Gates in north of Canouan aimed at super-rich residents, locals alike

By Kenton X. Chance 

The gate erected in the north of Canouan last year, resulting in yet another round of protest and the intervention of Prime Minister Ralph Gonsalves is intended to regulate the movement of the island’s super-rich homeowners as much as the local Vincentian population.

Homeowners in the developed northern third of the island are now speaking out as the investor, Andrea Pignataro, through his company, CRD Holdings Ltd. (CRDH), has gone to court to try to prevent a “turnover meeting” of the Community Association, which should have taken place on Dec. 31, 2015, but was rescheduled to Dec. 31, 2018.

“You have no idea how many issues we have here, how many stories we’ve had,” a source familiar with the issues told iWitness News on condition of anonymity to focus attention on the situation rather than their status. 

“We’ve been kind of quiet about it, because, of course, we never want to put the image of Canouan to any detriment,” the source said.

“But now, what we realise is that information is key and if you don’t expose things, they are not going to be fixed, certain things need to come out. Otherwise, these people are going to … destroy this place.” 

Pignataro’s company is asking the court to stop The Grenadines Estates Community Association Ltd. (GECA) from appointing three new directors, amidst fears that such appointments will shift the balance of power in the northern one-third of the 1,800-acre of Canouan, dubbed by the international media as “the Caribbean island where billionaires go to escape millionaires”.

A team of high-profile lawyers skilled in company law will lock horns on Friday as the High Court in Kingstown hears arguments about whether to grant an injunction preventing the Community Association from holding its “take over meeting”.

The defendants are Vincentian Geoffrey Bollers as well as Achille Pastor-Ris, Andrey Karchenko, Fulvia Sancin De’Longhi and Roger M. Cave, residents of Grenadines Estate, Canouan. 

Lawyer Michael Koieman and La Keisha John-Farrell of Dentons Delany will represent CRDH, Joseph Delves appears for Pastor-Ris, Bollers will appear for himself Sten Sargeant led by Douglas Mendes, SC will represent Karchenko, De’Longhi and Cave.

CRDH is asking the court to grant a permanent injunction restraining the defendants from taking any steps to convene a “turnover meeting” within the meaning of GECA’s by-laws.

The claimant is also asking the court to grant a permanent injunction restraining the defendants from taking any steps to appoint any director and/or ratify the appointment of any director to GECA’s Board, including Karchenko, De’Longhi and Cave.

‘Dictatorship’ in Canouan 

The legal matter comes amidst what the source told iWitness News is a “dictatorship” in the north of Canouan that is affecting the rich homeowners, the residents of the local village, and the government coffers, resulting in Gonsalves speaking out publicly about the dwindled contribution of the Canouan investment to the national income. 

“Canouan is clearly a jewel,” the source told iWitness News but said that the current situation has reduced the value of properties on the island.

“You cannot sell a villa in Canouan. Nobody will buy it,” the source said, adding that even if someone is willing to buy, Pignataro has the right of first refusal, meaning that the homeowner must offer to sell him first. 

The source said it is important that the community association be placed in “right standing” hence the directors were called to have the turnover meeting.

The source said that the situation on the island is untenable as homeowners have no choice but to use Pignataro’s companies to procure certain services.

One villa owner decided that they did not want to work with Pignataro’s companies because of the “high maintenance cost” and the quality of the service, the source said.  

“When the villa owner came with his people, they blocked his access to the gate. They don’t allow him to come in,” the source told iWitness News, adding that the matter has resulted in a lawsuit because the villa owner’s property “has basically been decommissioned … and the house is falling apart”.

The source said that at least five houses are in this situation, adding that if there was a properly-functioning community association, such situations would not arise, because the association would control the gate and security and would enforce the by-laws. 

Defendants accused of ‘unlawful steps’ to change company governance 

In the claim, which High Court judge Justice Gertel Thom will hear on Friday, CRDH says the defendants have taken and are planning to take improper and unlawful steps to effect substantial changes to the structure and governance of GECA.

