The Tribune

• President sides strongly with Toby Smith

• Finds ‘binding’ deal but ditched for RCCL

• However, court majority finds for the Gov’t 

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian entrepreneur seeking to restore Paradise Island’s lighthouse has split the Court of Appeal over his long-running Crown Land lease battle with the Government.

Sir Michael Barnett, the court’s president, on Friday sided strongly with Toby Smith and his Paradise Island Lighthouse and Beach Club company by finding that “there was a binding agreement” for him to lease a total five acres for development of a beach break-type destination.

And the Court of Appeal’s most senior judge, asserting that he would order “specific performance of the lease” by the Government, also found that the latter did not sign the agreement with Mr Smith because it “determined that it had found a better deal” - namely Royal Caribbean Cruise Lines’ Royal Beach Club project, which itself wanted to lease three of the same acres sought by the Bahamian entrepreneur.

However, Sir Michael’s dissenting verdict did not prove decisive, as his two fellow justices on the three-strong Court of Appeal panel rendered the majority decision in favour of the Government by finding the reverse - that no valid, legally binding lease agreement was in place.

Appeal justices Gregory Smith and Michael Turner upheld the original Supreme Court verdict by Sir Ian Winder and said they saw no reason to overrule, or interfere with, the Chief Justice’s analysis of the case or his legal conclusions.

Toby Smith declined to comment on the Court of Appeal verdict, or its implications for his long-standing battle with both the Government and Royal Caribbean, when contacted by Tribune Business yesterday. However, while doubtless a setback in that it represents a second legal reversal, the fact it was not a unanimous Court of Appeal decision may yet keep him in the fight.

The Bahamian entrepreneur now has 20 days in which to decide whether to seek permission for an appeal to the London-based Privy Council, the highest court in the Bahamian judicial system. Sir Michael’s status, and strength of his dissenting opinion, may well pave the way for such an appeal given that the Privy Council typically only hears cases that raise key legal issues or matters of public interest/importance.

The Davis administration previously requested that Toby Smith “reapply” for the necessary government permits and approvals so that his project can proceed after he lost the original Supreme Court case. However, little is likely to change until it is known whether the Privy Council will hear an appeal.

Appeal justice Smith, writing the majority verdict, said the dispute centred on a 21-year lease that the then-Minnis administration allegedly granted Toby Smith for the use of two Crown Land parcels - one two acres in size, the other three - on the western end of Paradise Island in the Colonial Beach area.

Noting that the initial application was made more than a decade ago in 2012, appeal justice Smith added that some six years later the Bahamas Investment Authority (BIA), via a May 23, 2018, letter informed Toby Smith that his $2m beach club project had been approved. However, rather than the 17 acres initially sought, the Crown Land lease was to cover just five.

Then, on January 7, 2020, Richard Hardy, acting director of the Department of Lands and Surveys, sent Toby Smith and his company a letter headlined “approval for Crown Land lease”. This covered a two and three-acre parcel, respectively, with the first adjacent to the lighthouse at Paradise Island’s western end and the other for the ‘beach break’ destination.

The letter contained instructions on how the attached lease documents were to be signed, dated, sealed and notarised, then returned to the Department of Lands and Surveys. Once the minister responsible for Crown Lands, who was then-prime minister Dr Hubert Minnis, signed a copy of the lease was to be returned to Toby Smith.

The Bahamian entrepreneur signed the lease forwarded by Mr Hardy, and returned it to the Government for execution two days later on January 9, 2020. Dr Minnis, though, did not sign the lease on the Government’s behalf as it emerged that Royal Caribbean had rival designs on the three-acre Crown Land parcel for its own Royal Beach Club project.

Toby Smith, aware of the competing cruise line interest, wrote to Dr Minnis on February 12, 2020, to voice growing concern over the situation. “As you are aware, I have been requesting a meeting with you for the past more than two years,” Mr Smith wrote. “Unfortunately, I have been reduced only being able to chat with you briefly on your way to the House of Assembly and Cabinet.

“I would appreciate to have a formal meeting with you as is afforded to others. In such a chats (sic), in the past and today, you advised me that the land that I am asking for in the Crown Land lease would not be compromised with ‘Carnival, Royal Caribbean Cruise Lines or any other cruise company’.”

Toby Smith added that Dr Minnis had referred him to Joshua Sears, his senior policy adviser, on “several occasions” but the latter had provied no update on the lease “other than it awaits your signature”. Clearly anxious, the entrepreneur requested that the Government provide him with a “comfort letter” to give certainty and confirm that all terms in the lease, as set out in Mr Hardy’s letter, “remain a binding agreement”.

