The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The two companies that hold the former Ginn project’s real estate assets have vehemently rejected a Supreme Court judge’s findings that they “do not come with clean hands” in their challenge to the sale of 1,143 acres over almost $10m in allegedly unpaid tax arrears.

Michael Scott KC, attorney for LRA-OBB Ltd and Resort Holdings, told Tribune Business that Justice Franklyn Williams’ July 31, 2026, decision refusing to give his clients permission to launch Judicial Review proceedings against the Department of Inland Revenue’s (DIR) bid to sell the 1,143 acre parcel bore little resemblance to the hearing or application he made.

Justice Williams, in his verdict, found that Resort Holdings and LRA-OBB Ltd “do no come with clean hands” because they had failed to both object to the DIR’s property tax assessment notices - and comply with their tax-paying obligations - for a whole decade prior to initiating legal proceedings to block the tax authority’s bid, on the Treasurer’s behalf, to close a $26m sale of that land parcel to Coakley International as part of the latter’s ambitious $6.5bn West End development plans.

But Mr Scott, responding on behalf of his clients to the “clean hands” verdict, told this newspaper: “We definitely and without hesitation reject all of that, deny all of that. None of that was raised at the hearing. It must relate to a different hearing because none of that was canvassed at the hearing.”

Justice Williams’ verdict was released just as Resort Holdings and LRA-OBB, the latter of which has ‘LRA’ standing for Lubert Adler, the US investment bank that financed the original Ginn project, last week made their fourth attempt in less than 18 months to reclaim control of the Old Bahama Bay (OBB) resort from Island Ventures Resort and Club (IVRC), the entity formed by the 73 condo owners to manage the property.

Mr Scott confirmed late last week that the takeover move was at “a bit of an impasse”. However, there are likely to be little if any practical consequences flowing from Justice Williams’ verdict as the Attorney General’s Office, on the DIR and Treasurer’s behalf, had earlier this year agreed to give an undertaking that the Coakley International deal would halt and not proceed to closing.

This was because Resort Holdings and LRA-OBB have a live case before the Tax Appeal Commission challenging the DIR’s valuation of the 1,143-acre parcel and, by extension, the amount of real property tax that should be paid on it annually. The hearing has concluded, and the Commission’s decision is now awaited, with much hinging on the outcome as to whether the Coakley International deal can proceed, notwithstanding that Resort Holdings and LRA-OBB will likely appeal a reversal.

Justice Williams had even signed a Supreme Court Order, March 12, 2026, giving effect to the undertaking. This stipulates the Department of Inland Revenue and the Bahamas Treasurer take no further steps to close the deal with Coakley International, which is pledging to unleash a development creating 2,800 construction jobs and 6,000 permanent posts for Bahamians, until the challenge LRA-OBB and Resorts Holdings are mounting over the unpaid tax is resolved.

The Order, which has been seen by this newspaper, mandates that the Department of Inland Revenue and Treasurer “do respectfully undertake not to complete the sale of the property…. until after the completion of the appeal proceedings lodged” by the two rival ownership claimants and their managing agent, Reunion Cay Island Resort LLC, with the Tax Appeal Commission.

However, the contents of Justice Williams’ verdict are likely to make uncomfortable reading for LRA-OBB and Resort Holdings. He asserted that they failed to make “full and frank disclosure” that they paid $25.731m for the 1,143-acre tract’s transfer to their ownership as part of a Judicial Review action challenging the DIR’s attempt to sell the property as opposed to the tax authority’s valuation.

The two corporate owners had sought an injunction blocking the property’s sale while the Tax Appeal Commission process was ongoing, plus a Supreme Court ruling to “quash altogether the decision for sale of the property”. They also sought declarations that the DIR and treasurer had committed “statutory non-compliance”, that they had “breached the legitimate expectation that no bids for sale would be had and accepted” during negotiations, and there was a failure of due process.

Justice William, though, said the Real Property Tax Act requires all aggrieved taxpayers to submit a challenge within 30 days of receiving their annual assessment to the chief valuation officer, Shunda Strachan, the DIR head, if they are challenging the value assigned to their property.

However, he added that “for years 2014 through 2023” representing a whole decade, LRA-OBB and Resort Holdings had neither challenged the 1,143-acre tract’s value - which remained constant at $26m - or paid due taxes that were billed. It was only in March 10, 2024, that Daniel Baker, the two companies’ agent, filed a challenge to the 2023 real property tax bill.

Justice Willianms said this was some 11 months and ten days past the deadline for inquiries about 2023 real property tax bills to be submitted, but the agent for Resort Holdings and LRA-OBB on October 3, 2024, submitted a rival appraisal showing the 1,143-acre parcel was worth $12.66m - less than half the DIR’s valuation.