“The Defendants’ actions – if successful – would improperly deprive the Claimant of (;) its full rights as a shareholder; (in) its full entitlements to substantive representation on the Board; and (in) its real property interests over parcels of the Grenadines Estate.”
The claim said that the defendants had sought to achieve “these illicit ends” by convening an “unlawful” shareholder meeting (a “turnover meeting”) on May 17, 2024, in order to “force through” the “wide-ranging changes” detailed in the claim.

The claim said that upon discovery of the plans to hold the turnover meeting, CRDH wrote to the Board on April 18 expressing its “outrage and serious concern regarding these illegal actions, which were purportedly taken on behalf of GECA’s Board without CRDH’s knowledge or consent. 

CRDH also demanded that the board rectify these “irregularities” and refrain from convening a turnover meeting or taking any other steps to implement its proposed changes and requested a response by April 19.

“Disappointingly, CRDH received no response to its legitimate demands, and there is no indication that the Board and/or Defendants have taken any action to correct the various irregularities/illegalities highlighted by CRDH.”

In light of this, CRDH is seeking urgent interim injunctions to stop the defendants from convening the “unlawful” shareholder meeting and from taking any other steps to effect “unlawful” changes to the Company’s ownership and governance structures.

The claim said that the defendants’ actions risk causing imminent and irreparable harm (financially or otherwise) to CRDH, as it threatens the integrity and operation of GECA.

CRDH said GECA was not in the financial position to properly maintain and administer the relevant areas of the Grenadine Estate. 

“This potentially results in detrimental and irreversible impacts on the brand and reputation of the Grenadines Estate which the Claimant has worked tremendously hard and made significant investments to achieve thus far,” the claim said. 

It said that the defendants’ “unlawful” actions are “oppressive and unfairly prejudicial” to the claimant’s interests as a shareholder and major investor in GECA, including for the purpose of the lease agreement. 

“Unless the Defendants are prevented from carrying out their unlawful scheme, their actions will cause the Claimant loss, including by depriving the Claimant of its shareholding in the Company.”

CRDH is also arguing that Bollers and Pastor-Ris have acted in breach of their statutory duty — owed to the Company’s shareholders, including the CRDH — to act in accordance with the by-laws, and have proposed further “unlawful” actions in breach of the by-laws.

CRDH is asking the court to declare that the actions taken by Bollers and/or Pastor-Ris purporting to appoint directors to GECA’s Board; and call a turnover meeting, contravene the lease agreement and are legally ineffective.

The claimant is further asking the court to order that GECA’s register of directors and records be rectified to reflect the removal of Pastor-Ris, Bollers and the late Antonio Saladino from the Board of GECA and the appointment of Colm Casev, Ian McGreal and Patrick Smyth as directors of GECA’s Board.

The court is further being asked to grant an order requiring Bollers and Pastor-Ris to take all necessary steps (including to execute all necessary documents and form) to facilitate the rectification of GECA’s share capital register and records.

CRDH is asking for an award in damages for harm/loss caused and occasioned by the defendants’ “tortious and unlawful conspiracy aimed at causing loss to the Claimant”.

The company also wants the court to grant permanent injunctions restraining the defendants from taking any steps to convene a turnover meeting and restrain them from taking any steps to appoint any director and/or ratify the appointment of any director to GECA’s Board, including Karchenko, De’Longhi and Cave.

CRDH also wants the court to grant a permanent injunction restraining the defendants from taking any step to effect the assignment of CRDH’s leasehold interest in the “Common Areas” of the Grenadines Estate, without the CRDH’s permission as well as a permanent injunction restraining the Defendants from taking any steps purporting to cancel or issue any shares in GECA.

The company is also asking the court to grant a permanent injunction restraining the defendants from taking any steps qua (acting in the capacity of) directors of GECA.

National coffers suffering

However, the homeowners are not the only ones complaining about the situation in Canouan. Gonsalves has done so publicly on multiple occasions over the last few years.  

On Sept. 6, 2023, one day after visiting the island where protests had erupted over the erection of a gate in the north of the island, the prime minister said there were many issues with “the project”, resulting in it not generating the tax dollars that the government had hoped.

