It is with great concern that the Villa Owners listened to a presentation by the Leader of the Opposition, the Honourable Mr. McNeil Rogers, on Radio Anguilla on the 14th May 2013 (“Presentation”).
Whilst having no wish to enter into the political arena in Anguilla, the Villa Owners do feel constrained to clarify and correct several statements made in the Presentation.
As its premise, the Presentation appears to have conflated the issues of the Villa Owners being subjected to a “rental pool” operated by the Hickoxes, with the willingness of the Villa Owners to rent their villas. To be clear – the Villa Owners are entitled, and have attempted, to arrange for the rental of their villas over the course of the last year. For the reasons explained below, the Villa Owners do not wish, and are not required, to have their villas rented by the Hickoxes.
As explained in greater detail below (a) the Villa Owners invested US$ 20, 025, 000 into Cap Juluca to prevent the Resort from closing in 2010/11 (from which amount the Hickoxes directly received US$ 8, 000, 000 in 2011) (b) as a condition of their investment, the Villa Owners were and are entitled to rent their villas by themselves or through a third party rental agent, (c) as proprietors of 4.5 villas, the Villa Owners are entitled to receive all the rental income from these villas (d) it is in the Villa Owners’ interest, and they have made numerous attempts, to arrange for their villas be rented as a source of return for their investment (e) the Villa Owners have been unable to rent their villas due to the intervention of the Hickoxes and (f) as a result of the Villa Owners inability to rent their villas, they have incurred losses in the range of US$ 1, 000, 000 to US$ 2, 000, 000, since May 2012 and continuing.
1. In the autumn of 2010, Leeward Isles Resorts Ltd (“LIR”), the owner of Cap Juluca, was in dire need of funds to meet certain financial commitments, including (a) the first payment to Mr. Hickox under a Settlement Agreement involving the owner of Cap Juluca and Mr. Hickox, in the amount of US$ 8, 000, 000, and (b) to finance the opening of Cap Juluca for the Winter Season 2010/11.
2. LIR, through Mr. Adam Aron, intended to raise the required funds through the sale of a specified portion of the existing villas, as well as through the sales of new villas that were to be developed at the Points and Cove Bay Beach. Both the MOA of 2009 and the MOU of 2010 – entered into between the respective Government of Anguilla at the time and LIR – expressly envisioned and approved such sales.
3. Upon being approached by Mr. Aron to invest in Cap Juluca, the Villa Owners undertook the usual due diligence procedures and reviewed the property and persons involved, so as assess the relevant risk factors in such investment.
4. The initial assessment by the Villa Owners was that Cap Juluca represented an extremely high risk investment in light of the fact that (a) the lands were subject to substantial Charges in favour of Mr. Hickox, Mr. Friedland and First Caribbean Bank, (b) LIR had entered into a Settlement Agreement with Mr. Hickox for some US$ 75, 500, 000 (c) the debt assumed in relation to Mr. Hickox was disproportionally high in relation to the operating income of the Resort and, perhaps most importantly, (d) there was an extremely long and acrimonious history of litigation surrounding the Resort, which centred around Mr. Hickox.
5. Against the background of Mr. Hickox’s charges against the Resort lands and the possibility of default under the LIR/Hickox Settlement Agreement, there was the very real prospect that Mr. Hickox would, at some point, attempt to take control of a portion of the Resort. In such a situation, any independent purchaser of villas at Cap Juluca would be faced with the prospect of having to deal with Mr. Hickox, either directly or indirectly, on an ongoing basis. Given the history of the litigation at Cap Juluca the Villa Owners were understandably disinclined to make any investment in Cap Juluca unless sufficient safeguards and insulation from any such situation could be guaranteed.
6. Faced with the imminent closure of Cap Juluca, if funds could not be urgently obtained, LIR sought to ensure that the necessary protections were implemented to the satisfaction of the Villa Owners. Ultimately, the Villa Owners’ investment was made contingent on a number of protections, including but not limited to –
a. The right to control the rental of any villas acquired by the Villa Owners (“Villa Rental Rights”),
b. The right to the use of the grounds and facilities of the Resort for the benefit of the Villa Owners and their rental guests (“Occupant Rights”), and
c. The right to a full return of investment plus interest and expenses in the event that the Crown Lease was lawfully transferred to any person or entity with whom the Villa Owners did not wish to carry on business or did not feel possessed the requisite credibility, financial strength or professional wherewithal to successfully operate the Resort (“Put Right”)
7. LIR accepted the conditions of investment and memorialised same in the Subleases, and accompanying instruments, which were delivered to the Villa Owners in 2010/2011.
