The Tribune

• Chub Cay challenges ‘free access’ ruling

• ‘Substantial implications’ for property law

• And winning homeowners want even more

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian resort developer yesterday moved to overturn a Supreme Court ruling that threatens to undermine the $100,000 “entry fee” business model for its private club by giving nearby homeowners free access to multiple amenities.

Chub Cay Realty, in papers filed with the Court of Appeal, is asserting that the June 8, 2022, ruling by Justice Indra Charles that effectively grants non-member homeowners and their guests - including potential vacation rental clients - “free use of the private club facilities” without paying a cent in membership fees or towards their upkeep.

The developer, which is owned by Texan billionaire George Bishop, is alleging that the verdict “is an abuse of the judge’s power to act judiciously” by giving the three Chub Cay homeowners who brought the claim “the benefit of the free use of the facilities of the exclusive club without any financial burden”.

Justice Charles described her ruling as “no doubt a ground-breaking judgment” for The Bahamas, as the action initiated by three homeowners - all non-members of the Chub Cay Club - raised “a novel question” as to whether a 2004 Grant of Easement gave them the right to access and use facilities regardless.

She ultimately found in favour of the trio - Richard and Pamela Escobar, Charles Vose and a corporate entity, Msairnsea LLC - by granting the declaration they desired, namely that they have the same access as that enjoyed by club members and hotel guests to the bar, restaurant, club, hotel, beach and common areas and pathways.

Chub Cay Realty, recognising that the ruling upends its business model by granting non-members free access to the private club’s facility, argued in its appeal filings: “This case has substantial implications for the Law of Easements and the Law of Property and Conveyance in The Bahamas, and raises important issues of public interest and policy....

“If for no other reason, the importance of this decision should be ventilated at the Court of Appeal as it sets new precedent by expanding and introducing a new species of recreational easements into Bahamian law.”

David Renaud, Chub Cay’s general manager, did not respond to Tribune Business voice and text messages seeking comment last night. However, the developer is far from alone in wanting to overturn the original verdict impacting the resort island located in the Berry Islands chain.

For the three homeowner themselves are also appealing Justice Charles’ decision, namely her refusal to include the club’s recreational and sporting facilities among the amenities they can access for free. She found that such access was “not contemplated” by the 2004 Grant of Easement, and excluded the swimming pool, golf course, tennis and squash courts from the facilities they can use for free.

And, in a sign the trio want all or nothing, their July 15, 2022, appeal is also bidding to overturn the Supreme Court’s finding that it “is not an unreasonable requirement” that they pay fees in return for using these facilities. They are arguing that the Grant of Easement gave them “a single comprehensive right to use a complex of facilities” including the sports and recreational amenities, and not just the bar, restaurant and others where they were given free access.

The homeowners are also arguing that Justice Charles failed to take into account that Chub Cay and its real estate “have long been marketed by its developer from time to time in promotional material as being a recreational resort, or that the developer agreed that its facilities would be available for public use in exchange for the Hotel Encouragement Act’s tax breaks and other incentives.

“Successively, for nearly 30 years and continuing, Chub Cay benefited under the statutory framework of the Hotels Encouragement Act intended to promote the development of hotels and resorts within The Bahamas by means of conferring tax concessions,” the homeowners’ appeal asserted.

“Further in exchange for duty-free concessions, the developer expressly agreed that the developer’s facilities and amenities would be ‘available to members of the general public’. Moreover, the fact of such facilities being open to the public renders them within the scope of facilities under the Grant of Easement which may be accessed and used by the plaintiffs as grantees.”

Chub Cay Realty, meanwhile, recognising the implications for itself and other Bahamas-based private members’ clubs with similar circumstances, is arguing that Justice Charles interpretation of the Grant of Easement “as too wide and vague”.

“The facilities of the private club are available for the exclusive use of members and their guests,” the developer said. “The judge’s interpretation allows non-members of the private club and their guests the free use of private club facilities...

“Furthermore, the judge, by expanding the use of recreational facilities to non-members under the guise of the facilities being a utility and benefit to the dominant tenement in their enjoyment of the land did not give any concern to the eligibility of persons who deliberately choose not to become a member of the club, bypassing the procedure and vetting requirements.”

Chub Cay Realty and Mr Bishop are thus urging the Court of Appeal to overturn Justice Charles’ verdict, and declare that the Grant of Easement does not give the homeowner to access and free use of its private members’ club facility. They are also seeking an injunction to stop them from “future interference and trespassing” on the private members’ club’s land.

The Grant of Easement was designed to pave the way for Chub Cay’s sale to Kaye Pearson’s investor group in 2005. It allowed the homeowner trio and other lot owners “to use that portion of the club and other facilities.. which are open to non-members of the club and to guests of the club (including without limiting the generality of the foregoing, the bar, restaurant, club, hotel, beach and common areas and pathways) in the manner in which the club is intended to be used”.

The Pearson group’s acquisition failed, and Mr Bishop acquired the Chub Cay resort development and club on July 25, 2014, purchasing it from Scotiabank (Bahamas) and removing it from receivership. The developer then executed a new declaration of covenants, easements and restrictions on June 30, 2019, but the three homeowners declined to sign-up to this.

In response, the developer wrote a July 5, 2019, letter saying access to the private members’ club would be limited to paying members and resort guests only. And it denied the trio use of the club and its facilities on the basis that agreeing to the 2019 declaration was mandatory.

This triggered the homeowners’ legal action seeking to determine whether the Grant of Easement gave them a right of free access to the facilities, and Justice Charles ruled that they cannot be forced to sign-up to the 2019 declaration. Carlson Shurland QC, of Shurland & Co, is representing the developer, while former attorney general, John Delaney QC, of Delaney Partners, is acting for the homeowners.