For worthless real estate deals at Caravanserai: Court awards more than $1.2 million in damages

POSTED: 11/6/15 9:14 PM


St. Maarten – In two similar lawsuits, the Court in First Instance has sentenced Country St. Maarten, the Cadastre and retired notary Francis Gijsbertha to pay damages that total $1,236,572. The injured parties are two Anguilla-based companies, NHKK Enterprises Ltd. and Fralexia Ltd. Both companies bought pieces of the former Caravanserai Resort in Beacon Hill. The transactions were later declared null and void, because the selling party, Kildare properties, had no permission from the government to split the long lease rights to the land.

A third lawsuit is still in the works: it concerns a purchase by International Financial Planning Services of a piece of the property for $1.5 million. This transaction has been declared null and void for the same reasons.

NHKK bought a piece of the property on June 22, 2011 for $130, 250. The notarial deed stated that the land was “free and un-mortgaged.” Later it turned out that this was not the case and when Scotiabank auctioned Caravanserai last year, the resort became the property of Alegria Real Estate.

The court holds notary Gijsbertha liable for the damages NHKK incurred. “The notary should have made sure that the country as leaseholder approved the split,” the court ruled.

The court also holds the Cadastre liable because it signed the registration saying that no mortgages or liens on the land were known. The information was incomplete, the court ruled. Information the Cadastre had at its disposal showed that there were three mortgages on the main parcel of land. The Cadastre should have shared this information with the notary, the court points out in the ruling.

The court found the country guilty by association: “The country is liable for mistakes made by the Cadastre. This means that the country is liable for the damages NHKK says it has incurred.”

The damages Fralexia incurred are almost tenfold, because this company paid on July 28, 2010 $700,000 for the Sunset Bar&Grill and $1,050,000 for Bliss restaurant and nightclub and Dragon Gate restaurant.

Basically, Fralexia got caught up in the same problems with the lacking permission to split the right of long lease and its transactions were also voided. Fralexia demanded in court $2,250,000 from the country, the Cadastre, Gijsbertha and Gijsbertha NV, plus an additional $42,000 from the country and $1.2 million as compensation for rent for the next ten years.

The court rejected Fralexia’s claims against Gijsdertha and his company, but held the Cadastre and, by extension, the country liable for damages.

The Cadastre provided wrong information and is liable towards Fralexia, the court ruled. Like in the case of NHKK, the court holds the country liable for mistakes made by the Cadastre.

The court rejected the claim of $700,000 for the purchase of the Sunset Bar&Grill, because Fralexia only submitted that it did not understand why the notary did not transfer the right of long lease. The court awarded the claim of $1,050,000 – the purchase price for Bliss and Dragon Gate – because in this case the Cadastre gave wrong information to the notary.

The court did not hold notary Gijsbertha liable, but it sentenced the country and the Cadastre to pay the purchase price of the two businesses, while the country also has to return the transfer tax of $42,000.

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