8. The terms of each of the relevant Subleases and instruments were delivered to, and approved by, Mr. Hickox (along with Mr. Friedland), whereupon the charges against 4.5 villas were released by these persons, so as to enable the Subleases to be granted to the Villa Owners, free and clear from such encumbrances. Had either Mr. Hickox or Mr. Friedland not been satisfied with the terms and conditions of the Villa Owners’ investments, then clearly the transactions could not have proceeded, the relevant lands would not have been released from the charges and the Villa Owners would not have paid over the relevant funds.
9. The Government of Anguilla was also duly provided with all the relevant Subleases and instruments, which were approved, as evidenced by the issuance of Alien Landholding Licences to each of the Villa Owners.
10. As a result of these approvals, the transactions were able to close, the aggregate sum of US$ 20, 025, 000 were paid over by the Villa Owners to LIR and the Subleases were registered in the Land Registry. Out of this payment by the Villa Owners, the sum US$ 8, 000, 000 was paid directly to, and received by, Mr. and/or Mrs. Hickox and the Resort was able to remain open for the 2010/2011 tourist season.
11. Under the Villa Rental Rights incorporated into the Subleases and accompanying instruments, the Villa Owners were expressly permitted, should the occasion arise and should they so choose, to arrange for the rentals of their villas through any preferred rental agent or on their own behalf. To ensure the viability and success of such rentals, the Villa Owners and their rental guests were irrevocably granted access to and use of the Resort facilities.
12. The rental agent designated at the time of the grant of the Subleases was Cap Juluca Management Company Limited, which entity acted as the exclusive rental agent to each of the Villa Owners. The Alien Landholding Licences granted to each of the Villa Owners expressly identified and confirmed Cap Juluca Management, or its affiliates, as the exclusive rental agent for each of the Villa Owners. Cap Juluca Management is not affiliated, and has never been affiliated, with the Hickoxes. Cap Juluca Management, through its subcontractor Maundays Bay Management Group Ltd, has at all material times been ready, willing and able to rent the 4.5 villas owned by the Villa Owners, and in compliance with the MOU.
13. A crucial point which appears to have been wholly ignored or overlooked by many commentators is the fact that, following the liquidation and/or receivership of LIR, all the net rental income generated by the Villa Owners’ villas were and are payable to the Villa Owners themselves. Restated, the Villa Owners are entitled to all the profits generated by the rental of their villas. To date, the Villa Owners estimate that they have lost between US$ 1, 000, 000 to US$ 2, 000, 000 in rental income due to their inability to rent their villas. Accordingly, it is clear that regardless of whether the relevant villas are rented by the Villa Owners or by the Hickoxes, no rental income from those villas will flow to the Hickoxes or the Resort. Any notion that these villas are relevant to the profitability of Cap Juluca is quite simply misguided.
14. Following the liquidation/receivership of LIR, it was always the intention of the Villa Owners to continue the rental of their villas through the offices of Cap Juluca Management. Accordingly, since May 2012 the Villa Owners have exerted every effort to make arrangements to ensure the security of their villas and for access to and use of the Resort facilities, so as to ensure viable rentals of their villas.
15. Unfortunately, since May 2012, the Villa Owners’ several efforts to rent their villas have been consistently rebuffed or undermined in the following manner –
a. The Hickoxes unlawfully and abruptly removed the furniture from the Villa Owners’ villas, which furniture was only returned following the commencement of legal proceedings to recover same.
b. Whilst the Villa Owners’ villas were open, guests who were occupying these villas were removed and guests wishing to occupy these villas, were diverted to other villas – all without any authorisation from, or even consultation with, the Villa Owners.
c. The Villa Owners, on numerous occasions, sought assurances that their guests would be permitted access to and use of the Resort facilities. All such requests were either denied or ignored.
d. The Villa Owners invited meaningful dialogue with the Hickoxes, in the event that they were able to become the legal owners of the remaining lands at Cap Juluca. To date the Hickoxes have rebuffed or ignored each such invitation.
