Kenneth Schweitzer v Carter Enterprises Ltd

• Jurisdiction: Bahamas
• Judge: Forbes, J
• Judgment Date: 14 September 2022
• Docket Number: 2022/FP/CLE/GEN/00072
• Court: Supreme Court (Bahamas)

BETWEEN

Kenneth Schweitzer

Plaintiff

and

Carter Enterprises Limited

Defendant

Before:

His Honourable Justice Andrew Forbes

2022/FP/CLE/GEN/00072

COMMONWEALTH OF THE BAHAMAS

IN THE SUPREME COURT

Common Law and Equity Division

Appearances:

Mr. Osman Johnson appearing on behalf of the Plaintiff, Mr. Kenneth Schweitzer

Mr. Harvey O. Tynes, KC with Mrs. Tanisha Tynes-Cambridge and Ms. Roshar Brown on behalf of Carter Enterprises Limited

Forbes, J

BACKGROUND

1 The parties are before the Court for what the Plaintiff alleges was a breach of a promissory note made between himself and members of the Williams family to acquire a fifty percent share of the resort and marina known as “Riding Rock Marina Resort” in San Salvador, The Bahamas.

2 By a Specially Indorsed Writ of Summons filed on the 4 ^th September 2012 the Plaintiff alleges that the Defendant made a promissory note for the sum of $2,000,000.00. The said promissory note was dated the 1 ^st day of April 2007 with repayment to be made to the Plaintiff on the 31 ^st January 2008 (also referred to as the maturity date) in the said promissory note. The Plaintiff alleges that the promissory note provided:

• a. That the principal and interest under the said note shall be repaid by the defendant to the plaintiff on 31 ^st January 2008;

• b. That subject to the approval of the Central Bank of the Bahamas all payments are to be made in the currency of the United States of America;

• c. That the principal amount shall bear interest at the rate of 10% per annum;

• d. That the defendant shall be in default under the said promissory if it failed to pay the sums due thereunder within 30 days of the maturity date;

• e. That the defendant irrevocably and by way of security for the payment and its performance of the terms of the said promissory note appointed the Plaintiff as its true and lawful attorney (with full power to appoint substitute and sub delegate) on behalf of the Defendant in the Defendant's name or otherwise to sign, seal and deliver and complete an indenture of Mortgage in favour of the Plaintiff over the real property more particularly described in an Indenture of Conveyance dated 29 ^th day of November 1985 and made between Columbus Landings Limited of the one part and the defendant of the other part and recorded in Registry of Records in volume 4462 at pages 369 to 373.

3 The Plaintiff also alleges that after the 31 ^st January 2008 he requested payment from the Defendant but it failed to pay the Plaintiff the sum due under the said promissory note; that prior to the execution of the promissory note the Defendant had made arrangements to import into The Bahamas certain materials for the renovations for its Resort and Marina at Riding Rock in the Island of San Salvador, one of the Islands of the Commonwealth of the Bahamas and in this regard applied to the Ministry of Financial Services & Investments seeking certain customs duty concessions on various goods totaling $2,044,367.40 under the Hotel Encouragement Act which concessions upon application of the Plaintiff were allowed in the sum of $1,611,012.85. He further alleges that he agreed to assist the Defendant with financing of the purchase of the goods which it intended to import into The Bahamas for the purposes of renovating the said Riding Rock Inn and Marina in exchange for the Defendant executing the said promissory note and accordingly the same was executed by the defendant in favour of the Plaintiff.

4 The Plaintiff further alleges that in pursuance of this agreement the Plaintiff spent a total of $1,455,300.62 for the Riding Rock project and the said sum was acknowledged by Kevin Williams, one of the Defendant's duly authorized representative on 7 ^th July 2007 and certified by the Defendant's Accountant, Mr. Arthur Carlson. The Plaintiff alleges that the intention behind the execution of the promissory note was to secure the repayment of all moneys advanced by the Plaintiff for the purchase of materials and furnishing relative to the renovation of Riding Rock Inn and Marina and that should the Plaintiff default in the repayment of the amount owed a mortgage would be placed over the Plaintiff's land as described in an Indenture dated the 29 ^th November 1985 and made between Columbus Landing Limited and the Plaintiff and recorded in the Registry of Records in Volume 4462 at pages 369 to 373.

5 The Plaintiff alleges that the Defendant has not made any attempts to obtain the Central bank approval to pay the Plaintiff as required by the promissory note nor supplied it the information so the Plaintiff's application can be granted by the Central Bank; that by letters dated the 9 ^th July 2012 and the 9 ^th August 2012 through his Attorney the Plaintiff presented the promissory note for payment but it was dishonored and the Defendant is in breach of its obligations thereunder. Additionally, that the Defendant through its Attorney in answer to the 9 ^th July letter stated that the Defendant required a proper accounting and adverted to the Plaintiff requiring certain information which the Defendant well knew was in the possession of its Account.

