PHILIPSBURG--The Court of First Instance on Tuesday declared null and void the disputed December 16, 2010, auction of Pelican Resort and Club.
In the court case on the merits, the former owners of Pelican Resort, now Simpson Bay Resort, successfully challenged the legality of the auction, which was called after the owners of the resort fell behind with their mortgage payments.
Lender Quantum Investment Trust (QIT) auctioned off the resort in a public auction on which it submitted the only and winning bid and became the owner of the resort, after which QIT transferred ownership to Simpson Bay Resort Owner Company B.V. (SBROC), an affiliated company.
Transfer of ownership took place in a so-called "Deed of Command" signed on January 26, 2011, by notary Henry Parisius, who is now retired.
This court case revolved around the question of whether all obligations deriving from the general and legal conditions of the auction indeed were complied with.
According to claimants, the purchase price of US $30.5 million was never deposited with the notary. This is against the law, which states that a transfer of funds on real estate must always proceed via a notary.
QIT apparently had attempted to write off the debt of the previous owners in lieu of payment when it took over the property. However, a settlement such as this is prohibited, the Judge ruled.
The Court also found no proof of the existence of a so-called Certificate of Payment to show that any payment actually had been made. The purchase price was never deposited on a notary-appointed bank account, which was in violation of the Civil Code and the auctioning conditions.
According to the Court, Quantum and SBROC were, and still are, bound by law to deposit the purchase price with a notary. This means that the resort's real estate was not transferred legally from Quantum to SBROC, which also entails that the writs of attachment were not voided by auction, the Court stated.
This led the Court to the conclusion that Pelican Resort the Owner Company N.V. is still to be considered the resort's legal owner, which brings parties back to the situation that existed prior to the December 16, 2010, auction.
Therefore the Court declared the transfer of the resort from Quantum to SBROC null and void.
It also was stated that notary Parisius had been at fault in acting in contravention of the Civil Code and therefore could be held liable for damages incurred. He was sentenced to payment of damages to the foundation representing the interests of Pelican Resort and Club and its subsidiaries Pelican and Pelican Resort Club the Management Company N.V.
The notary also was ordered to pay damages to two individual timeshare owners from the United States. Robert Russo and Franklin Biddar were participants in the PCIP Investors programme, through which Pelican Resort's owner had borrowed money to renovate the resort. Both had lent the resort $100,000, but never were paid back.
Quantum, SBROC and the notary all were sentenced to payment of NAf. 8,563 in legal fees.
"This verdict will have big repercussions for St. Maarten," stated the claimants' lawyer Gerrit van Giffen by telephone. "Investors in the resort have still quite a few outstanding claims. The resort was auctioned for less than nothing, after which no one was paid anymore. Now is the time for all parties to go and sit around the table and reach a settlement.
"I understand that the Court's decision is painful for the new owners. We will be prepared to come to a solution, but the people who suffered damages must be compensated, especially the investors. Hopefully, the doors will be opened now for us to engage in talks."
It is expected that Quantum, SBROC and notary Parisius will file an appeal against the Court's decision.