Citation: BS 2018 SC 3

Title: SCHOONER BAY VENTURES LIMITED v. DESTINATION SCHOONER BAY

(BAHAMAS) LTD. AND JAMES MALCOLM
Country: The Bahamas
Court: Supreme Court
Suit No.: 2016/CLE/gen/01064
Judge(s): Winder, J.
Date: January 19, 2018
Subject: Injunction
Subsubject: Sought to restrain certain operations of the defendants – Application of the general
principals of American Cyanamid Co. Ltd. v. Ethicon Ltd [1976] ER 396.

Appearances:
Courtney L. Pearce-Hanna for the plaintiff
Colin A. Jupp for the defendants

WINDER, J.:
This is an application for an injunction.

1. This action was commenced by the plaintiff by specially indorsed Writ of Summons, filed on 14
July 2016, seeking relief as follows:

1) Damages for assessed breach of the Declaration;

2) Damages for tortious interference and malice to be assessed;

3) Damages following the defendants' passing off and purporting to do business as an

authorized agent of the plaintiff company;

4) A permanent Injunction enjoining the defendants from:

a. using the plaintiff's trademark;

b. carrying on business in Schooner Bay without a Business licence issued by the Board;

c. holding themselves out to be the exclusive representative of Schooner Bay;

d. listing or advertising the rental, sale or property management of any Schooner Bay
properties;

5) An injunction restraining the defendant from brokering sales, rentals marketing or property
management of the properties within Schooner Bay until 22nd March, 2018 or the expiration
of the plaintiff's exclusive rights under Article 5, Part II, Founder's Reserved Rights, 5.5 of
the Declaration, whichever is later;

6) A declaration that pursuant to the Declaration, the plaintiff has exclusive rights under Article
5, Part II, Founder's Reserved Rights, 5.5, to broker sales, rentals marketing and property
management of the properties within Schooner Bay until 22nd March, 2018 or the expiration
of the plaintiff's exclusive rights under Article 5, Part II, Founder's Reserved Rights, 5.5 of
the Declaration, whichever is later;

7) Interest pursuant to the Civil Procedure Award of Interest Act; and

8) Costs.
 2. The action is defended. In their defence, the defendants deny the allegations relying on the
permission granted by the plaintiff and upon the 2nd defendant's Business License and Real Estate
Salesman License. They say that they have lawful authority to operate at Schooner Bay and have
rightfully entered into business relationships with private property owners at Schooner Bay to service
their real estate needs.

3. The plaintiff has applied by Summons dated 19 May 2017 for an injunction in the following terms:

[A]n Order that the defendants whether by themselves or by their agents or servants or
otherwise be restrained pending the outcome of the proceedings from:

1. Operating or otherwise conducting business in Schooner Bay;

2. Using the trademarked name and image of Schooner Bay without permission;

3. Taking or using any photographs other images or video footage of the Schooner Bay
Community Common Areas;

4. Conducting or carrying on any and all business in connection with real estate sales and
rentals of properties in Schooner Bay;

5. Conducting or carrying on any and all management and/or marketing business in

relation to the Schooner Bay Development;

6. Holding himself out to be an authorized agent representative or spokesperson of the

Schooner Bay Development;

7. Using photos of or references to the Schooner Bay development on the Destination

Schooner Bay website and requiring the removal of any and all such photos and
references as well as the Schooner Bay Ventures' office number, sales office number
and postal address from the Destination Schooner Bay website;

8. Posting, linking to, using or otherwise referencing any and all videos on the Video
streaming website You Tube that include flybys, visuals or other images of Schooner
Bay properties and it's common areas;

9. Discussing the operation of Schooner Bay to third parties as an agent or employer of

Schooner Bay;

10. Committing any, or any further breach of the Declaration of Covenants Conditions and
Restricted dated 5 May 2009 as amended by an Amended and Restated Declaration of
Covenants Conditions and Restrictions dated 4 March 2010 along with a Rectification
for Amended and Restated Declaration of Covenants and Conditions and Restrictions
dated 5 May 2010 and further amended by the Fourth Amendment to Declaration of
Covenants Conditions and Restrictions dated the 7 March 2014;

11. Making disparaging and negative remarks about the plaintiff, written or otherwise, it's
agents and representatives or the Schooner Bay Development;

12. Any other tortious interference with the plaintiff's property — the Development at
Schooner Bay and the related business of its promotion, marketing skills and leases.

