Tuesday, March 13, 2018
By NEIL HARTNELL
Tribune Business Editor
A BAHAMIAN businessman yesterday challenged the Government to demonstrate its support for local entrepreneurs after a new front erupted in his battle with a foreign developer.
Glen and Tracy Kelly, who were previously evicted from their Crown Land farm at Abaco's Schooner Bay, have now been hit with a lawsuit that seeks to bar them from operating a property management business at the project.
The action, launched by Schooner Bay Ventures, alleges that the couple - as homeowners at the 220-acre development - have breached the Declaration of Covenants and Restrictions all property purchasers must sign up to.
This Declaration, according to legal filings obtained by Tribune Business, contains a clause granting Schooner Bay's developer an eight-year exclusivity on all real estate and property management activities at the development. While that exclusivity will end shortly, according to this newspaper's sources, the Declaration also stipulates "that no business may operate in Schooner Bay without a business licence issued by the Board".
Schooner Bay Ventures is alleging that the Kellys obtained no such licence, resulting in them "wrongfully and unlawfully" providing property management services for at least five other homeowners at the development.
It is seeking damages from the couple, a Supreme Court declaration that they are "barred from marketing properties within Schooner Bay", and a 'permanent injunction' to prevent them from engaging in such activities.
The legal move by Schooner Bay's developer represents the latest setback for the Kellys, and effectively adds insult to injury given the fall-out they have suffered as a result of being evicted from their organic farm.
Pledging to fight the latest attack by the foreign developer, Mr Kelly told Tribune Business the lawsuit was designed "to hit us financially and emotionally" in a bid to force the couple "to give up and go into the night".
He suggested that Schooner Bay Ventures was attempting to "make it as uncomfortable as they can", and using its 'deeper pockets' to wear them down financially via a "war of attrition".
Tribune Business last year revealed how Schooner Bay Ventures had seemingly breached the conditions of its 100-acre Crown Land licence by evicting Driftwood Food Company, the Kellys' hydroponic farm, from that site.
Mr Kelly yesterday said the Government had gone "quiet" on his complaints over the farm eviction, and 'called out' the Prime Minister and his administration over their support of Bahamian entrepreneurs being squeezed out by wealthier foreign investors.
"I'd like to hear the Government's views, especially the Prime Minister's, who owns a home there that is being managed by the developer," he told Tribune Business. "Does the Government think it important that Bahamians be allowed to take up the entrepreneurial spirit and go and serve their country, or do they think foreign big business is far more important.
"I'd like to think they're both important. I think they [Schooner Bay] realise our pockets aren't as deep as theirs. It's no secret. If it's a game of attrition they'll win, but I've got to believe at some point the Government of my country will do the right thing."
Mr Kelly's call is especially problematic for Dr Minnis, who owns a property at Schooner Bay. Tribune Business previously revealed that the developer is managing Dr Minnis's property, the Island Cottage, in an arrangement that violates Bahamian real estate law. The Prime Minister's press secretary, Anthony Newbold, declined to comment on the matter when invited to do so.
The new battle with the Kellys is the latest in a series of ongoing controversies swirling around Schooner Bay, after Tribune Business last year revealed the issues with its Crown Land licence and evidence that it is violating Bahamian real estate law.
The developer, headed by Dr David Huber, dubbed 'America's richest Mormon', and US attorney Tina Gascoigne, took "great exception" to this newspaper's reports without providing any evidence to refute them. And there is little doubt that Schooner Bay's development has stalled ever since Dr Huber severed ties with then-partner, Lindroth Development Company, in 2013-2014, with the project's original vision and philosophy in danger of being lost.
Despite filing its lawsuit with the Supreme Court registry on September 20, 2017, Schooner Bay Ventures only served the Kellys with the papers on March 7. The move comes after the developer lost a similar action this January when Justice Ian Winder rejected its bid for an injunction to block Bahamian realtor, James Malcolm, from operating the exact same business at Schooner Bay.
