The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar and the Government are likely breathing a sigh of relief after the Supreme Court rejected SuperClubs Breezes work-stopping injunction bid, finding the $3.5 billion developer was at “greater risk of prejudice”.

Justice Milton Evans, in a March 6 ruling on the first issue raised in the two resorts’ ‘land swap’ dispute, found in favour of Baha Mar’s argument that imposing an injunction would be “extremely damaging” with its ‘soft opening’ now less than three weeks away.

He ruled that SuperClubs Breezes’ 50 per cent expansion, which its owner is alleging has been delayed by Baha Mar’s failure to fulfil the land swap terms, was “too remote” when compared to Baha Mar’s investment on the issue of damages flowing from any injunction.

And Justice Evans criticised both resorts for failing to bring their ‘Letter of Intent’ dispute to the Supreme Court earlier by seeking its help to resolve the various land title issues “before the matter became contentious”.

The ruling effectively clears the way for Baha Mar to proceed with the ‘race’ to complete construction and meet its March 27 opening target for three of its four resort brands - the Baha Mar Hotel Casino, and the SLS and Rosewood resorts. The Hyatt is understood to be opening in early May.

Apart from Baha Mar, the ruling is also a welcome boost for the developer’s projected 5,000 full-time hires, who will have jobs to go into, and the Government, which is relying heavily on the $3.5 billion project to drive an economic turnaround that will be felt by all.

Setting out the background to the dispute over the ‘Letter of Intent’, which sets out the terms for the land transfer arrangements between Baha Mar and SuperClubs Breezes, Justice Evans wrote: “The Cable Beach strip has long been famous for the sequential flow of hotels, which present a scenic view by day, and even more magnificently by night.

“The buildings present a harmonious landscape, and there is an image of co-operation between the businesses as they co-exist in their combined efforts to provide a tourism product for which the Bahamas has become world famous.

“Alas, things are not always as they appear from a casual glance.”

Justice Evans described the dispute between the two Cable Beach-based resorts as “a story of acrimony, and highlights difficulties presented by their efforts to co-exist”.

He acknowledged that it was “difficult to conceive” how Baha Mar “could have gotten off the ground” without the assistance of, and arrangements with, its resort neighbours such as the 400-room SuperClubs Breezes.

As previously reported by Tribune Business, central to the dispute over the 2011 Letter of Intent, and the various land swaps envisaged, is the 0.66 acre parcel upon which SuperClubs Breezes’ initial wastewater treatment plant stood.

This would have stood in the middle of Baha Mar’s centrepiece casino hotel had it remained, and the Letter of Intent pledged to swap this land for property of the same size, upon which Baha Mar has built SuperClubs Breezes a replacement plant at its expense.

The swap of other land parcels was also included in the Letter of Intent, which Justice Evans said contained promises by both sides that they would “proceed expeditiously to perform and take such steps to carry out their respective obligations under the agreement”.

SuperClubs Breezes initiated legal action on August 14, 2013, demanding that Baha Mar fulfil its side of the bargain, while claiming damages for alleged breaches.

It also sought injunctions to prevent Baha Mar, prior to a final trial and verdict, from allegedly “trespassing” on its property and “unlawfully dealing” with land subject to the Letter of Intent swaps.

John Issa, SuperClubs Breezes’ owner, in a supporting affidavit alleged that the resort’s planned expansion - which had been designed to open at the same time as Baha Mar - had been delayed because of the latter’s failure to complete the conveyances/lease changes contemplated in the Letter of Intent.

And, at the same time, Mr Issa alleged that Baha Mar was “continuing apace with its development” on land owned by SuperClubs Breezes, which had yet to be transferred to it.

Opposing this, Tracy Ferguson, Baha Mar’s associate general counsel, alleged that SuperClubs Breezes had “continuously placed unreasonable demands” on the developer, which delayed completion of the Letter of the Intent.

She warned that any injunction-imposed construction stoppage would result in “massive commercial and financial loss and damage” to Baha Mar, which was likely to be “many multiples” of SuperClubs Breezes’ assets and those of its owner.

Detailing the reasons for his decision, Justice Evans said the dispute centred around the two sides’ allegations concerning the other’s failure to fulfil, and complete, the Letter of Intent’s terms.

“I am surprised that neither party saw fit to file a Vendor and Purchaser summons to seek the court’s assistance in resolving the title issues before the matter became contentious,” Justice Evans said.

“The parties both blame each other for this lack of completion, and it seems obvious to me that a resolution as to who is to blame can only be determined at trial. To walk that road at this stage would not, in my view, be consistent with the application before me.”

Agreeing that there was a serious issue to be tried, Justice Evans said injunction decisions were guided by which party was likely to suffer the “least irremediable prejudice”.

And that party, he found, was Baha Mar. “In essence, the plaintiff [SuperClubs Breezes] complains of the defendants [Baha Mar] acting prematurely to activate the benefits of the Letter of Intent in their favour without providing to the plaintiff the benefits due to them under the agreement,” Justice Evans said.

“The real damage, they say, which flows from this is the plaintiff’s inability to proceed with its own planned project.

“In weighing this against the defendant’s [Baha Mar] assertion that construction of the project is on a timeline, and delays are costly, and to place a stop on construction would be extremely damaging. I am led to conclude that in this matter, the greater risk of prejudice lies with [Baha Mar].”

Justice Evans said Baha Mar had already “invested greatly financially in its project”, whereas SuperClubs Breezes had yet to begin its own.

And Baha Mar was “in a better position financially” to compensate SuperClubs Breezes for any effects flowing from the Supreme Court’s refusal to grant the injunction.