By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The sale of four private islands in the Exuma cays has eliminated “the sword of Damocles” that was hanging over its former owners’ heads and netted the Public Treasury a multi-million dollar tax boost.

Damian Gomez KC, who is representing one of the principals behind Darby Shores Ltd, the cays’ former owner, confirmed to Tribune Business that the deal has closed after this newspaper obtained a legal document detailing a road map for ending that company’s receivership and resolving all outstanding disputes between the parties.

“The sale of the Darby Islands completed on November 29, 2024, and the Department of Inland Revenue have been paid all outstanding real property tax arrears,” a ‘Notice of Application’, filed with the Supreme Court on December 5, 2024, reveals. “There is now no justification for the continuation of the receivership and its continuing costs.”

Mr Gomez, a former minister of state for legal affairs in the last Christie administration, told this newspaper: “Yes, the sale closed on the Friday, but we were only told about it when the cheque actually cleared. We now go into other matters that have arisen but, in terms of the Government, that sword of Damocles is gone.

“We are trying to work things out to minimise expenses, but we haven’t yet reached the stage where we can conclusively say what is likely to happen.” Tribune Business previously reported that $9.2m in unpaid real property tax arrears was owed on the four-strong island group - Big Darby Island; Little Darby; Guana Cay; and Betty Cay - and this number may have increased further by the time of the sale.

The remaining proceeds from the $40m sale to a purchaser, who is understood to be a crypto currency and digital assets investor, are being held in an escrow account by the Lennox Paton law firm which is representing other Darby Shores Ltd shareholders.  These monies will be invested in fixed deposits at the Royal Bank of Canada (RBC), paying interest between 3.25 percent and 3.75 percent, until there is agreement on how they are to be disbursed.

The ‘notice of application’s’ road map, which will have to be approved by the Supreme Court, calls for Darby Shores Ltd’s receivers, Lindsay Cancino and Marcia Woodside, to formally be discharged from their duties but paid all costs and expenses due to them.

It also recommends that an initial $5m distribution be made to Darby Shores Ltd’s shareholders from the sales proceeds within seven days of their receipt. It calls for Dr William Chester and Aileen Marty to both be paid $625,000, while fellow shareholders William Cook, Richard Davis and William Saeger are to get $1.25m each. 

Efforts to resolve the Darby Islands’ fate have been complicated by the falling-out, and subsequent legal dispute, that has embroiled the owners in a Supreme Court battle. However, it is understood all sides agreed to a Supreme Court Order affirming that they would accept the purchase and work towards the deal’s completion, with a portion of the sales proceeds earmarked to liquidate the unpaid property tax debt.

The impending sale came after Senior Justice Deborah Fraser rejected a bid by Dr Chester to have his partners held in “contempt of court” for breaching a previous court Order requiring all sides to co-operate over efforts to market the islands to potential buyers.

The complaint was backed by Mr Cancino and Ms Woodside, who had been appointed as receivers for the Darby Islands by the Supreme Court with a mandate to “resolve the outstanding property taxes” via selling the cays or any other method that would “prevent [their] being subject to a forced Bahamas government sale at auction”.

Detailing the background, senior justice Fraser said: “In or about 2010, the Darby Islands began accruing real property taxes. In response, Darby Shores Ltd sought to sell a few of the islands and use the proceeds from sale to settle the taxes. A total of about $9.204m in real property taxes was due and owing at the material time.

“On 10 July, 2023, due to the mounting real property tax sums and demand notices from the Department of Inland Revenue, the shareholders of Darby Shores agreed to sell the Darby Islands.” Mr Cook, as the company’s president, signed an exclusive agreement with the Coldwell Banker Lightbourn Realty real estate firm some seven days later to market the four islands at a collective purchase price of $44.5m.

“On August 9, 2023, the Department of Inland Revenue served its final demand on Darby Shores in relation to the outstanding real property taxes,” senior justice Fraser added. Two days later, Dr Chester “sought orders declaring that the defendants were acting in bad faith and mismanaging Darby Shores by allegedly failing to pay real property taxes owed to the Department of Inland Revenue in the sum of $9.204m”.

This led to the receivers’ appointment and a Supreme Court Order setting out their powers and mandating that all involved “co-operate fully” with efforts to market the islands for sale. “Based on tension and disagreement amongst the shareholders relating to the value of the Darby Islands, they each sought legal advice from different counsel on the best way forward,” senior justice Fraser added.

“A flurry of applications were subsequently filed in these proceedings by the parties relating to the Darby Islands. Based on the failure of Darby Shores to settle the outstanding taxes, the Department of Inland Revenue moved to sell the Darby Islands by its power of sale.” This led to the injunction blocking the seizure by the tax authorities and permission launch of Judicial Review proceedings.

Senior justice Fraser subsequently dismissed the contempt action by Dr Chester. The real property tax arrears were split between the four islands with some $4.656m owed on Big Darby Island; a further $3.441m on Little Darby; $986,279 for Guana Cay; and $120,346 on Betty Cay.

Big Darby Island and Little Darby cover some 793 acres combined. Coldwell Banker Lightbourn Realty, in a brochure to market the property, said: “Big Darby, a 554-acre island, boasts an historic structure known affectionately by locals as ‘The Castle’, which was built by a previous owner, Sir Guy Baxter, in 1938.

“During his ownership, Big Darby island was a working plantation with goat, cotton, palm oil and fruit as its products. The ‘castle’ is in great need of repair, but will make an incredible private home or community club house for a future investor. Darby Island is home to over 14 beaches, two miles of ocean frontage and features a few stunning caves dotting its perimeter.

“Positioned in close proximity to Darby, only about 50 metres between them, the 238-acre island of Little Darby includes a 1,600 foot runway, a three-bedroom main home, three renovated cottages offering a total of seven bedrooms and multiple powder sand beaches.”