Mr Kelly said Schooner Bay Ventures' decision to proceed with the lawsuit has "completely blown my mind", given that the ruling in Mr Malcolm's case had seemingly established a legal "precedent" that would favour the couple.
The action, which only names Tracy Kelly as a defendant, alleges: "In breach of the Declaration and her Covenants as a homeowner, the defendant wrongfully and unlawfully marketed for rent and/or provided property management services for the following properties within Schooner Bay."
Five properties were named, and the lawsuit alleged: "In further breach of the Declaration, the defendant is operating a business marketing for sale and/or rent the properties located within the Schooner Bay development without having first obtained a business licence from the Schooner Bay Community Corporation....
"The defendant knowingly and unlawfully carried out the above-mentioned acts which are causing - and will continue to cause harm - to the plaintiff's business, causing the plaintiff to suffer serious loss and damage."
Schooner Bay Ventures claimed that the Kellys' business had resulted in it losing property sales and rentals commission; property management fees; marketing opportunities and "loss of opportunity".
Many observers, though, while likely interpret Schooner Bay's latest move as further evidence of a desire to establish a monopoly on all real estate business at the project at the expense of driving out Bahamian companies.
Mr Kelly yesterday said the couple had been engaged in property management services at the south Abaco development, ensuring homes and properties were maintained; paying bills on behalf of owners when they were absent; and providing access to repairmen when necessary.
"We're aggrieved by this move as much as anything else," he told Tribune Business of the lawsuit. "We certainly have the relevant licences. They [the developer] knew full well we doing this business, and to my knowledge no one else has a business licence from Schooner Bay."
Mr Kelly indicated he would reach out to the couple's homeowner clients to obtain their support, pointing out that "most of them are well-to-do folks" who have "contacts" in Nassau.
"We're going to engage a lawyer in our defense, and see if it goes any further than this," he added. "It saddens us, but I've learnt nothing should surprise me any more. I'm still in shock, but I shouldn't be."
Expressing unhappiness that his wife had been named as a defendant, even though the company's government Business License was in his name, Mr Kelly said: "I think it's a very intentional attempt to hit us financially and emotionally with the hope we'll give up and disappear into the night.
"That's what I truly believe. They'll make it as uncomfortable as they can in the hope we go away and, whether the action's valid or not, they won't have to pursue it."
Mr Kelly alleged that the legal actions against the couple and Mr Malcolm were a "systematic" effort to drive Bahamian entrepreneurs out of Schooner Bay, and warned: "There will be more unless they're [the developer] somehow checked in their behaviour.
"Anyone they perceive as being in the way of their real estate sales machine. The funny thing is our business could have been one of the greatest cogs in the wheel, but they look at it as a detriment.
"There are homeowners who do not want them [the developer] to manage their home, even if they're legally entitled to. They do not want them. It's good to have options and competition for Bahamian and foreign homeowners at Schooner Bay."
Schooner Bay, through its Covenants and actions, appears to be in breach of Bahamian real estate law. Foreign developers, under the Real Estate (Brokers and Salesmen) Act, can only sell and manage the real estate that they own. Once such property is sold to third-party buyers, the Act prevents them from engaging in re-sales of that real estate, and operating their own property management/vacation rental businesses.
In Schooner Bay's case, it has only sold lots to home buyers who were then responsible for vertical construction on their properties. Thus it cannot get involved in managing these homes and/or renting and leasing them out, activities it has been engaged in, and without the necessary licence from the Bahamas Real Estate Association (BREA).
Mr Kelly, meanwhile, said he had received no indication that the Government is prepared to intervene over his farm eviction. "The Bahamas Investment Authority did come up," he told Tribune Business, "and got some information from me. That's it. It's all quiet."
He added that the couple had suffered an "immediate" financial impact as a result of losing everything already planted, and "had to give up other things" to recover between 33-50 per cent of their business by relocating elsewhere.
Unable to offer winter residents "the whole gamut of organic vegetables" previously produced, the Kellys have been forced to focus on "quick growing" crops such as sour creams. While this had created "a lot of angry customers", Mr Kelly said this was not directed at the couple but towards "the right people".