This appraisal emerged just weeks after the DIR used its ‘power of sale’ to advertise the property, in a bid to recover the unpaid taxes, in September 2024. After correspondence between Mr Baker and the tax authority, Antonio Moxey, a collections officer in the DIR’s revenue enhancement unit, said it had “opted to defer acceptance of any bids submitted from the power of sale exercise until such time we have conducted a re-assessment of the subject property.

“Further note that you must be prepared to settle all outstanding taxes once we have concluded the re-assessment,” Mr Moxey added. The reassessment was undertaken by TR Associates in November 2024, and Mr Baker voiced disappointment with the outcome.

Nathaniel Butler, managing director at Bahamas-based Drewber Solutions, was then hired to negotiate with the DIR on behalf of LRA-OBB and Resort Holdings. He first proposed exchanging other land parcels in Grand Bahama’s West End to extinguish the tax debt and then, in a June 5, 2025, letter offered a settlement where all surcharges, penalties and fees for tax non-payment would be waived, with a “35 percent settlement concession” on all taxes payable since 2019.

Mr Butler also reiterated his client’s belief that the 1,143-acre tract be valued at $12.572m, and said: “Should these terms be accepted, the total settlement would be $2.384m, and we are prepared to remit this sum by manager's cheque no later than Friday, June 13, 2025.”

Justice Williams commented: “Here for the first time is any objection made to valuation in respect of [the 1,143-acre parcel] for years other than 2022 and 2023. Those objections come, respectively, more than seven, six, five, four, three and two years after service of each year's assessment notice.”

However, Ms Strachan’s reply was less than favourable. She wrote on July 1, 2025: “The Department of Inland Revenue is not minded to lower the assessed values of the properties. We have had many meetings and e-mails with representatives of the property owners. However, they have made no attempt to settle their tax arrears.

“They requested reviews for the values of several properties and, while we did not agree with their value claims, we commissioned an independent appraisal. The findings of that report revealed that our assessed values were in fact significantly under market values….

“The Notice of Assessment for the 2025 tax year was gazetted on October 11, 2024. Hence all property owners were deemed served on that date. The deadline for objecting to the 2025 Notice of Assessment expired prior to November 30, 2024. Your objection submission is therefore not accepted” because it missed the deadline.

Justice Williams, in refusing to give permission for the Judicial Review to proceed, extend the application time or grant any of the relief sought by LRA-OBB and Resort Holdings, said to do so “would prejudice the Inland Revenue in its statutory remit, be detrimental to good administration and inimical to the public interest”.

He added that LRA-OBB and Resort Holdings had effectively accepted the DIR’s $26m valuation of the 1,143-acre tract for a decade by failing to meet the annual deadline for challenging this. And while the two companies argue that the DIR violated the Real Property Tax Act because they were never given notice it was exercising its power of sale, the judge added that they were more than 12 months and six months in arrears, respectively, in challenging the 2023 and 2024 values.

“The applicants are deemed to have waived compliance when on October 25, 2024, in an e-mail exchange they accepted the DIR's offer to defer acceptance of bids pending receipt of independent valuation on the property,” Justice Williams ruled.

“I find that this conduct of the applicants indicated an intention to waive such compliance, and by extension any right held by the applicants in this regard. The decision to, and the exercise of the power of sale given the applicants’ conduct, their repeated and continuing failure to pay the taxes due, whilst concurrently making no objection to the yearly notices of assessment was not illegal, irrational or procedurally improper.”

Justice Williams said it was clear that the DIR’s sale deferral was conditioned on it completing its reassessment, and only referered to the acceptance of bids. He added that the due process afforded LRA-OBB and Resort Holdings had been “extraordinary, and extending beyond any statutory requirement or the rudiments of natural justice”.

And he ruled: “In the premises, I find that the respondents [DIR] were not required to recommence and re-advertise the sale, and the applicants could apprehend no legitimate expectation. In my view, the respondents were entitled to review (any) bids made prior to its deferral, and or any received since, and to prefer and or select one of those bids.

“The applicants do not come with clean hands. For ten years, they neither objected to assessment notices nor paid the statutorily obligatory taxes. Their seeming disposition was, at the very least, one of studied indifference, at most willful refusal. At the time at which the respondent sought to exercise the power of sale, that year's tax was in arrears for more than six months after the expiration of 30 days from becoming so due, no objection having been made.

“Further to this issue of clean hands, I take judicial notice of the fact that the applicants' objection - coming more than 90 days after the day on which the notice of assessment was deemed to have been served - was unaccompanied by explication or reasonable cause therefor, and the whole of the tax payable under the notice of assessment, the sine qua non for the consideration of the applicant's objection, had not been deposited with the respondents as required by the Act.”