The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The developer behind a distressed $30 million Paradise Island condominium project has lost his bid to overturn a Supreme Court order permitting CIBC FirstCaribbean International Bank (Bahamas) to sell it.

The Court of Appeal, in a November 27 ruling, found there was “ample fortification” for the Order given the threats by Peace Holdings, and its principal, Al Ballard, to launch legal proceedings against any Ocean Place purchaser.

The three appeal judges, via two different verdicts, backed the Supreme Court’s findings that the involvement of Mr Ballard and Peace Holdings in the sale process would “only serve to derail” it.

The judgment, at least for the moment, removes a major obstacle to efforts by CIBC FirstCaribbean International Bank (Bahamas) and the receivers, the KPMG accounting firm, to sell Ocean Place.

The nine-storey, 79 unit property dominates Paradise Island’s southern shoreline, its development having been initiated under the first Christie administration in 2006.

Tribune Business understands KPMG, on the bank’s behalf, is now aiming to move “as quickly as possible” to secure a buyer for Ocean Place and conclude a sale, being mindful of a possible appeal by Peace/Mr Ballard to the London-based Privy Council.

CIBC FirstCaribbean International Bank (Bahamas) had claimed the developer owed it $37.079 million in unpaid principal and interest, at the time it appointed KPMG as Ocean Place’s receiver in October 2012.

The advances to Peace and Mr Ballard were secured by a debenture covering Ocean Place’s real estate, with credit extended via a series of transactions between March 2006 and August 2012.

Following an initial $5.4 million advance, CIBC FirstCaribbean International Bank (Bahamas) provided further credit facilities worth $6 million, $7.1 million, $6.9 million and $750,000.

Peace and Mr Ballard “failed to properly service the debt”, sparking the receivership and series of, to-date, unsuccessful legal manoeveres by the developer in a bid to regain the property.

Justice Abdullah Conteh, in his written judgment, said the Supreme Court Order obtained by CIBC FirstCaribbean International Bank (Bahamas) “directed that the property be sold free and clear of any challenge” by Peace/Mr Ballard or another party.

“The force of the order was to confer an unimpeachable title on any purchaser of the property from the bank,” Justice Conteh said, noting that KPMG was “actively canvassing the sale” among potential buyers.

While Mr Ballard had sued CIBC FirstCaribbean International Bank (Bahamas) for alleged breaches of their agreement, and failing to provide adequate funding for Ocean Place, the bank sought a judgment on its behalf for $38.116 million in December 2013.

Justice Conteh noted that Peace/Mr Ballard were not challenging the Supreme Court’s ability to grant the sale Order, but rather its alleged failure to grant an adjournment because some ‘ninth hour information’ had been discovered. He described this as a “quibble”.

While the developer had “not engaged” the judge’s Order to sell Ocean Place, Justice Conteh said the key issue was whether the Supreme Court was right to do so given the case’s factual circumstances.

“There is, we find, ample fortification for the Judge’s Order for sale,” Justice Conteh wrote, given his finding that Mr Ballard “will not hesitate to threaten proceedings against any purchaser, given his conduct after the Court of Appeal decision”.

The Supreme Court had also found: “It seems a reasonable fear by the bank that the sale will be lost without the Order sought.

“As seen above, the purchaser has stated that it will not proceed without a court Order.”

Justice Conteh, noting that Mr Ballard and Peace’s challenge to the debenture’s validity had failed at both the Supreme Court and Court of Appeal, said the background to the Ocean Place dispute also supported the Order.

“The receivers who had been put in were continuing to operate Ocean Place, including managing, repairing and maintaining it and the common areas at great expense, while trying to market it and, from the evidence, the appellant [Peace] was threatening any sale by the receivers with litigation,” Justice Conteh said.

“In those exceptional circumstances, we think it was proper for the respondent to seek the assistance of the court, and for the learned judge to lend that assistance by the Order for sale he granted.”

Justice Adderley, in his verdict, said Peace and Mr Ballard had refused a proposal for both sides to agree a ‘consent order’, where in return for allowing the sale to proceed without challenge, the developer would have its claims against CIBC FirstCaribbean International Bank (Bahamas) preserved and converted to a monetary sum.

Justice Adderley added that the Supreme Court also found it was “utterly remote” that Mr Ballard’s claims against CIBC FirstCaribbean International Bank (Bahamas) for “misrepresentation, undue influence and economic duress” would succeed.

“He [the Supreme Court judge] reviewed the sales process, and concluded that the involvement of Peace in it would serve only to derail the sale,” Justice Adderley said.