4. The application is supported by the affidavit of Tina Gascoigne, in house counsel for the plaintiff,
and sets out the plaintiff's complaints against the defendants. Paragraph 2 and 3 of the said affidavit are
settled in the following terms:
2. As a property owner the Second defendant agreed to abide by the terms and conditions of
the Declaration. ...

3. The Second defendant, by himself and through the First defendant, breached the terms and
conditions of the Declaration by carrying out the following acts;

i. Using the trademarked name and image of Schooner Bay without permission;

ii. Taking or using any photographs other images or video footage of the Schooner Bay
Community Common Areas;

iii. Operating their business in Schooner Bay without a Business Licence issued by the
Schooner Bay Community Operation Board;

iv. Marketing Schooner Bay Properties for rent via the internet, including but not limited to
the following properties:-

a. Carioca Cottage;

b. Unplugged;

c. Ever Sunward;

d. The Jib;

e. Crosswinds;

f. Breezeway;

g. Azure Way;

h. The Anchorage;

i. Pilot's House;

j. Captain's Cottage;

k. Sea Glass Villa.

v. Marketing Schooner Bay Properties for rent via the internet at Destination Schooner
Bay (Bahamas) Ltd. ([Link] and including but not limited to the
following websites:-

a. [Link]

b. [Link]

c. [Link]

d. [Link]

e. [Link]

vi. Marketing of certain Schooner Bay properties "Pilot House" and Captains Cottage" as
part of a rental and fractional ownership program via [Link]. There is now
 produced and shown to be marked Exhibit "TG-3" printed screenshots of the
[Link] website advertising the relevant properties.

vii. Video marketing of the Schooner Bay Village South Abaco via the video sharing website
You Tube;

There is now produced and shown to be marked Exhibits "TG-4" through "TG-7"
respectively printed screenshots of the defendant's You Tube video of the Schooner
Bay Village South Abaco, published by James Malcolm on 11th April, 2014; printed
screenshots of the defendant's You Tube video of Zanzibar Beach house, Little Bridge
Bay, Schooner Bay Abaco Bahamas published by James Malcolm on 25th September,
2015; printed screenshots of the defendant's You Tube video of The Out Island Club
published by James Malcolm on 24th November, 2015; and printed screenshots of the
defendant's You Tube video of The Out Island Club published by James Malcolm on
27th August, 2015;

viii. Continuing to communicate with Schooner Bay homeowners and the world at large as
an authorized agent of Schooner Bay in addition to "bad-mouthing" the plaintiff and its
employees, agents and representatives; ...

5. The 2nd defendant replied to the plaintiff's complaints in an affidavit filed on 10 October, 2017.
Paragraphs 5, 6, 7, 8, 9, 10, 11, 12, 13, 19, 20 and 22 of the Malcolm affidavit are settled in the following
terms:

…
5. The plaintiff SBV is a company also incorporated in the Commonwealth of The Bahamas
carrying on a business as a property developer and vendor of property located in Schooner
Bay ("SBV"). However, the plaintiff is not licensed under the Act to engage in the practice of
real estate business in the capacity of a real estate broker or a real estate salesman. Under
the Act it is an offence punishable by a fine of three thousand dollars or to imprisonment for
12 months or both for persons to engage in the practice of real estate business either as a
real estate broker or real estate salesman without a license and the plaintiff is operating in
breach of the aforesaid statutory provisions.

6. As a former employee of SBV, the property developer at Schooner Bay, and as a licensed
real estate salesman under the Act, I and my company, DSB were authorized by SBV, to
carry on DSB's property and rental management business in Schooner Bay as is evidenced
by a written approval from SBV's Town Manager to me dated 1st October 2013 ... (the
"written approval") and the letter from SBV to me dated 19 December, 2013, ... (the "letter")
which states in pertinent part: You may continue to operate your business with the clients
you currently have.

7. In the course of DSB conducting business at Schooner Bay, several homeowners at

Schooner Bay discussed with DSB and myself for the purposes of DSB advertising their
homes in Coastal Living Magazine ("Coastal Living"), a prestigious consumer magazine with
10 publications each year, that features homes from destinations around the world as a
means of advertising them for vacation rental purposes.

8. The Homeowners all desired to have their homes located in Schooner Bay advertised in the
Coastal Living Vacations Rental Program in addition to other rental programs and marketing
efforts that DSB in its capacity as property manager may have arranged.

