The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based investor has failed to recover the outstanding $7.5m they were allegedly owed for selling land to the now-abandoned Ritz-Carlton project on Rose Island.

Senior justice Deborah Fraser, in a March 25, 2025, dismissed the Lovejoy family’s claim for breach of contract against the development’s initial holding company and successors after she found they took too long to initiate legal action and thus became “statute-barred” under the Limitations Act. She also criticised the “ambiguity” of the claim, and “the insufficiency of the evidence” to back it.

The dispute dates back more than 18 years to when Laurie Lovejoy, and his Rose Island Beach and Harbour Club vehicle, agreed to sell Rose Island real estate to the development entity for the Ritz-Carlton project, RC Rose Island Hotel Company. The $22m purchase/sales price was split between a $14.5m cash payment, which he received, while the remaining $7.5m was to be paid by the issuance of Class D shares in the project.

The resort development was to be financed by an $80m loan from Lehman Brothers, which was secured on its Rose Island real estate. However, the “substantial profits” anticipated by Mr Lovejoy and his family never materialised due to the ‘credit crunch’, and the subsequent 2008-2009 financial crisis and recession, which saw Lehman Brothers collapse and enter liquidation.

The $80m loan, and Rose Island collateral security, ended up in the hands of Lehman Brothers’ liquidators and the Class D shares in the Ritz-Carlton project became “worthless” as a result. The loan, and rights to the collateral, were transferred and sold between various corporate entities before ultimately being acquired by Hotel Consult Inc, the investor seeking to redevelop the former Paradise Harbour Club into a resort.

The Central Bank of The Bahamas, in a May 2021 report, said Hotel Consult Inc planned to develop a hotel on the 107 acres it had acquired on Rose Island for just $10.3m - a price more than 50 percent less than what Mr Lovejoy and his company received. The project was to include a restaurant, bar, five bungalows, pool lounges, cabanas and the expansion of existing dock and marina, and employ 100 workers “at peak” and another 80 “incremental” staff.

Persons who have visited Rose Island recently said there is little evidence of significant new work happening. Tribune Business files reveal that the Ritz-Carlton project, whose developer was Miami-based GenCom Group, headed by real estate and resort developer, Karim Alibhai, was supposed to generate between 600-800 full-time jobs when completed, and open in 2009.

It was intended to feature 400 dwellings, including a luxury resort, private residences and a sheltered marina, and create 900 construction jobs. The initial Heads of Agreement was signed between Ritz-Carlton and its parent chain, Marriott, and the Government on February 13, 2006. A supplemental deal in April 2007 transferred Marriott’s 70 per cent stake in the development to GenCom Group.

Senior justice Fraser, recalling the involvement of Mr Lovejoy and his company, wrote in her ruling: “On October 20, 2006, the first claimant (Mr Lovejoy’s Rose Island Beach and Harbour Club) and the second defendant (RC Rose Island Hotel Company) entered into an agreement for sale.

“Under the terms of the agreement, the first claimant agreed to sell certain property, along with the associated development rights, to the second defendant for a total consideration of $14.5m in cash and $7.5m in Class D Shares. These Class D Shares were held by the second claimant.” That was Rose Island Beach and Harbour Club Development Ltd, another corporate entity of Mr Lovejoy’s.

“The second defendant sought to undertake the Ritz-Carlton project on the aforementioned property and requested a loan of $80m from Lehman Brothers Holdings. In consideration of providing the loan, Lehman Brothers Holdings required the execution of various securing documents,” senior justice Fraser noted.

“The claimants anticipated that the project would generate substantial profits. However, their expectations were disrupted by the onset of the financial crisis of 2008-2009. Facing financial difficulties, the second defendant sought to raise funds through a shareholder debt on September 2, 2008.

“On September 15, 2008, Lehman Brothers Holdings entered liquidation, triggering the calling in of the $80m loan extended to the second defendant by the liquidators. As a result, the Class D Shares held by the second claimant became worthless, leading to significant financial losses for the investors.”

Via a series of transactions, the debenture securing the $80m, “along with the associated development rights and other securities and collateral”, were in 2016 transferred to LRLA Rose Island Ltd, which the Lovejoys named as the first defendant in their claim.

“The first defendant, as an assignee of the rights of the debenture holder, Lehman Brothers Holdings, held a power of sale over the secured assets, including the Ritz-Carlton development property and the development rights transferred by the first claimant. The first defendant subsequently exercised its power of sale and transferred the property to Hotel Consult Inc,” senior justice Fraser wrote.

“The claimants contend that while they have received the $14.5m in cash, they have not yet received the $7.5m in Class D Shares. As a result, the claimants have initiated legal actions between 2009 and 2019, alleging breach of contract and seeking appropriate relief.

“Additionally, the second defendant was struck off the Companies Register on January 1, 2011, and has not been restored for the purposes of this matter or any other legal claim. In light of the second defendant’s removal, the claimants assert that the first defendant should be held liable for their losses.”

However, Christopher Jenkins KC and Sebastian Masnyk, the Lennox Paton attorneys representing LRLA Rose Island, urged the Supreme Court to reject the claim as their client could not be held liable for the actions of RC Rose Island Hotel Company.

The Lennox Paton duo also contended that the claim had been brought too late, and thus was “statute barred” and should be dismissed, arguing that the 2019 action was initiated more than 12 years after the alleged contract breach when the Limitation Act sets the limits at six years. They also said they were not a party to the contract in dispute.

Senior justice Fraser found for the defendants, ruling: “The first claimant entered into a contract with the second defendant, which was completed on October 20, 2006, whereby the property was conveyed from the first claimant to the second defendant. The claimants initiated an action on March 11, 2019.

“Under the Limitation Act, a claim for breach of contract must be brought within six years of the breach, specifically regarding the failure to issue the Class D Shares. It is reasonable to conclude that such consideration under the agreement for sale should have been issued prior to the actual conveyance of the property.

“Accordingly, it is my position that the limitation period for the breach began when the property was conveyed from the first claimant to the second defendant. As such, the claimants are barred by the limitation period.”

Senior justice Fraser also found the Lovejoys and their companies had “failed to adequately establish their causes of action, and have not provided sufficient evidence to support their assertions”, while LRLA Rose Island did “not owe any legal obligations” to them. As a result, she dismissed the claim.