Settles within 24 hours of losing verdict
Chief Justice brands Copperfield 'evasive'
Perry, Brave gave exemption 'understanding'
A world-renowned magician/illusionist paid $2.235m in outstanding real property taxes to the Government within 24 hours of the Chief Justice branding him "evasive" in a verdict that found the monies were owing.
Sir Ian Winder found that David Copperfield, once described by Forbes magazine as the most commercially successful magician in world history, and his Imagine Nation Company Inc owed tax arrears for the period 2007-2014 on two Exuma cays that formed part of his Musha Cay purchase in 2006.
During his trial testimony, Mr Copperfield alleged that he had been given an "understanding" by both former prime minister, Perry Christie, and now-prime minister, Philip Davis KC, that property tax exemptions under the Hotels Encouragement Act had been extended to the two cays in question - Rudder Cut Cay and Little Lansing Cay - but called neither man as witnesses to support his case.
Gail Lockhart-Charles KC, attorney for Mr Copperfield's Imagine Nation Company Inc, in a statement to Tribune Business confirmed that her client had paid the outstanding real property tax arrears and associated surcharges/penalties to the Treasurer within one day of Sir Ian's verdict on June 8, 2023.
"Imagine Nation Company Inc developed a spectacular multi-Island hotel resort known as the Islands of Copperfield Bay on four islands that were purchased in 2006," she confirmed. "A question arose as to whether all four islands were included in the concessions under the Hotels Encouragement Act.
"The court found that the concessions applied to only one island until the agreement was amended. Once the ruling was handed down by the court determining the issue, Imagine Nation paid the full amount of the judgment the next day. Imagine Nation has spent millions of dollars developing the hotel resort and it is currently spending millions of dollars in upgrading and enhancing the staff facilities and accommodations on the Island.
"The hotel has contributed extensively to the Bahamian economy, offering employment and housing for a multitude of Bahamian employees, and The Bahamas has been the beneficiary of a constant stream of favourable publicity in the international media as a result of the spectacular resort that Imagine Nation has created," Mrs Lockhart-Charles continued.
"Mr Copperfield has also collaborated with the Bahamas Ministry of Tourism to promote The Bahamas at the highest levels including a commercial that played during the Super Bowl." The verdict, and subsequent payment, come at a time when the Government is seeking to crackdown on real property tax arrears owed by foreigners and businesses. Some $461m was said to be owed by these two categories, including $226m by foreign property owners.
There is no suggestion that Mr Copperfield was deliberately seeking to avoid paying taxes, and the fact the sum due was fully paid within 24 hours indicates he was awaiting the Supreme Court's verdict to fully clarify and settle the matter.
The magician/illusionist previously defeated the Government's bid to obtain a summary judgment against his company over the outstanding real property taxes in late 2019, but was less successful with Sir Ian's substantive ruling last week. The Chief Justice, in his earlier ruling, had warned that Mr Copperfield faced a "hard road" with his case and so it ultimately proved.
Last week's verdict traced the dispute's origins to the acquisition of Musha Cay, together with Rudder Cut Cay, Little Lansing Cay and Big Lansing Cay, from John Melk, co-founder of the Blockbuster video chain, and his wife in 2006. The four cays now form the hotel resort known as the Islands of Copperfield Bay.
The original Hotels Encouragement Act agreement, secured by the Melks on September 9, 1996, provided tax breaks - including real property tax exemptions - for construction and operations at the Musha Cay Resort only. The other three cays were not included, and the Melks paid real property tax on all three - including their "one-half interest" in Big Lansing Cay - up until the time they sold to Imagine Nation Inc.
The latter inherited the 1996 Hotels Encouragement Act agreement by virtue of its acquisition. Following the purchase, the Treasurer then contacted Mr Copperfield's company requesting that it submit the real property tax declarations for the three islands other than Musha Cay and pay the due taxes.
Imagine Nation Inc was advised three times by the then-director of investments, via letters written on July 19, August 21 and September 11 of 2007, that the Hotels Encouragement Act's tax exemptions did not cover the other three islands and that the Government would not permit the duty-free importation of fuel or real property tax breaks for the other three islands.
The three letters were all sent to Imagine Nation Inc's then-attorney, Richard Lightbourn, the former FNM MP and McKinney, Bancroft & Hughes partner. Moving forward eight years, the Treasurer in 2015 issued two certificates determining $1.935m in property tax was due on Rudder Cut Cay and $96,515 on Little Lansing Cay. It later that year initiated legal action, demanding $2.032m in real property tax and surcharges plus a 10 percent penalty of $203,179.
Shorty thereafter, the Government and Imagine Nation clarified the situation going forward by entering into a new Hotels Encouragement Act agreement on February 24, 2016, which extended real property tax relief and other tax breaks to the other three islands besides Musha Cay. However, this did not eliminate the property tax liabilities that Mr Copperfield's company had built up prior to that date.
Imagine Nation, in its defence, said it had undertaken at the Government's request "the considerable task of cleaning up Rudder Cut Cay and making it safe" by removing "many tons of waste and dangerous toxic debris, including chemicals, abandoned and corroded machinery and vehicles, and dilapidated, dangerous and uninhabitable buildings" based on the understanding that the concessions and exemptions would be extended beyond Musha Cay.
Pointing to the $20m investment by Mr Copperfield and his companies in upgrading the cays, and the magician donating his name, brand and time, plus the Islands at Copperfield Bay, to promoting The Bahamas as a tourism mecca, Imagine Nation argued that all the islands were exempt from real property tax as per the 1996 agreement or, in the alternative, it was "inequitable" for the taxes to be levied.
Mr Copperfield was subject to cross-examination at trial, and Sir Ian ruled: "In as much as Imagine relies on an understanding by Mr Copperfield that the acquisition of Rudder Cut Cay and Little Lansing Cay would be afforded exemptions either at the time of the purchase or at the time of the amended Hotels Encouragement Act, I did not accept his evidence.
"Having seen and observed Mr Copperfield, I was not satisfied that, on balance, he properly recollected conversations on this issue but, rather, he perhaps perceived that he would receive the exemptions based on his plans for the island. He admitted on oath that his recollection with respect to certain key dates and events were 'foggy'.
"When asked about certain key facts he became evasive, and asked to rely on what was written in his witness statement." Sir Ian noted that, when asked if the Government had agreed in writing to extend real property tax exemptions to Rudder Cut Cay and Little Lansing Cay, Mr Copperfield replied: "I wish I could tell you for sure. My mind is kind of foggy....."
When asked whether he developed his "understanding" after the purchase, or when the deal was in motion, he again replied: "Again, not clear. A little foggy about the date and times." Sir Ian wrote: "Copperfield maintained that he developed this understanding from former prime minister Perry Christie and the [then] deputy prime minister Philip Davis, but made no effort to call either of them as witnesses."
Sir Ian noted that it was only three years after the Government told Imagine Nation that no property tax exemptions were granted to the other three islands that its then-attorney, Mr Lightbourn, wrote to the Bahamas Investment Authority (BIA) on June 21, 2010, mentioning the "understanding" referred to by Mr Copperfield.
He also noted that the Hotels Encouragement Act and its tax breaks do not apply retroactively, and Mr Copperfield and Imagine Nation never requested that this happen.