The Tribune

• Financier claims rooms shrunk 60% from original 1,600

• But fight with Canadian pension fund owner remains live

• Alleges Gov’t holding up Treasure Cay over South Ocean

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A controversial Austrian investor says he has cut 60 percent of planned rooms from his proposed South Ocean redevelopment to “accommodate Albany” even though the property remains entangled in litigation he initiated.

Dr Mirko Kovats, a Lyford Cay homeowner and Bahamas permanent resident, is alleging that members of the Davis administration are linking the dispute over South Ocean - the 384-acre tract in southwestern New Providence that is one of the island’s few remaining sites for major resort development - with his efforts to acquire Abaco’s Treasure Cay project (see other article on Page 1B).

Asserting that the two projects are not connected, the Austrian implied that the Davis administration had refused to grant him approval for Treasure Cay’s purchase as a means to exert leverage over him with respect to South Ocean and advance the Albany development’s interests over his.

It is unclear how Dr Kovats can be drawing up development plans for South Ocean when he is still embroiled in a Supreme Court legal battle with the current owner over his efforts to acquire it. The Austrian and his Bahamas Island Consortium vehicle initiated action against the Canadian Commercial Workers Industry Pension Plan (CCWIPP), and its IF Propco Holdings (Ontario) 39 Ltd vehicle, in 2020 in a bid to force it to close the sale with him.

Dr Kovats is understood to be arguing that CCWIPP and its investment vehicle have a binding sales agreement with himself, which they broke in a “breach of contract”, and that they should be forced by the Supreme Court to complete the 384-acre tract’s sale to him. 

The Canadian pension fund, which took over South Ocean after Ron Kelly defaulted on his loan repayments, has been seeking to exit its last remaining Bahamas resort investment for almost two decades. Viewing the 2014 deal with Dr Kovats as having fallen through, CCWIPP subsequently agreed to sell the property to the adjacent Albany developers, who include Lyford Cay-based billionaire Joe Lewis, golfers Ernie Els and Tiger Woods, and singer Justin Timberlake.

The Austrian’s legal action, though, has halted Albany’s purchase and forced the high-end southwestern New Providence residential community to put redevelopment plans for its South Ocean neighbour on ice. This newspaper, though, was told that Albany and its principals have not walked away from the deal, and are instead watching and waiting to see how the legal battle between Dr Kovats and the pension fund plays out.

“Albany has agreed to sit back and wait and hang in there,” one source, speaking on condition of anonymity, told Tribune Business. “They’re confident [CCWIPP] will win this action and get rid of them.” Dr Kovats, in legal filings, acknowledged South Ocean was “another property dispute in which I am involved” in addition to Treasure Cay.

“In June-July 2014, the Bahamas Island Consortium agreed to purchase the South Ocean property from I.F. Propco Holdings (Ontario) Ltd, a Bahamian company owned by the Canadian Commercial Workers Industry Pension Plan of Canada. The pension plan reneged on this agreement in August 2014,” Mr Kovats alleged in documents seen by this newspaper.

“I accordingly filed suit in The Bahamas against I.F. Propco Holdings (Ontario) 39 Ltd and the trustees of the pension fund to enforce our agreement and for damages. An appraisal of the South Ocean property valued it at nearly $2.7bn. This valuation was informed by a 2014 CBRE offering memorandum for the South Ocean property. 

“The pension fund moved to strike out the lawsuit, which I understand is similar to a motion to dismiss in US courts. That application was denied, and the lawsuit is proceeding.” Dr Kovats, though, alleged that South Ocean and the related litigation was frequently raised as an issue in meetings with the Prime Minister, Cabinet ministers and other officials earlier this year when he sought to move his Treasure Cay acquisition through to approval.

He asserted that one March 3, 2022, meeting with Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, and Phylicia Hanna-Woods, the Bahamas Investment Authority (BIA), “had little, if anything, to do with Treasure Cay but rather the scaled back (again to accommodate Albany) project at South Ocean and the unconnected ongoing litigation against the Canadian pension fund...

“[Attorney] Gregory Cottis explained in detail both Dr Kovats’ historical ownership of approximately 1,100 feet of beachfront in between Albany and the Canadian pension fund property, and also the background and current status of the litigation involving the Canadian pension fund.” Paula Carrillo, director of Marriott International for the Caribbean and Latin American region, was said to have been present at one of these encounters.

“The Government was aware of my dispute with the pension fund regarding the South Ocean property,” Dr Kovats alleged. “I discussed my plans to develop the South Ocean property with government officials in September 2021 and February 2022.

“In June 2022, at the behest of the Government, I submitted plans to potentially scale back the size of the South Ocean property development from the 1,600 rooms I had envisioned to 640 rooms in order to accommodate the Albany development.

“I believe that members of the Government have, in part, linked the South Ocean property dispute with that over Treasure Cay. These two issues are not related; the developments are taking place on different Bahamian islands and involve different sellers.

“Nonetheless, my approval from the Bahamas Investment Authority (BIA) for the Central Bank has been held up while I am forced to address issues related to the South Ocean property and make revisions to it so that other development projects such as Albany can be accommodated.”

CCWIPP, represented by Leif Farquharson, the Graham, Thompson & Co attorney and partner, last year sought to persuade the Supreme Court that Dr Kovats’ action should be struck out and dismissed on the basis that it was “frivolous, vexatious and amounts to an abuse of the process of the court” because the two sides had never signed a binding sales agreement.

The two sides, via an exchange of e-mails between attorneys, had by early July 2014 agreed a $70.5m purchase price for South Ocean. However, it is unclear if a binding sales deal was ever signed. Acting justice Tara Cooper-Burnside, in a January 2022 verdict, said that while Mr Farquharson’s arguments were “compelling, this is not a clear and obvious case such that the plaintiffs’ writ and statement of claim should be struck out”.

“I find that this action is one which should not be resolved in a summary fashion without the benefit of the discovery and oral evidence tested by cross-examination,” she ruled. “I therefore decline to exercise the court’s discretion to strike out the plaintiffs’ writ and statement of claim, and dismiss the summons with costs to be taxed if not agreed.”