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Privy Council Details 'Quiet' Model Fraud

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The fraudulent abuse of the Quieting Titles Act has jeopardised many Bahamians’ home ownership dreams, with the Privy Council this week detailing a model template for how this practice works.

With Arawak Homes confirmed as having superior documentary title to land in Sir Lynden Pindling Estates, which it acquired in 1983, the London-based court’s ruling exposes why homeowners, Dennis Dean and his wife, did not.

The Deans, who purchased their land in 1998 and 1999, based their ownership on the title certificate granted to Thaddeus Johnson on January 28, 1985. He claimed to “have been in open and undisturbed possession” of the property since 1935.”

The Deans acquired their property via three conveyances from Bahamas Variety Company, which gained its title from Thaddeus Johnson, and another conveyance from Johnson’s widow.

Yet the Privy Council noted that there were “three complications” with the Deans’ land acquisitions.

First, on January 29, 1985, just one day after he obtained his Certificate of Title, Thaddeus Johnson, conveyed all the property he had obtained via the Quieting Titles Act to another company, C.B. Bahamas, which recorded its title in the Registrar General’s Department.

Thus, with the land having been conveyed to C.B. Bahamas before it arrived on the scene, Bahamas Variety Company had nothing to convey to the Deans.

And, in an action involving Arawak Homes against Thaddeus Johnson and C.B. Bahamas, the Supreme Court ruled in 1986 that both Johnson’s original certificate of title was invalid, and that C.B. Bahamas was not a “bona fide purchaser” under the Quieting Titles Act.

“The judge had before him the record of the application to quieten the title and heard evidence from, among others, Mr Johnson,” the Privy Council found.

“He found that Mr Johnson, who was a man of humble means, had acted throughout the application on behalf of a Mr Robinson, who controlled CB. He held that CB could not rely on the certificate of title because Mr Johnson’s application was based on an outdated plan from 1926, which did not portray the existing circumstances on the ground.

“He held that that was a misrepresentation of a material kind which was covered by section 27 of the Quieting Titles Act. CB, through Mr Robinson and others, had knowledge of the fraud and also of Arawak’s interest in and development of the land. CB was not entitled to pursue its claim for trespass.....

“Mr Johnson had deliberately and fraudulently suppressed material information when he obtained the certificate of title.”

No ruling was made on the validity of Johnson’s certificate of title because he was not a party to the case, but the Court of Appeal backed the Supreme Court’s pronouncement on a model Quieting Titles Act scam.

It ruled in 1992 that “Mr Johnson was Mr Robinson’s cat’s paw, and that a survey of the disputed land in 1972, which showed that it was virgin bush, discredited Mr Johnson’s assertion that he had cultivated it for many years and gave further support to Arawak’s allegation of misrepresentation”.

The Johnson/C.B. Bahamas is a template for how the Quieting Titles Act is abused. A ‘patsy’ is usually put forward to claim some connection to the targeted property, with a certificate of title sought under this Act.

The ‘front man’ is usually being controlled by the scheme’s architects, who stay out of the picture until the title certificate is obtained.

Then, as in the Johnson case (it took just one day), the land is conveyed or ‘washed’ through a series of conveyances to a new owner, making it harder for the ownership trail to be detected.

Then, having obtained the title certificate by fraud (often failing to notify other interested parties, as required by the Act), those behind the scheme start selling property to unsuspecting Bahamian buyers - often for prices below market value.

Such practices were frequently employed by different groups of ‘con artists’ with respect to the Sir Lynden Pindling Estates land, using ‘front men’ to obtain fraudulent title certificates and on-selling property to buyers based on the “outdated, non-existent” 1926 plan.

Not only has this frustrated Arawak Homes, it has jeopardised home ownership for many Bahamians who thought their title was good. The ‘Dean case’ ruling will likely change that misconception in a hurry.

The Privy Council ruling also emphasises that when it comes to determining whether there is good title, it is very much a case of ‘buyer beware’. Thus purchasers need to hire attorneys to investigate conveyancing and Supreme Court documents.

Arawak Homes began its action against the Deans in 2002, seeking a declaration that they could not enter the disputed land, and that the property was theirs.

“Mr Dean claimed title to those plots by virtue of the conveyance from Thaddeus Johnson’s widow in 1999, and also a proprietary beneficial interest in the plots, as he claimed that Arawak had allowed him to spend $300,000 in building two duplexes without protest,” the Privy Council said.

“But at trial, Mr Dean’s counsel conceded that Arawak had the better title to the land, leaving for determination only the issue of proprietary estoppel.”

The Supreme Court “rejected Mr Dean’s evidence that he had developed the plots in the mistaken belief that he owned the land”, and found “he knew that he did not own that land, and that he built on the land when he knew that Arawak was successfully asserting its right of possession against others.”

This was backed by both the Court of Appeal and Privy Council, the latter of which rejected the five grounds advanced by the Deans to support their case.

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