“You mentioned today that my ‘land matter will be dealt with at the same time that you deal with Royal Caribbean Cruise Lines’ land matter on March 2, 2020,” Mr Smith told Dr Minnis.

“As you are aware, my application is almost eight years in the making. I have patiently waited for a favourable outcome so I am rather surprised that my lease is now somehow commingled with a foreign party’s expression of interest that is only recent.

“Further, I understand directly from Royal Caribbean Cruise Lines’ legal counsel that they have applied for the whole area of Crown Land situated on the western portion of Paradise Island, which wishes to encompass the land that I have applied for and contained within the Crown Land lease agreement. This has me deeply concerned......

“We are not about to be marginalised by a large cruise ship company when we have invested eight years and are a 100 percent Bahamian-owned and operated company.” However, Mr Smith met with then-attorney general Carl Bethel KC, Candia Ferguson, then director of investments at the BIA, and Mr Sears on February 27, 2020, to be told he had no binding Crown Land lease agreement.

This triggered Toby Smith’s legal action. However, appeal justice Smith said he could “find no fault with this objective analysis” of Mr Hardy’s letter by the Chief Justice. He found that it showed the lease transaction had not been completed, as it made no mention of rental payments and the first year’s cheque was not attached to the return.

And Sir Ian said Toby Smith’s request for a “comfort letter” effectively “betrays [his] own view that the document was subject to execution by the minister” - the position always taken by the Government. Analysing all this, appeal justice Smith said he could find no fault with the Chief Justice’s assessment.

“I therefore am of the view that there was no agreement for a lease as between Paradise and the Minister responsible for Crown Lands,” he wrote, also agreeing with the Government’s argument that the absence of a ministerial signature and seal meant the lease was invalid under the Conveyancing and Law of Property Act.

“On the facts as found by the trial judge, Mr Smith had no expectation that there was a binding agreement until the minister signed the documents (or at the very least gave him a ‘comfort letter’ as he requested,” appeal justice Smith said, gaining backing from appeal justice Turner.

“It would, in my view, be untenable for the contrary to be true, especially in The Bahamas. Namely, that the Crown could divest itself of limited Crown Lands other than by the deliberate and formal granting of a lease.

“From a government perspective, it could hardly be argued that a present or prior government should be bound by the acts of its alleged ‘agents’ when they may not have any knowledge of or control over the acts of such agents. The requirement of direct ministerial control over the disposition of scarce Crown Lands seems imperative in the context of The Bahamas.”

Sir Michael, though, disagreed. Describing Mr Hardy’s letter as being of “major importance”, the Court of Appeal president said the letter was headlined “approval for Crown lease” and did not say or suggest there were any matters left to be agreed between the parties.

“In my judgment, the critical question in this appeal is whether the letter of January 2020 evidenced a binding agreement between the appellant and the minister for the lease of five acres of land on Paradise Island,” Sir Michael wrote. “The Chief Justice formed the view that there was no concluded agreement.

“It is difficult to see how it can be said that there was no concluded agreement. The lease sent on January 7, 2020, had been prepared by the respondent’s [Attorney General’s] lawyers on the respondent’s instructions. There was nothing further to be negotiated and agreed....

“The document reflecting the terms of the agreement was sent by the respondent to the appellant for signature. All that was left was for the respondent to sign and seal the lease. He did not do so because the Government determined that it had found a better deal.”

Finding that everything revolved around Mr Hardy’s letter, Sir Michael added: “There is no suggestion that there were any terms not yet agreed or which required further discussions. The negotiations were complete and the terms of the agreement were incorporated in the lease prepared by the respondent and sent by the respondent to the appellant for execution.

“If the lease did not represent the terms of the agreement, the respondent would not have sent it to the appellant for execution by it and state that upon its return it would be executed by the minister and a counterpart sent by the minister to the appellant for safekeeping. That is completely inconsistent with a continuing or ongoing negotiation as pleaded” in the Government’s defence.

Going further, Sir Michael concluded: “With respect, the suggestion that a government cannot be bound by actions of its alleged ‘agents’ lacks credulity. It is inconceivable that the director of lands and surveys would obtain a lease from the Attorney General’s Office setting out the terms of a lease and send it to the appellant without the knowledge and consent of his minister.

“This is against the background that the correspondence establishes that there was an agreement in principle to give a five-year lease, as is evidenced from the Memorandum of Understanding. In my judgment, there was a binding agreement and I would allow the appeal. I would order specific performance of the lease which was sent with the letter of January 7, 2020.”