The Tribune

By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

An Exuma developer has been given “one final chance” by the Court of Appeal to produce the subdivision approval necessary to resolve a disputed $944,192 real estate deal.

The appellate court, in a unanimous verdict, issued an Order giving February Point Resort Estates until end-May 2019 to show investor Malik Momin that it has met the Planning and Subdivision Act’s legal requirements and can close the transaction.

Should February Point fail to do so, appeal justice Milton Evans wrote that it would then have to return the $944,192 to Mr Momin together with interest - as well as his legal costs - following a dispute that hinged on the transition provisions contained in The Bahamas’ main planning law.

The Court of Appeal, in a written judgment issued on May 17, said the legal battle originated in Mr Malik’s February 18, 2008, decision to acquire Lot 36 in Elizabeth Harbour, Great Exuma, from February Point for $895,000.

The sales agreement provided that February Point would “retain rights and interest in the property” until the full price was received. While both parties agreed that Mr Malik had fulfilled his obligations by February 2013, a dispute emerged over whether February Point was able to provide good title to the property if it had not obtained subdivision approval under the Planning and Subdivision Act 2010.

Mr Malik demanded that the developer either produce proof of approval or refund the purchase price, leading to a March 15, 2018, hearing before Justice Indra Charles in the Supreme Court on the interpretation of the Planning and Subdivision Act’s transition provisions in section 62.

The Supreme Court found in February Point’s favour, with Justice Charles ruling the section was intended to protect real estate transactions entered into - but not closed - before the Planning and Subdivision Act came into force on January 15, 2011.

“The Act is clear and unambiguous, and provides that not only any agreement to convey or conveyance would not be null and void, but also that any person who obtained title to the lot within the subdivision shall not be prejudiced,” Justice Charles ruled.

She agreed with Candice Hepburn, February Point’s attorney, “that the intent of Parliament when enacting the Act was plain, and it would have been nonsensical or illogical for Parliament to preserve an agreement for sale under the Act but to thereafter consider a conveyance made pursuant to that agreement null and void”.

However, Christina Galanos, representing Mr Malik, argued before the Court of Appeal that the effect of section 62 was only that the February 18, 2008, sales agreement between her client and February Point remained valid and in effect.

She added that because February Point had failed to pass Mr Malik a conveyance to the property prior to the Planning and Subdivision Act coming into force, the developer was now required to obtain subdivision approval under the new law.

Ms Hepburn stuck to the arguments adopted by Justice Indra Charles in her judgment at the Supreme Court level, but Ms Galanos told the Court of Appeal that Parliament had shown its intent to deal specifically with land sales where there is no subdivision approval.

She argued “it is inconceivable that where there is an ambiguity, Parliament would prefer an interpretation of the Act which would validate a conveyance in the absence of subdivision approval and thereby defeat each and every purpose of the Act”.

The Court of Appeal, referring to the Private Roads and Sub-divisions (Out Islands) Act that was in effect when Mr Malik’s sales agreement was drawn up, said it was not unreasonable for buyers to demand proof of subdivision approval.

“It must be remembered that under the old Act and the new Act the vendor/developer has an obligation to obtain subdivision approval, and failure to do so constitutes a criminal offence. There has been no change in that regard,” Justice Evans wrote.

Noting that sales agreements could be completed, and subdivision approval obtained at a later date, he added: “It would be nonsensical to think that Parliament would make provision for a vendor who acts in breach of legislation and is thereby guilty of a criminal offence......

“The learned judge seems to have been beguiled by Ms Hepburn’s submission that it would have been illogical for Parliament to preserve an agreement for sale under the Act but to thereafter consider a conveyance made pursuant to that agreement null and void.

“However, it must be noted that Parliament’s primary intent is to ensure compliance with the law and to preserve regulatory control over the development of subdivisions. The validating of the agreements preserves the parties’ rights while at the same time ensuring that both parties comply with the law. There is nothing illogical about requiring persons to obey the laws enacted by Parliament where they still have an opportunity to do so.”

As a result, the Court of Appeal concluded: “In all the circumstances of this case we thought it reasonable to give the respondent [February Point] one final opportunity to provide the necessary subdivision approval so that the transaction could be completed.”