C Lounge wins battle in court against Alegria (ex-Caravanserai Resort)

POSTED: 07/10/15 8:06 PM



The C Lounge on the Alegria property in Beacon Hill closed down in June of last year, but it will reopen once repairs are completed. Photo today / Hilbert Haar

Resort owner ordered to repair property

St. Maarten – Jimy’s NV, the company that exploits the C Lounge and the Thai Smile Restaurant at the Alegria Resort does not have to vacate the two establishments as Alegria demanded in summary proceedings. The Court in First Instance denied Alegria’s demand yesterday and ordered the company to do urgent repairs to the building under threat of a penalty of $250 per day with a maximum of $25,000.

In April, Jimy’s lost a court case against Alegria when it demanded proper repairs and a free pass on the rent until those repairs were done. At the time, Alegria claimed that the repairs were complete and the court rejected Jimy’s position that they were not done properly. This time, the resilient tenant managed to turn the tables on its landlord.

Since it bought the former Caravanserai Resort at auction in August of last year, Alegria has been at war with the tenants that operate businesses at the resort – from Marty’s pool bar to the C Lounge and Thai Smile. The new owner also refused to honor the contracts of more than 2,000 timeshare owners.

In the latest legal battle, Alegria demanded that Jimy’s NV vacates both the C Lounge and Thai Smile and that the company surrenders all keys. It furthermore demanded payment of $43,750 in rent, $7,546.90 in late fees and $6,037.50 in maintenance fees.

In reconvention, Jimy’s asked the court to order Alegria to repair all damages hurricane Gonzalo caused to the property within 48 hours after serving of the verdict, and to establish that the rent be decreased by 100 percent until all repairs are properly done.

Alegria told the court that Jimy’s does not behave as a proper tenant by not paying the rent and exposes the properties to potential damages by not exploiting the restaurants.

From September 2014 until May 2015 Jimy’s incurred rent arrears, but from May on forward, the company paid $49,500 to Alegria. This amount covers the rent arrears, but not the late fees and the maintenance fees Alegria demands.

The court ruled that the significant rent arrears Jimy’s built up “do not have the importance Alegria wants to attribute to it.” The court notes that parties have been entangled in a legal battle since Alegria bought the resort at auction over the question whether Jimy’s was still a tenant. There was also a dispute about repairs to the roof caused by hurricane Gonzalo. Furthermore the court notes in its ruling that Jimy’s has in the meantime paid the arrears even though the restaurants are still closed and therefore do not generate any income.

“Against this background it cannot be said that the tenant has such bad payment behavior that the lessor does not have to continue with the lease agreement.”

The court gave no opinion about Alegria’s demand for the payment of maintenance fees and late fees because parties are disputing many points that require substantiation. In the context of summary proceedings, the court denied Alegria’s request for payment of these claims, but it did considered it for its decision about the clearance of the property.

Considering all arguments, the court rejected Alegria’s demand that Jimy’s should vacate the restaurants.

Jimy’s fared better with its demand that the owner repairs the property. Already in November of last year, Jimy’s produced a report with pictures that shows that the roof is leaking, that repairs had not been done, or had not been done properly, that electric wires are dangling dangerously and that the sceptic tank is in bad condition.

In December, Alegria claimed that the repairs had been done, by last month Jimy’s presented a new report, written by S. and Co NV and Associates that again mentions inadequate repairs, leakages and danger from loose electric wiring, among other issues that point to the bad state of the property.

Alegria contested this report during the last hearing on June 25, but its arguments did not win the case. Jimy’s made it sufficiently plausible that the property needs urgent repairs, the court ruled based on documents. In particular, Alegria has to address leakages and the electrical wiring.

That there have been no more complaints about leakages during the first half year of 2015 can be explained, as Jimy’s did, from the long period of drought on the island.

“Alegria’s position that there have been no more complaints since the rainfall does not tally with statements of mister (Salem) Fahdi (director of Alegria – ed.) at the hearing who indicated that he had been approached several times to look at problems or damages,” the court ruling states.

Jimy’s wants to open both establishments as soon as possible, though Alegria doubted this during the court hearing. Jimy’s closed both businesses in June 2014 when the low season kicked in. Normally they would have reopened in the high season. Jimy’s has acknowledged that it is looking for a buyer. “That did not go through due to the circumstances and the attitude of Alegria. That will also deter other buyers from taking over restaurants.”

Jimy’s noted that the inadequate maintenance and the demand to clear the property are linked to a larger plan of Alegria. “It wants to develop the Caravanserai Resort and it wants to get rid of the current structures and its tenants.”

Alegria acknowledged in court that there are plans but that they are “for the long term” and that this is “no reason to want to get rid of the current tenants.”

The court ruled that there is sufficient interest on the part of Jimy’s to have the property in such a condition that the restaurants can reopen. “This interest is decisive,” the court ruled.

Alegria will have to complete all repairs within four weeks after the verdict has been served, or face penalties for every day it fails to abide by the ruling.

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