Condo owners sue Beach Bay developer

A developer linked with a five-star hotel plan in Bodden Town is being sued over plans to demolish two blocks of condos on the site.

A group of owners at Beach Bay Condominiums has filed a writ of summons against property developer Beach Bay Ltd.

They are questioning the legality of the methods used by the company to gain the “super majority” necessary under strata regulations to order the demolition of the two buildings.

The owners are also seeking a permanent injunction preventing the construction of anything other than condominiums on the site.

Lawyers for the group say Beach Bay Ltd. and the Registrar of Lands, named as a co-defendant, breached strata laws and previous legal agreements. They say this has prevented them from blocking the “destruction of their homes.”

The lawsuit throws long-discussed plans for a five-star hotel at Beach Bay into doubt.

John Layton, the U.S. developer who represents Beach Bay Land Ltd. – the correct name of the company referenced in the suit, said Monday that the arguments outlined in the writ of summons had no merit.

Mr. Layton has not spoken publicly about plans for a hotel at the site, though the project has been referenced several times by politicians, including in the Legislative Assembly.

“I haven’t made any planning applications in reference to this property and until this issue is resolved that is not going to happen,” Mr. Layton said.

“We believe we have complied fully with the terms of the previous agreement and with Cayman Islands law.”

He said Strata Plan 39 had filed the demolition order for the buildings with the Registrar of Lands on Dec. 15. As of Monday this week, he said the demolition order was still pending and the strata is considering legal action of its own to compel the order to be processed.

Mr, Layton said no one was losing their home and pointed to the fact that Jack Matthews, one of the plaintiffs, who owns three of the condo units, was a multimillionaire Texas developer.

“No one is losing their home here. To the best of my knowledge, none of the nine minority owners are full-time residents of the property.”

According to court documents, Beach Bay Ltd. bought up units in the two condo developments over a five-year period. Eventually the developer acquired control over half the votes in Strata Plan 39 and elected a new executive council.

The company then moved to put an adjoining piece of land, which it had also purchased, under the strata plan, sub-dividing it into new lots.

The addition of the new lots combined with the condo units it had already acquired gave the developer the “super majority” of 80 percent of votes necessary to get a resolution for demolition.

Nine strata lot owners – Robert Stewart, Taimoon Stewart, Diana Pratt, Harold, Levy, Matthews Cayman Development, Tim Burke, Darlene Theodore, Al Fogarty and Cedar Valley Ltd. – are seeking to contest the methods used by the developer to obtain that majority.

A writ of summons, filed in Grand Court last week, alleges that Beach Bay Ltd. contravened the conditions of a prior agreement, referred to in the court filing as a “consent judgment.”

According to the court filing, the original developer put part of the land under strata control and retained ownership of the adjoining parcels, with the intention of adding them to the strata as new strata units were developed.

Following a legal dispute between the condo owners and the original developer in the mid-90s, the consent judgment was agreed. According to the court filing, that judgment guaranteed that any parts of the adjoining land would be transferred to the strata upon phased completion of the new units.

It says the judgment was binding on any future owners of the land. The writ offers differing interpretations of that judgment as alternatives for the court to consider.

It suggests that the full condo development was not completed and therefore the land could not be transferred and sub-divided into new strata lots.

“Completion has not taken place, therefore no entitlement to transfer could have arisen.”

The writ makes the alternative claim that the adjoining land, referred to as the original land, should already have been transferred to the strata and held as its common property. It states that the consent judgment implied there should be a time limit on the completion of the development. Mr. Layton disputed this claim and said the consent judgment showed that any time limit had been waived.

The lawsuit adds another alternative that the Registrar of Lands was not entitled under Cayman Islands law to combine the two pieces of land, creating new strata lots within the same strata plan, in a process referred to as rectification.

“It deprived them of the right to block a super majority resolution and thereby prevent the destruction of their homes,” it suggests.

The writ adds that if the court decides the developer was entitled to pass a resolution to declare the buildings destroyed, that compensation be determined by an independent expert.

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  1. Seems to me that the developer pulled a fast one.

    The super majority rules were designed to prevent a few hold out owners from preventing major projects that are in every owner’s interests.

    The way they have been used here is a sneaky way to deprive other owners of their property.

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