A group of 33 investors has suffered a setback in their bid to secure a £1.8 million payout from troubled property investment venture Harlequin.
The investors had all put money into a Saint Vincent and the Grenadines-based holiday resort called Buccament Bay which was sold via Harlequin Management Services (South East), the UK sales arm of Caribbean-based Harlequin Property.
The investors paid deposits of 30% of the purchase price for individual hotel rooms in the resort which were sold as freehold investments. They were told they would receive 10% of the purchase price for the first two years after the resort was complete and after that 50% of the rental income for their rooms.
However, the investors have not received title for the hotel rooms and have not had their deposit money returned.
The case did not centre on whether or not the investors were owed money, a point which deputy judge Nicolas Strauss QC noted ‘does not appear to be in dispute’.
Instead it focussed on whether a UK court could wind up Buccament Bay, given that the company was incorporated in Saint Vincent and the Grenadines.
While the investments were sold through Essex-based Harlequin Management Services (South East), which filed for administration in April 2013, Strauss ruled that Harlequin’s ventures including Buccament Bay were not run with ‘bird’s eye management from Essex’.
He agreed that they were largely managed in Saint Vincent and the Grenadines and therefore this was the correct jurisdiction to apply for a winding up petition.
Strauss said: ‘The preliminary issue before me is whether the court should exercise its jurisdiction to hear winding-up petitions, based on undisputed or largely undisputed debts, when neither of these companies [Buccament Bay and Harlequin Property] is incorporated in this country.
‘In this case, there is no justification at all for a winding up order here.’
Buccament Bay was hit by a series of delays. Harlequin Property argued that it could not repay the investors due a ongoing legal dispute with its former auditors in which it is claiming £70 million.
New Model Adviser® understands that the investors could take their case to the Caribbean. There were 45 petitioners when the claim originally started over a year ago, but only 33 decided to pay to be included in the final action.
Harlequin declined to comment. Lawyers representing the investors also declined to comment.