By NEIL HARTNELL
Tribune Business Editor
Old Bahama Bay’s condo owners could be exposed to a $42m-plus damages claim for alleged “tortuous interference” with the resort’s sale as part of the former Ginn project’s $2.8bn revival.
Amy Wilde, an executive with Lubert Adler, the Grand Bahama resort’s owner, said its attorneys had advised that the condo owners’ company, Island Ventures Resort & Club (IVRC), would be liable for the “inevitable financial losses” should Skyline Investments pull out of the deal to acquire the property.
Ms Wilde, in a December 20, 2018, affidavit filed with the Supreme Court, alleged that despite IVRC accepting Lubert Adler’s termination of its Old Bahama Bay lease as valid, it was refusing to vacate and deliver the free and clear possession that was needed to facilitate the resort’s sale to Toronto-based Skyline.
The Old Bahama Bay sale is part of Skyline Investments’ wider $42m deal to revive the former Ginn project, which received a significant boost on Christmas Eve after Supreme Court justice, Keith Thompson, signed an interim order declaring that IVRC’s lease was “null, void and of no effect” (see other article on Page 1B).
Ms Wilde, alleging that IVRC’s legal action was designed to block the sale, claimed: “The first defendant [Lubert Adler] has been advised by its lawyers that the plaintiff [IVRC] has interfered or is interfering with a third party contract, namely the sale of the property, to the extent it has a cause of action against it and can recover damages.
“The plaintiff is now, and has been well aware, of the impending sale of the property and is now - and has - acted in defiance of that fact, and has taken active measures to try and prevent the sale including going even so far as to issue this writ against” the Lubert Adler-owned corporate vehicle that holds Old Bahama Bay.
Besides Lubert Adler’s potential loss of the $20m purchase price from Skyline from an “aborted sale” of Old Bahama Bay, Ms Wilde said the US-based financier could also be liable for the $22m that Resorts Holdings Bahamas would miss out on should the Toronto-based developer withdraw from that element of its plans.
Resorts Holdings Bahamas is the Credit Suisse-led consortium of lenders which currently owns the 1,476 acres that formed the former Ginn project’s real estate component. Skyline needs to acquire this, plus Old Bahama Bay and the other 280 acres held by Lubert Adler, to fulfill its ambition of bringing that project back to life over a 10-year period and create 1,400 Bahamian jobs.
Ms Wilde, though, alleged that the true motive for IVRC’s actions was its fear that Lubert Adler’s repossession of Old Bahama Bay, and subsequent sale to Skyline, would bring to an end its ability to use revenues generated by the 72-slip marina and other resort amenities to finance the condo owners’ home ownership costs.
John MacDonald, IVRC’s president, had previously claimed that the lease termination and subsequent sale will be “unjust and inequitable” since it will essentially “give away for free” the business built up by the condo owners over the past six-and-a-half years of their resort lease.
Describing this as “misinformation”, Ms Wilde alleged that his claims “perhaps shed light on the plaintiff’s motivation. They have not been asked to give up a profitable business.
“The plaintiff’s shareholders are condominium owners,” she continued. “They have grown accustomed to using [Old Bahama Bay’s] assets to offset or finance their cost of second home ownership.
“Although the plaintiff’s shareholders are able to continue to operate their condominium units, the lease for [Old Bahama Bay’s] assets has now come to an end, as was clearly understood by both parties when they entered into the lease. The plaintiff is a tenant under a lease that has been brought to a lawful termination, which it has accepted.”
One source familiar with Lubert Adler’s position, speaking on condition of anonymity, told Tribune Business: “They [the condo owners] were using the marina revenues, perhaps the most viable part of the operation, to subsidise their home ownership and pay common area expenses. They had a gravy train going on and don’t want to give that up.”
Ms Wilde accused IVRC of “believing it can ignore the lawful terms of a lease and, indeed, its lawful termination simply because it feels it is entitled to”. Lennox Paton, IVRC’s attorneys, in an October 1, 2018, letter to Lubert Adler appeared to accept that the lease had been lawfully terminated at the second time of asking, and that December 6, 2018, was the date to vacate.
Meanwhile, much of Ms Wilde’s affidavit was spent rebutting previous assertions by Mr MacDonald in an affidavit which she branded as “replete with inaccuracies, errors and misstatements”.
In particular, she claimed that IVRC had provided no evidence to support its alleged $500,000 expenditure on Old Bahama Bay marina repairs, and the $1.6m allocated to Hurricane Matthew rebuilding.
Ms Wilde alleged that IVRC’s official financial reports provided to Lubert Adler showed just $325,061 of “capital repairs” over the two years to end-2017, while claiming that the condo owners were given $100,000 in “rent relief” to help finance such work.
She also contested IVRC’s Old Bahama Bay workforce figures, alleging it had told Lubert Adler some 41 employees were engaged as at June 2017 and that it may be including contractor staff to inflate this figure.
“Lubert Adler did carry out significant work that directly of indirectly benefited the resort property,” Ms Wilde claimed. Pegging this investment at a total $11.324m, she said it included $6m to upgrade power supply poles to West End; $2.651m on “back of house” and laundry facilities; and $1.206m to expand Grand Bahama Utility Company’s water supply.
A further $281,099 was spent on upgrading West End airport beyond that $11.324m, with Ms Wilde alleging that Old Bahama Bay’s condo owners only had access to the resort’s amenities at Lubert Adler’s discretion - meaning they had no contractual right to do so.