Appeals court rejects claims against Simpson Bay Resort

POSTED: 09/3/12 10:45 PM

St. Maarten – The Common Court of Justice crushed all perspectives for the fired employees of the former Pelican Resort yesterday in a ruling that voids an April 2-ruling.t would have obliged the resort’s new owners to rehire all staff, to pay them based on their collective labor agreement and to pay the Wifol-union $50,000 compensation.

The Pelican-saga began in 1996, when the company that operated the resort went bankrupt. The timeshare owners, united in a tenants association bought the bankrupt resort, brought it into an owner company and continued to operate it through a management company. The tenants association and Royal Resorts became the directors of the new companies.
Belize-based quantum investment trust granted the owner company a loan to finance an expansion. When the owner company defaulted in 2010, Quantum bought the resort at an auction on December 16.
At the time of the auction the resort employed approximately 200 people; of them 182 were represented by the Wifol union who worked under a collective labor agreement that expired on December 31 of last year.
The new owners established a holding, an owner company and a management company under the management of UP-MP Jules James and Royal Resorts.
The same day the new management company offered the Pelican employees a 6-month contract, but the union turned this offer down.

On January 18 2011Royal Resorts ask the directorate for labor affairs permission on behalf of the Pelican Resort Club Management Company to terminate the contracts of 182 of its employees because of the financial crisis the company went through.
The union has always maintained that the new owners ought to respect the collective labor agreement.
But the Common Court of Justice ruled yesterday against this position. “Based on the law of St. Maarten someone who buys a company is not held to sign labor contracts or otherwise enter into terms of employment with employees who entered service before the takeover and who are working for the company at the moment of the takeover,” the ruling by judges mrs. L.C. Hoefdraad, E.M. van der Bunt and H.J. van Kooten reads.
The judges noted that the opinion that legislation in St. Maarten has developed in such a way that a regulation like the one in the Netherlands currently must be considered to be part of it, “find no support in the law.”
Local legislation offers the option to continue silently with these labor contracts, but this did not happen: Simpson Bay Resort offered the Pelican employees a 6-month contract. The court concluded that the new owners explicitly objected to continue with these labor contracts. “There is no silent continuation of the labor contracts. The Simpson Bay Resort Management company is therefore not held to abide by the collective labor agreement obligations,’ the court ruled.

The court also rejected the claim that the new owners used a mala fide construction with the objective to rob the employees of their rights.
Furthermore the court rejected the union’s claim that Royal Resorts has an obligation to honor the collective labor agreement. It concluded that the Pelican Resort Club Management Company remained the employer of the Wifol-members and that this role has not been taken over by the Simpson Bay Resort Management Company or by Royal Resorts.
Lastly, the court notes that Wifol has offered insufficient proof for its position that Simpson Bay Resort and Royal Resort have attempted to benefit from the fact that the Pelican Resort Management Company defaulted on abiding by the collective labor agreement.

mr. Jairo Bloem, the attorney for the Simpson Bay Resort and Royal Resorts called a press conference on Friday to celebrate the court ruling. In the presence of the resort’s new director Mark Miller, the attorney wished the Wifol-members proper guidance. “It is the hope of the Simpson Bay Management company in spite of what has happened over nearly two years to have the single focus on the resort in a way that seriously affected the operation of the resort and the ability to sell time share rights, that the Wifol-members will be properly guided and told that they should knock on the door of the Pelican Resort Management Company. If they do not have the requisite funds to make the payment then they should approach the Social Insurance Bank (SVB) and that is where these probably frustrated, angry, annoyed and mostly confused Wifol-members will be able to get some satisfaction.”

Bloem said that if the employees were to be paid what they would have received amounts to between $2.5 and $2.8 million – money that “will have to come from the social security fund.”
The attorney said that the Simpson Bay Resort negotiated with Wifol to employ its members. “After more than 300 hours of negotiating the resort offered to employ every one of them for six months and it was rejected. Employing everyone all 145 – for a year was rejected.” This deal was signed in the presence of former Vice Prime Minister Theo Heyliger and the former Minister of Tourism and Economic Affairs Franklin Meyers, but it did not work out.
“What WIFOL wanted was for their employees to be paid out which came with a ticket price of $1.2 million of unbudgeted expenses; these funds have to come from somewhere. You can keep asking an investor to keep putting money in but at a certain moment you either have it or not,” Bloem said.

The resort lost approximately 3,000 members during the court procedures. Bloem said that the court ruling is important for the resort, and that a different outcome would have been disastrous. It would have meant that the remaining timeshare owners would have to come up with the money to cover these expenses.
“To ask the members to pay an additional US$500, could have also resulted in the loss of more members, since this means that there will be fewer members to pay the remaining expenses and we will have no other alternative than to shut the doors, it is that simple” Director Mark Miller said.
The resort is not ruling out that it will speak with Wifol again. “We are going to consider everything again at this time, we have specifically stated that at the inception there were more means to negotiate and come to a solution,” Bloem said. He labeled the past 19 months as “wasteful exercises” with one court case after the other and a lot of negative remarks in the media. That has resulted in great apprehension, and uncertainty among timeshare owners.
“This achievement today is an achievement for the members and certain for the 90 employees who are working there right now,” Bloem concluded.

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