6 The Plaintiff claims that under the terms of the promissory note the Defendant through its representative has admitted that payments to the Plaintiff totaled $1,455,399.62 with interest of 10% per annum; that the sum now owed to the Plaintiff from 17 ^th April 2007 to 4 ^th September 2012 is $2,238,916.82 with interesting accruing at a daily rate of $ 398.73 until payment. The Plaintiff further particularized its claim setting out the sums due as interest from April 2009 to the 17 ^th April, 2012 and interest from the 4 ^th September, 2012 at the per diem rate for a total amount due and owing as $2,238,916.82. Therefore, the Plaintiff claims against the Defendant:- (i) the sum of $2,238,916.82 with interest thereon at a rate of 10% per annum until payment; (ii) or alternatively if the Defendants fails to pay the sum of $2,238,916.82 plus interest, a Declaration that the Plaintiff is entitled under the promissory note to execute a Mortgage over the said property; (iii) Costs and (iv) further and other relief.

7 A Memorandum and Notice of Appearance were entered on behalf of the Defendant and filed on the 19 ^th December 2012. A Defence was filed on the 27 ^th September 2012 and an Amended Defence was filed on the 29 ^th April, 2021.

8 The Defendant in its Defence admits paragraph 1 of the Statement of claim save and except that renovations in the company would be equally divided between the Plaintiff and the Defendant. Further as it relates to (ii) of paragraph 1 the Plaintiff was solely responsible for obtaining Central Bank Approval. The Defendant denies paragraph 2 of the Statement of Claim and asserts that Plaintiff breached the contract in that he did not provide the sum as described in the promissory note. Further that the Plaintiff further reneged on his contract as both Plaintiff and Defendant were supposed to share equally in regards to the renovation to Riding Rock Resort & Marina. That the Defendant admits paragraph 3 of Statement of Claim in that concessions were given under the Hotel Encouragement Act, but that the goods were never imported. The Defendant denies paragraph 4 of the Statement of Claim and stated that the Plaintiff did not agree to assist the Defendant with financing as they had both agreed to renovate the Riding Rock Inn & Marina at each of their own respective expenses.

9 That the Defendant denies paragraph 5 of the Statement of Claim and puts the Plaintiff to strict proof to produce the original letter. Further that the amount as stated is not accurate and still in dispute as there was to be an agreed itemization between Mr. Williams and Mr. Schweitzer. That the Defendant denies paragraph 6 of the Statement of Claim in that it was never the intention of the Defendant to secure a Mortgage. The Defendant asserts that the Plaintiff was to purchase shares valued at Two Million Dollars ($2,000,000.00) which would represent a fifty percent (50%) interest in the business and due to the Plaintiff's breach of contract the agreement was never successfully manifested. The Defendants denied paragraphs seven through nine of the Statement of Claim.

10 The Defendant by its Amended Defence states that it admits that on or about the 17 ^th April, 2007, Kevin Williams, a Director of the Defendant company executed a Promissory Note in favour of the Plaintiff and that the note contains the provisions set out in Paragraph 1 of the Statement of Claim. However, it is denied that the Promissory Note was intended to create a legal obligation on the part of the Defendant to pay the Plaintiff the sum of Two Million Dollars ($2,000,000.00) or any sum. Further that in addition to the provisions set out at paragraph 1 of the Statement of Claim the Promissory Note also contains an express provision, at paragraph 6 that the Note and the sums payable thereunder would be convertible into fifty percent (50%) of the preference shares in Riding Rock Holdings, Ltd., a company which would be formed under the laws of the Commonwealth of The Bahamas for the purpose of holding the assets forming part of the Riding Rock Resort and Marina situate in Cockburn Town, San Salvador.

11 The Defendant also asserts that on or about the 7 ^th January, 2006 prior to the creation of the said Promissory Note, the Plaintiff made an agreement in writing with Kevin Williams, Carlos Williams, Michelle Williams and Jason Williams (“the Williams Family”) that the Plaintiff would purchase a fifty percent (50%) interest in the Riding Rock Marina and Resort property and business at the proce of Two Million Dollars ($2,000,000.00). Moreover, that the Promissory Note was created by the Defendant solely for the purpose of enabling the Plaintiff to obtain a loan in the sum of Two Million Dollars ($2,000,000.00) from a “Chinese” source in order to...