9. However, after DSB took the necessary steps to have the Homeowners' properties listed in
Coastal Living the Homeowners and DSB were made aware that SBV contacted Coastal
Living raising concerns that DSB was in violation of the Declaration of Covenants and
Restrictions governing Schooner Bay, notwithstanding the fact DSB was run as a Home
 Based Business in accordance with Article 2 Part II of the Declaration of Covenants and
Restrictions governing Schooner Bay, ... and it was operated pursuant to the written
approval and the letter.

10. As a result of the actions of SBV, Coastal Living informed me via email dated 18 March,
2016 from Kristen Payne, Executive Director at Coastal Living, ... that they were not able to
move forward with placing the Homeowners' properties in the Coastal Living Vacation
Rental Program until the dispute between DSB and SBV is resolved in a way that makes it
clear to Coastal Living that they can proceed without any risk.

11. As a result of the actions of SBV, by letter dated 13 May, 2016 ... the Homeowners'
attorneys contacted the attorneys of SBV, to request that they immediately (i) issue a written
retraction of the allegation that DSB's management of the Homeowners' Schooner Bay
home rentals is a violation of the Declaration of Covenants and Restrictions governing
Schooner Bay (ii) confirm that the Homeowners and DSB, as their property manager, have
the right to place the Homeowners' properties in the Coastal Living Rental Program and (iii)
acknowledge the right of the Homeowners to advertise their properties in Coastal Living and
other publications, and to use the words "Schooner Bay" in such advertisements as part of
the legal description of the Properties and description of their geographical location.

12. To date SBV has refused to comply with the requests mentioned in paragraph 11 above
thereby compelling the Homeowners and DSB to commence legal proceedings to seek
relief from the Court in the circumstances.

13. As a result of the forgoing, on 9th June 2016, DSB and the Homeowners filed Supreme
Court Action 2016/CLE/gen/00845 ("the First Action") seeking determination by this
Honourable Court of issues relating to DSB's right to operate its property management
business in Schooner Bay. In spite of the aforesaid issue being already before the Court for
determination by virtue of the First Action, on 14th July, 2016 (1 month later) SBV filed
Court Action Number 2016/CLE/gen/1064 ("the Second Action") which raises the same
questions of law and fact (namely, whether DSB is entitled to do business in Schooner Bay)
and which is in respect of the same transaction or series of transactions (namely, DSB's'
management of the Homeowners properties and his authorization by SBV to do so).
…

19. At all material times, I have been a licensed real estate salesman and under section 3(1)
and in particular 3(1) (c) and (e) of the Act I am lawfully entitled and have the right to,
among other things, manage land or engage in any other business concerned with the
management of land either in a consultative capacity or as an agent or direct or assist in the
procuring of prospects or negotiation or closing of any transaction which results in a sale,
exchange, lease, or rental of land of another or is calculated to have that result. ...

20. At all material times DSB has been in the business of property management and rentals in
Schooner Bay, which as The Company of a licensed real estate salesman, it may do
pursuant to section 3(1) (c) of the Act.
…

22. In view of the foregoing, each of the allegations made in SBV's summons seeking the
injunction are wholly unmeritorious. I address each of them in turn below.

a. With respect to operating or otherwise conducting business in Schooner Bay, in

addition to having the lawful right to do so, SBV itself gave DSB and myself
permission to operate in Schooner Bay pursuant to the letter dated 19th December
2013 referred to above.
b. As to using the trademark name and image of Schooner Bay without permission,
Schooner Bay is a geographical location and as such any references to Schooner
Bay by the defendants are references not to the plaintiff's development brand but
rather to the physical location itself which is situate east of the main public road and
immediately south of Guinea Schooner Bay on the Eastern Coast of Great Abaco
Island.

c. With respect to taking or using photograph or videos of Schooner Bay Community

Areas, all photos or other images taken by the defendants were taken with the
permission of private property owners under contract with the defendants and such
activities are not prohibited but rather permitted under clause 5.4 (a) (ii) of the
Declaration.

d. As to paragraphs 4 and 5 of the Summons concerning carrying on and conducting

business with sales, rentals and management of properties paragraphs 19-22.a.
apply mutatis mutandis.

