The Tribune

BY FAY SIMMONS

TRIBUNE BUSINESS REPORTER

jsimmons@tribuneemedia.net

A PROPOSED Paradise Island beach club and lighthouse restoration project has suffered a final legal setback after the Privy Council ruled that the Crown Land lease at its centre was never binding on the Government.

The judicial system’s highest court yesterday dismissed an appeal by Paradise Island Lighthouse and Beach Club Company Limited, finding that the proposed 21-year lease of five acres remained subject to formal execution by the minister responsible for Crown Lands.

The ruling brings to an end Toby Smith’s 14-year effort to secure the Crown Land for a development that was intended to include recreational and entertainment facilities, including a beach club, while restoring and maintaining the historic Paradise Island lighthouse.

Mr Smith first applied in 2012 for 17 acres, with the Bahamas Investment Authority later recommending a 21-year lease of five acres in 2018.

At the heart of the dispute was a January 7, 2020, letter from the Department of Lands and Surveys enclosing a completed lease for Smith’s company to execute. The company signed and returned the documents two days later, arguing that the correspondence evidenced an already concluded agreement with the Government.

The Privy Council, however, agreed with Chief Justice Sir Ian Winder and the majority of the Court of Appeal that the documents did not create a binding agreement because the lease still required execution by the minister.

Lord Hamblen, delivering the judgment, said the Board's task was to determine objectively when the parties intended their legal relationship to become binding. While that could occur before every term was formally documented, it could also occur only after formal execution where the circumstances showed that was the parties’ intention.

The Board found there was no evidence that all of the detailed terms contained in the proposed lease had already been agreed before the January 7 letter was issued. It said the absence of documentary exchanges establishing agreement on those terms undermined Mr Smith’s argument that the lease merely recorded an agreement that had already been reached.

More significantly, the Privy Council found that the wording of the Department’s letter pointed to further formal execution being required.

The company was told to leave the date on the lease blank because it would be inserted when the lessor signed. The documents were also to be returned to the Department and then sent back to Mr Smith only after the lessor had executed them.

“If the agreement was already made then there was no need to delay the dating of the lease, nor would the documents need to be sent back to the appellant,” the Board said.

The court also pointed to the absence of any instruction in the January 7 letter to pay the initial rent and the fact that Mr Smith did not submit the rent when he returned the signed lease.

Mr Smith eventually tendered a cheque for $29,254.40 — the annual rent specified in the lease — on March 19, 2020, more than two months after signing and returning the documents. The judgment records that this was the rent stated under the proposed lease.

The formal requirements surrounding Crown Land also weighed heavily in the Board’s assessment.

The Conveyancing and Law of Property Act provides for the disposition of Crown Land under the official seal of the minister responsible for Crown Lands. The Privy Council said that statutory requirement represented “a further layer of formality” and provided relevant context for concluding that the parties could have intended to become legally bound only when the lease was formally executed.

The Board further rejected Mr Smith’s argument that the courts should not have considered a letter he sent after the disputed lease was returned.

In the February 12, 2020, letter, Mr Smith referred to his “application for Crown Land” – saying  he had been “approved for the lease” and sought a “Comfort Letter” from the Prime Minister, who was then responsible for Crown Lands.

The Privy Council said those references were objective indications that no binding agreement had yet been reached. It noted in particular that seeking a comfort letter was difficult to reconcile with Mr Smith’s position that the Government was already legally obligated to grant the lease.

The ruling follows years of litigation that began after the Government failed to execute the lease.

Mr Smith’s company filed its claim in May 2020 seeking a declaration that a concluded lease agreement existed or, alternatively, damages.

Sir Ian dismissed the claim in February 2023, finding that any agreement remained subject to execution by the minister. The Court of Appeal upheld that decision in March 2024 by a majority, although then-President Sir Michael Barnett dissented, finding that the January 2020 documentation evidenced a binding agreement.

Sir Michael had argued that negotiations were complete, that the lease contained the agreed terms and that the minister’s failure to sign did not prevent those terms from becoming enforceable.

Mr Smith’s case had also been closely tied to competing development interests on Paradise Island, with the five acres overlapping land sought by Royal Caribbean for its Royal Beach Club project. Mr Smith had argued that his proposed development was pushed aside after the Government decided to pursue what he described as a “better deal” with the cruise giant. His lawyers advanced that argument during the Privy Council hearing in July.

The Privy Council’s judgment, however, did not determine the merits of those competing development proposals. Its decision was confined to whether Mr Smith’s company had already secured a binding agreement for the Crown Land lease.

The Board ultimately concluded that the lower courts were entitled to find that no such agreement existed and advised that the appeal be dismissed.

The ruling therefore leaves Mr Smith’s proposed five-acre Paradise Island development without the enforceable Crown Land lease on which the legal battle had centred, while bringing the litigation over whether that lease had already been granted to a final conclusion.