NASSAU, BAHAMAS — The Court of Appeal has ruled in favor of a prominent investment house and real estate developer seeking a winding-up petition against a Nassau hotel owner.
The Court of Appeal, in its decision, allowed the appeal by Sterling Asset Management Ltd, headed by prominent investor David Kosoy, which had sought to reverse a Supreme Court judge’s decision.
In September 2019, Justice Ian Winder had dismissed Sterling Asset Management’s winding-up petition against Sunset Equities Ltd, owner of the Courtyard Marriott opposite Junkanoo Beach.
In the decision delivered by Justice Milton Evans yesterday, however, the appellate court ruled that the sanction imposed by Winder had not been a proper exercise of his discretion.
Sterling, which has shares in Sunset Equities, has been engaged in a legal battle with the hotel owner over a financing arrangement that allowed for the redevelopment of the former Nassau Palm Hotel.
The appellate court noted that on April 28, 2017, Sterling Asset Management filed a summons for directions that was served on the respondent on July 27 2017. The hearing date of the summons was set for August 1, 2017 and at the hearing, Sunset Equities Ltd sought and was granted an adjournment to September 11, 2017.
The court yesterday noted: “At that time, the appellant sought to have the matter adjourned sine die, the respondent did not object and the court granted the adjournment.
“On July 26, 2018, the respondent filed a Notice of Motion to have the petition struck out on the basis that, inter alia, the petition had not been determined by the court within six months as per section 190(5) of the Companies (Winding-up Amendment) Act (CWUAA) and no application was made to extend time.
“On September 23, 2019, the learned judge dismissed the appellant’s petition on the basis that a continuation of the action would amount to an abuse of the process of the court.”
The court further noted that pursuant to section 190(5) of the CWUAA, winding-up petitions are to be dealt with in the six-month time frame provided for by the section.
However, the section allows for the extension of time, not exceeding six months, where special circumstances exist.
Justice Evans noted: “The CWUAA does not specify what those special circumstances are or may be. There is no provision in section 190(5) of the CWUAA, which provides that a petition not determined within 12 months must be dismissed.
“In the circumstances, the trial judge retains a discretion as to the appropriate order to be made in the circumstances of each case. Section 190(5) requires the trial judge to manage the winding-up action before him and provides certain guidelines; the trial judge is able to do this by powers granted to him under the Companies Liquidation Rules.
“Inherent in the powers so granted is the power to sanction parties who are not compliant with his directions. Those sanctions extend to the dismissal of the petition where the petitioner is in default of the directions given.
“However, that decision is done by the exercise of the judge’s discretion, taking into consideration the circumstances of the case. In the circumstances of the present case, the sanction imposed by the learned judge was not a proper exercise of the judge’s discretion.”
Evans pointed out that upon review of the matter, it was clear that all parties must bear some blame for the delay.
“I am satisfied that notwithstanding the obvious delay by the appellant in progressing the matter before the court, the sanction imposed was not a proper exercise of the learned judge’s discretion,” the appellate court judge stated.
“In arriving at his decision, the judge failed to consider the role played by the respondent and, more importantly, the fact that he lost control of the management of the proceedings.”
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