• Privy Council rules for first Bimini Bay developer

• ‘Serious irregularity’ on ‘demolished tenant’ award

• Beach club proprietor ‘demands speedy hearing’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A $9.67m damages award made against the Bimini Bay resort’s original developer for demolishing a tenant’s business faces a substantial cut following yesterday’s Privy Council ruling.

The London-based court, the highest in the Bahamian judicial system, overturned a previous Court of Appeal verdict by ordering that Therapy Beach Incorporated’s claim for the loss of its bar and restaurant facilities at the Bimini resort be sent back to the original arbitrator so she can “reconsider” issues impacting 96 percent of the sum awarded.

The unanimous verdict thus paves the way for a major reduction in the damages that must be paid by Gerardo Capo’s RAV Bahamas and Bimini Bay Resort Management entities to Therapy Beach and its principal, Miami-based entertainment owner/promoter, Garrick Edwards, following an eight-year legal battle triggered by the latter’s loss of his business and anticipated profits.

The Privy Council, in rejecting the Court of Appeal’s decision, effectively upheld a previous Supreme Court ruling by Justice Ian Winder. He found there was “a serious irregularity” in the initial arbitration hearing because it did not address the issue of whether Therapy Beach and Mr Edwards could recover lost profits relating to a three-year extension of their lease when the renewal had yet to be agreed.

Noting that an adverse finding on this issue would “potentially more than halve” the $6.8m awarded to Therapy Beach for loss of profits, the Privy Council said the arbitrator’s failure to consider this was “obviously unfair and unjust” to Mr Capo and his entities.

With the Bahamas Arbitration Act 2009’s section 90 providing the legal basis for the original Bimini Bay developer to challenge the award, the London-based court reinstated Justice Winder’s verdict and ordered that the case be sent back to the original arbitrator to reevaluate the $6.8m loss of profits damage and whether they should account for the three-year renewal.

This also means that, as ordered by Justice Winder, the $2.7m exemplary damages awarded to Therapy Beach and Mr Edwards must be reconsidered, too, because they were based on the $6.8m general damages/loss of profits determination. As a result, some $9.3m or 96 percent of the damages awarded against Mr Capo and his entities must now be reassessed.

Mr Edwards, when contacted by Tribune Business yesterday, demanded that a “speedy hearing” take place before the original arbitrator, retired Supreme Court justice Cheryl Albury, as he voiced fears that Mr Capo and his attorneys will seek to now “drag out” the proceedings even more.

Asserting that he has lost faith in the judicial process and system, Mr Edwards argued that it was largely down to himself - not Mr Capo and RAV Bahamas - as to whether the lease was extended for another three years.

Pointing out that Therapy Beach’s facilities were demolished before he was given that chance, he told this newspaper: “I demand that there be an immediate hearing with the original arbitrator. They’re going to try and drag this out.

“This all about the renewal years, and she [ex-justice Albury] put into great detail why she included them. The renewal was down to me, not to them. Unless I did something drastically wrong that affected their [Bimini Bay’s] business, then it was my decision whether I wanted to renew those years.

“That was a very easy decision for her to make. It was a no-brainer. But they destroyed my building before I could take the renewal years. They knocked it down before we even had a chance.” 

Mr Edwards declined to comment further on a case that saw his business demolished in defiance of an order from then-chief justice, Sir Michael Barnett, who had ordered that “the status quo” remain until he had ruled on the dispute with RAV Bahamas.

The Therapy Beach principal has also previously alleged that his restaurant and beach club facilities were bulldozed to pave the way for Mr Capo’s new partner, the Malaysian conglomerate, Genting, and its Resorts World Bimini brand, to operate its own food and beverage facility. That opened two days after Sakara’s destruction in July 2013.

Tribune Business understands that the site is now likely to be take over by Sir Richard Branson’s Virgin Cruises, which will likely implement similar plans by transforming it into a mix of beach clubs and restaurants that cruise passengers can enjoy when they finally visit Bimini once the COVID-19 pandemic abates.

The Privy Council judgment, detailing the background to the dispute, noted that the New Year’s Eve 2011 lease agreement between Mr Capo’s companies and Therapy Beach would see the latter pay a percentage of its gross revenues to RAV Bahamas plus a “common area charge”.

The three-year lease deal contained an option to renew for a period of the same length once six months’ notice was given and the parties could agree rental rates. Therapy Beach was also to pay RAV Bahamas $150,000 for constructing the beach club, which was to be completed within 120 days once payment was made.

“Therapy alleged that, in breach of contract, the building work was not properly completed; that Therapy had to attempt to complete it at its own expense and that, even by July 2013, it was not fully complete,” the Privy Council 

“On March 18, 2013, proceedings were commenced by RAV against Therapy in the Supreme Court of the Bahamas, alleging that the lease was void, illegal and of no effect on the grounds that its terms violated the International Persons Landholding Act of the Bahamas. On May 31, 2013, that action came before [then] chief justice Barnett, who reserved judgment at the end of that hearing.

“On July 18, 2013, before that judgment was handed down and while the lease was still in the currency of its original three-year term, the Sakara Beach Club was demolished by RAV and Therapy was evicted from the land. Subsequently, in his judgment dated September 12, 2013, then-chief justice Barnett rejected RAV’s claim that the lease was void, illegal and of no effect.”

Mr Edwards and Therapy Beach had initially claimed $12m in damages for loss of profits. However, ex-justice Albury discounted this by one-third at the arbitration hearing to account for the fact another business, Atlantic Seafood, was not included in the lease.

And she knocked a further 15 percent off on the basis that the figures offered by Therapy Beach’s key witness were not supported by documents. The combined 45 percent reduction is how ex-justice Albury arrived at the $6.8m for general damages/loss of profits.

Justice Winder, disagreeing with this and the failure to address whether Therapy Beach could claim for loss of profits for a three-year renewal period yet to be agreed, ordered that the matter be sent back to the arbitrator. The Court of Appeal, though, overturned this and upheld the initial arbitration verdict, leading to Mr Capo and RAV Bahamas appealing to the Privy Council.

Agreeing that the lease renewal issue was “central” to determining how much Therapy Beach ought to be awarded, the Privy Council backed Justice Winder in finding: “This is one of those cases in which the nature of the irregularity and failure of due process means that it is ‘inherently likely’ that there has been substantial injustice.

“Failing to deal with an issue which was put to the [arbitration] tribunal, which would potentially more than halve a $6.8m damages award is, on the face of it, obviously unfair and unjust.” The Privy Council also agreed that the initial 30 percent discount imposed by the arbitrator should be overturned, but upheld the other 15 percent reduction.