e. With respect to holding out as the only authorized agent representative for the
Schooner Bay project or spokesperson for the same, in accordance with their
permission to operate pursuant to the letter of 19th December 2013 and the terms
of the Act respectively, the First and Second defendants are currently the only
licensed entities and persons providing residential vacation rental management and
tourism services at Schooner Bay and, therefore, they are the exclusive provider of
vacation cottage, hospitality and destination management-travel at Schooner Bay.

f. With respect to the DSB website, the same is no longer in operation.

g. As to video streaming on YouTube, any such streams were either of the geographic
location Schooner Bay and/or done with the permission of private property owners
at Schooner Bay and as such the defendants have the right to engage in such real
estate business under the Act.

h. As to discussing the operation of Schooner Bay to third parties, as an agent or

employer of Schooner Bay SBV terminated my employment on 19th December
2013 and therefore since that time I could not have discussed Schooner Bay as an
agent or employee of the plaintiff nor did I hold myself out as doing the same.

i. As to any further breaches of any covenants, at all material times the defendants
have operated within their rights pursuant to the Act and not in breach of any of the
covenants of the Declaration.

j. With respect to the defendants making disparaging and negative remarks about the
plaintiff, in truth it has been the plaintiff who has made disparaging and negative
remarks about the defendants. Ever since the First Action, it has been the plaintiff
who sought to deny the defendant their legal right to operate at Schooner Bay
notwithstanding that SBV gave them permission to do so and notwithstanding that
the defendants have operated within the parameters of the Act. Also the plaintiff,
whether through its employees, agents, or servants, have harassed me as means
of trying to force me to stop operating at Schooner Bay. For example, sales officer
and security guards of the plaintiff often interfere with people renting or seeking to
rent homes at Schooner Bay either through myself or the First defendant. Also the
security guards often inform my clients that they are prohibited from taking photos
of properties at Schooner Bay when in fact they are allowed to do so under clause
5.4 (a) (ii) of the Declaration.
 k. As to the defendants tortiously interfering with the plaintiff's property, it has been the
plaintiff who has tortiously interfered with the defendants' legitimate business
dealings with Coastal Living by unlawfully claiming that it had the right to engage in
vacation rentals at Schooner Bay, when it is prohibited from doing so under the Act.
The plaintiff has also falsely alleged that the First defendant did not have a right to
engage in vacation rentals at Schooner Bay thereby causing Coastal Living not to
proceed with the intended advertising and marketing program for vacation homes
exclusive.

LAW
6. Section 21 of the Supreme Court Act empowers the Court to grant injunctive relief. Order 29 rule
1 of the RSC provides that an application for the grant of an injunction may be made by any party to a
cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction
was included in that party's writ, originating summons, Counterclaim or third party notice, as the case
may be.

7. In determining whether it should grant or continue an interlocutory injunction, the Court will
exercise its discretion having regard to the criteria set out in the celebrated case of American Cyanamid
Co. Ltd v. Ethicon Ltd [1976] AC 396, which include the following:

(1) Whether there is a serious issue to be tried;

(2) Whether damages are an adequate remedy; and,

(3) Where the balance of convenience lies.

8. According to the learned authors of Gee on Commercial Injunctions at paragraph 2.015:

"What the case [of American Cyanamid] clearly establishes is that there is "normally" no need
on applications for an interim injunction to embark upon a mini trial on witness statements or
affidavits to assess the quality of the claimant's case or the defendant's defences, or to assess
the rival merits on a disputed, complicated question of law. This would be wasteful of the parties
resources and those of the Court. It would also be inconsistent with the objective of the Court
not to pronounce an opinion on the substantive merits of the case until trial. This objective
encourages judges not to decide important applications on assessment of the apparent merits
based on evidence, which is incomplete, and without the benefit of cross-examination, full
disclosure of documents and detailed argument. These features made it fair and sensible to
avoid assessment of the merits in American Cyanamid……… However, the principles are
"guidelines", and not a "straitjacket", where the function of the Court is to hold the position as
justly as possible pending final determination of the triable issue at trial"

9. On the question of balance of convenience, the case of Fellowes & Son v. Fisher [1976] 1 QB
122, 137 provides useful instruction. In that case it was stated that:

"It is where there is doubt to the adequacy of the respective remedies in damages... that the
question of balance of convenience arises.... The extent to which the disadvantage to each
party would be incapable of being compensated in damages in the event of his succeeding at
the trial is always a significant factor in assessing where the balance of convenience lies."

