

Mr Malcolm, a former Schooner Bay Ventures employee, alleged that he received permission from the project's town manager on October 1, 2013, to engage in property and rental management.

However, relations between the two sides soured after he and several homeowner clients discussed advertising their properties in Coastal Living Magazine. While in the middle of securing this, Mr Malcolm and DSB found out that Schooner Bay Ventures had contacted the magazine and expressed concern he was violating the project's covenants.

The magazine got 'cold feet', and subsequently advised Mr Malcolm that it would not proceed with advertising his clients' properties until the dispute with Schooner Bay Ventures was resolved and it could move forward "without any risk".

DSB and the homeowners subsequently initiated their own legal action against Schooner Bay Ventures, which is due to go to trial this year. Mr Malcolm, though, alleged that just one month after they filed their action, the developer filed its injunction bid against himself, despite it raising "the same questions of law and fact" as the original action.

Describing Schooner Bay Ventures' claims as "wholly unmeritorious", Mr Malcolm refuted each one in turn, arguing that it was the developer who had interfered with and "made disparaging and negative remarks" about his business - not the other way around.

"The plaintiff, whether through its employees, agents or servants, has harassed me as a means of trying to force me to stop operating at Schooner Bay," Mr Malcolm alleged.

"For example, sales officer and security guards of the plaintiff often interfere with people renting or seeking to rent homes at Schooner Bay, either through myself or [DSB].

"Also, the security guards often inform my clients that they are prohibited from taking photos of properties at Schooner Bay when in fact they are allowed to do so."

Justice Winder, in his verdict, said Schooner Bay Ventures were interpreting the 'eight-year exclusivity' clause as meaning "a restriction on all lot owners from engaging real estate businesses in the community".

Mr Malcolm, though, relied upon both his approval letter from Schooner Bay's town manager and his rights as a licensed real estate salesman under Bahamian law.

Justice Winder found that while the permission granted to Mr Malcolm and DSB had been revoked, "I am not satisfied that there appears to be any prohibition with respect to most of the activities complained of [by the developer".

He added: "There also does not appear to be any exclusivity in the plaintiff to perform these activities.... Property owners in a community such as Schooner Bay (or any other subdivision for that matter) have rights over the common areas of the development to use them along with their guests, to take photographs whilst in these areas, and to allow their visitors and workmen to access their property using these common areas.

"Additionally, these homeowners have an expectation of using and marketing their own property for short-term rentals."

Justice Winder only forbade Mr Malcolm from using Schooner Bay's trademarks or promoting himself as the "only authorised agent" for the development - two things he has not been doing.