e. The Villa Owners are obviously concerned that the Hickoxes are attempting to operate the Resort without an Alien Landholding Licence, registered title to any of the lands of the Resort or even a business licence to operate the Resort – in what the Government of Anguilla has referred to as an “illegal occupation”. Notwithstanding this unsafe and unsatisfactory situation, the Hickoxes have continued to demand that the Villa Owners agree that they (the Hickoxes) should be the exclusive rental agents of the Villa Owners’ villas. Notwithstanding the Hickoxes’ precarious position and notwithstanding the Villa Owners have delivered copies of their Subleases and accompanying instruments clearly showing their entitlement to rent their villas through Cap Juluca Management, the Hickoxes have effectively taken the position that the villas would not be permitted to operate unless the Hickoxes were the exclusive rental agents. The Hickoxes belligerence in this regard is all the more disconcerting in light of the incontrovertible fact that the Villa Owners, and not the Hickoxes, are the persons entitled to the rental income from their own villas.
16. It is in the face of this impasse that the Villa Owners were constrained to secure their villas, so as to protect their investment and until such time as the chaotic situation at Cap Juluca could be rectified.
17. The Villa Owners have provided the documentation, instruments and agreements supporting each of the foregoing matters to the Crown, the Government of Anguilla and indeed the Hickoxes. The Villa Owners would invite the Honourable McNeil Rogers and others to review this same material.
The recent termination of a large number of employees at Cap Juluca is, of course, of deep concern to the Villa Owners, both in terms of the human costs and as an indicator of the decline of the Resort. It is, however, quite simply incorrect to suggest that such terminations are in any way related to any action or inaction by the Villa Owners. As an incontrovertible fact, the Villa Owners have made innumerable attempts to arrange for the operation of their villas in a viable and secure manner but have been unable to do so due to the actions and positions taken by the Hickoxes. Indeed, the closure of the Villa Owners’ villas has caused, and continues to cause, significant loss and damage to the Villa Owners.
Notwithstanding this situation, and while the Villa Owners intend to continue their efforts to resume the rental of their villas, any suggestion that the re-opening of these villas, will cure the current crises at Cap Juluca is quite simply a “red herring”, which serves to distract from the real issues affecting the Resort. The rental of the Villa Owners’ villas cannot and will not enrich the Hickoxes, since they are simply not entitled to the rental income therefrom, and cannot cure the several challenges now facing the Resort. The only real commercial resolution for the situation at Cap Juluca is for Government of Anguilla (with the support of all concerned) to ensure that the core of the Resort is leased to a credible, experienced and well financed operator who is able to lift Cap Juluca out of its current morass and to restore it to its flagship status as the premier resort in Anguilla. The Villa Owners would, of course, welcome the opportunity to work with such operator so as to ensure the value of their investment, the well being of the Resort and staff and the sustainability of the tourist industry in Anguilla.
From the Villa Owners perspective, Anguilla is not just a beautiful destination but is an island that receives investor interest due to its adherence to the rule of law and protection of property rights. The Villa Owners provided substantial investment into Cap Juluca, which allowed the Resort to survive the 2010/2011 season, have at all times fully complied with all their legal obligations, have obtained all the relevant permissions and licences (including Alien Landholding Licences) necessary to hold their interests at Cap Juluca and have paid all the necessary taxes due to the Government of Anguilla. In contrast to this, the Hickoxes, to date, have no Alien Landholding Licence to own any land at Cap Juluca, have no business licences, have no legal right to control the operations at Cap Juluca and have not paid any landholding taxes or lease payments due to the Government of Anguilla.
Notwithstanding these glaring deficiencies, the Hickoxes have ploughed ahead in their attempts to control the Resort, regardless of the effect such efforts have had, and continue to have, on the sustainability of the Resort, the Villa Owners and the staff at the Resort.
The lack of enforcement of the laws of Anguilla, in this regard, has directly caused substantial damage to the Villa Owners and has affected the tourist industry in Anguilla as a whole. More generally, the continuation of this unsatisfactory situation is also causing substantial damage to Anguilla’s standing amongst international commercial investors.
The solution, as the Villa Owners see it, is straight forward and wholly within the powers of the Government of Anguilla, to wit, the denial of any Alien Landholding Licence to the Hickoxes, the forfeiture of the outstanding Resort lands and the sale of such lands to an appropriate entity with the requisite credibility, financial strength and professional wherewithal to successfully operate the Resort for the benefit of the staff, Villa Owners and Anguilla as a whole.
Editor’s note: The statements contained in this paid press release are solely those of the Villa Owners, expressed through their Legal Representative and not necessarily those of the Anguillian newspaper.
