NASSAU, BAHAMAS — In a majority ruling, the Court of Appeal dismissed an appeal by Captain Toby Smith, affirming that he lacked a valid and enforceable Crown Land lease agreement for land on Paradise Island.
Chief Justice Ian Winder had ruled in February 2023 that there was no binding lease agreement between Captain Smith and his Paradise Island Lighthouse and Beach Club and the then minister responsible for Crown Lands (former Prime Minister Dr. Hubert Minnis) for five acres of Crown Land located on Paradise Island because the latter did not execute the necessary paperwork by applying his signature.
Smith appealed that decision but suffered another setback in his legal pursuits after the Court of Appeal dismissed his appeal in a majority decision. Court of Appeal president Sir Michael Barnett, however, in a dissenting judgment, said he would have allowed Captain Smith's appeal, noting that, in his view, "there was a concluded agreement between the appellant (Captain Smith) and the Government for the lease of the land in question."
In 2012, Smith applied to lease 17 acres of Crown Land on Paradise Island but was later informed by the Bahamas Investment Authority in May 2018 that only 5 acres were recommended. In October 2018, a Memorandum of Understanding was signed for the proposed development. In January 2020, Smith received approval for a lease of five acres. The lease stipulated an annual rent of $5,224 per acre. Smith signed and returned the lease for execution by the Minister in January 2020. In February 2020, Smith requested a Comfort Letter from the Minister, expressing surprise at the coexistence of his lease with Royal Caribbean's interest in the same land, seeking clarification to resolve ambiguity.
Justice Smith and Turner, in their decision dismissing Captain Smith's appeal, noted it was conclusive that there was no valid lease, underscored by the fact that Smith had sought a comfort letter and asked for an update regarding the Minister's signature. The justices noted that, notwithstanding that Captian Smith had executed the lease, even he believed that the document was subject to execution by the Minister.
"This Court cannot interfere with the trial judge's holding that he did not accept the Appellant's view that there was a binding agreement for a lease because it cannot be shown to be "plainly wrong. The absence of words like "subject to contract" does not mean that there is no need for a formal contract/lease. It is a question of interpretation and construction in the circumstances of any specific case. The parties' intentions ought to be disclosed by their language. If the agreement was subject to a formal lease, it means that there are terms to be agreed upon or conditions to be fulfilled; as such, there should be no contract until those things have been done," the Justices noted.
They further noted, "In this appeal, the absence of the words "subject to contract" does not mean that there was no need for a formal contract to have an agreement between the parties. Firstly, the words used and the conduct of the parties showed that both the Minister and the Appellant knew, and expected, that the Minister had to formally sign the contract before any agreement could be reached. Secondly, section 54 (1) of the Conveyancing and Law of Property Act, restricts the power of the Crown to divest itself of any Crown Lands other than by grant under seal."
Sir Michael, in his dissenting judgment, ruled that there was a binding lease agreement and noted that the court was not concerned with whether the behavior of the respondent was "ethical, dishonorable or proper."
"If the respondent had made a deal with the appellant to grant a lease, which deal was not enforceable, that the Government reneged on that deal in favor of a deal which it considered more beneficial is of no concern to the Court. Gazumping is not illegal, and it has been held that persons who hold fiduciary responsibility have a duty to gazump. The issue is whether there was an enforceable agreement," Sir Michael noted.
He further noted, "It is difficult to see how it can be said that there was no concluded agreement. The lease sent on January 7th, 2020 had been prepared by the Respondent's lawyers on the Respondent's instructions. There was nothing further to be negotiated and agreed. The document reflecting the terms of the agreement was sent by the Respondent to the Appellant for signature. All that was left was for the Respondent to sign and seal the lease. He did not do so because the government determined that it had found a better deal."
When contacted for comment Smith said he would be willing to provide a statement in due course, once he has met with his legal team.
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