National Commercial Bank Jamaica Ltd. v. Olint Corp Ltd. (2009) 5 LRC 370 further provided that:

"The Court should take whichever course seems likely to cause the least irremediable prejudice
to one party or the other."
ANALYSIS AND DISCUSSION
10. The plaintiff relies principally on Article 5.5 of the Declaration of Covenants and Restrictions
governing Schooner Bay. Article 5.5 of the said Declaration provides:

5.5 Real Estate Offices. For eight (8) years after the date that this Community Declaration is
recorded, the Founder shall have the right to exclusive operations of real estate sales, rental
or management offices within Schooner Bay, which shall be considered a deed restriction
for the entire Schooner Bay and shall be part of the consideration for the sale of property
within Schooner Bay. However, unsigned home-based real estate offices are permitted.

The plaintiff reads this section as a restriction on all lot owners from engaging real estate
businesses in the community.

11. The defendants say that they rely on a written approval from SBV's Town Manager dated 1St
October 2013 and from SBV dated 19 December, 2013. The 2nd defendant also relies upon his rights
as a licensed real estate salesman and broker pursuant to the provisions of the Real Estate (Brokers
and Salesman) Act. Section 2 of the Act, the interpretation section, provides:

"the practice of real estate business" has the meaning ascribed to that expression in section 3;

"real estate broker" means an individual who, for another or others, for compensation, gain or
reward or hope or promise thereof, either alone or through one or more officials or salesmen,
trades in real estate or an individual who holds himself out as such;

"real estate office" means any premises on or from which the practice of real estate business is
carried on;

"real estate salesman" means are individual who engages in the practice of real estate business
in whole or in part, as an agent of, or subject to the direction, control or management of, a real
estate broker;

Section 3 provides:

3. (1) A person engages in the practice of real estate business for the purposes of this Act if,
on behalf of another person, for compensation or valuable consideration directly or
indirectly paid, or expressly or impliedly promised, or, with intent to collect or receive
compensation or valuable consideration therefor, he -

(a) appraises, auctions, sells, exchanges, buys, leases, rents or offers, attempts or
agrees to appraise, auction or negotiate the sale, exchange, purchase, lease or
rental of any land or otherwise functions as a real estate broker or real estate
salesman in relation to any land;

(b) advertises or holds out to the public by any oral or printed representation that he is
engaged in the business of appraising, auctioning, buying, selling, exchanging,
leasing or renting land;

(c) manages land or engages in any other business concerned with the management
of land either in a consultative capacity or as an agent;

(d) takes any part in the procuring of sellers, purchasers, lessors, lessees, landlords or
tenants of land; or

(e) directs or assists in the procuring of prospects, or the negotiation or closing of any
transaction which results in a sale, exchange, lease or rental of land of another or is
calculated to have that result.
 12. The plaintiff says that it only has to establish a good arguable case. Whilst any permission
initially granted to the defendants have clearly been revoked, I am not satisfied that there appears to be
any prohibition with respect to most of the activities complained of by the plaintiff. There also does not
appear to be any exclusivity in the plaintiff to perform these activities. However, whilst my reading of
Article 5.5 does not readily lend to the prohibition contended for by the plaintiff I will refrain for a finding
that, the low bar of a good arguable case, has not been made out.

13. Property owners (including the 1st defendant) in a community such as Schooner Bay (or any
subdivision for that matter) have rights over the common areas of the development, to use them along
with their guests; to take photographs whilst in these areas, and to allow their visitors and workmen to
access their property using these common areas. Additionally these homeowners have an expectation
of utilizing and marketing their own property for short term rentals.

14.I am content to find that, save for the use of any trademark property of the plaintiff and any
holding out as the only authorized agent for the Schooner Bay Development, the balance of
convenience lies in favour of the defendants. When weighed against:

a) the right of the 2nd defendant to ply his trade as statutorily entitled; and

b) the rights of property owners, customers of the defendants, to engage in what appears to be
the ordinary use of the property and the promotion of their residences as short term rentals,
the refusal to grant injunctive relief is likely to cause the least irremediable prejudice.

15. In the circumstances therefore, subject to the provision of the usual undertaking in damages, I
grant a limited restraint in respect of paragraphs 2 and 6 of the Summons only. The majority of the relief
sought in the Summons having been refused, I make no order for costs.

Ian Winder
Justice