“For instance, for the last five years, the government has made hardly any money, a number approaching zero, for alien land holding licenses and transfer taxes because there are properties up there to be sold and the developers are not pushing the sale. They’re just keeping the land there within the company,” the prime minister said on the state-owned NBC Radio.

So far, there are about 31 homeowners plus Pignataro in the north of the island where there are about 70 properties — approximately 50 villas and 20 lots bought by investors.

Development of the north of Canouan started over three decades ago when, in 1990, then Prime Minister of St. Vincent and the Grenadines, the late Sir James Mitchell, and Saladino, a former banker, of Italy, signed an agreement leasing two-thirds of Canouan to the Italian investor. Pignataro is Saladino’s successor. 

On Monday, Gonsalves told iWitness News at a press conference in Kingstown that “the main issue” on Canouan has to do with Pignataro.

“And there’s a lot of dissatisfaction by homeowners in the north of Canouan,” the prime minister said, noting that the northern third of the island has a golf course, Mandarin Oriental Hotel and privately owned villas.

The prime minister noted that Pignataro’s company does the maintenance and provides services for the villas. “And homeowners are complaining that has not been done to their satisfaction.” 

Additionally, the developer has also not lived up to several conditions of the lease, including to “construct and maintain a vocational and hotel operations training school, and construct and maintain residential staff facilities for the lessee’s employees in the section of the Island referred to as ‘the Village’…”

There are also questions about the extent to which Pignataro has lived up to the condition that the lessee uses “its best endeavours” to employ Vincentian in the development and operation of the premises. 

On Monday, Gonsalves told iWitness News that his government was “contemplating many different things” in light of the loss of revenue because of the situation in Canouan.

“This is a complicated problem given the nature of the lease,” he said.

Gonsalves said he was “hopeful in the initial stage at least the company in the north that we will see some improvement”.

The prime minister said he knows that the homeowners “want to act in a particular way” adding that he was “watching to see what is taking place there. 

“I don’t want to speak to all the possible things which could happen. But I’m glad you asked me the question so I can speak about the matter broadly,” he said. 

The prime minister said he was advised, but not by the attorney general, about the court matter, which will be heard on Friday.

“… there’s a homeowner’s association and they’re going to squabble over who can do what, in that association. I think that is what that fight is about,” said Gonsalves, who is also a lawyer. 

Issues with lease

Gonsalves said that one of the issues regards how the NDP structured the lease.

“The government owns the property. They leased the property for 99 years, but within the lease they allow the owner of the 99-year lease to sell freehold, provided that the government agrees to every one of those transactions and for that, the developer will develop a first-class international quality facility on the island,” Gonsalves said.

The developer is responsible for putting in all public infrastructure, including roads and when it sells property, the government collects 17% in taxes, made up of 5% transfer tax by the vendor,  5% by the purchaser and 7% alien land holding license.

The alien land holding license was increased after Gonsalves’ Unity Labour Party (ULP) administration came to office in 2001.

“That was their structure,” Gonsalves further said of the NDP’s approach to the lease, adding that in addition to tax revenue to the state, people would get jobs and therefore there would be payroll taxes. 

Also, from the rent of the villas and Mandarin Hotel, the government would get 11% value added tax on the room and the food and beverage. 

“They get duty free concessions, but the consumer of the room and the consumer of the food and the drink will pay the 11%, like any hotel,” the prime minister said. 

The investor only has to pay US$16,105.10 in rent for the land this year, representing the amount due for each year between 2021 and 2025, under an arrangement that sees the amount increase incrementally every five years, reaching US$55,599.17 in 2089. 

One legal expert told iWitness News that the lease has no forfeiture clause and would cost the country a huge sum of money if the government acquired the land before the lease expires. 

Gonsalves told iWitness News that theowner of the lease “does not support any alteration to what was there before. 

“And if you were to change it, if you were to go unilaterally and change it, there are certain consequences into what you will have to pay as a state because you will essentially, because of the agreement, taking away his quote-unquote property. Because he has a lease on particular terms,” the prime minister said. 

“There’s a lot more I can say. No. But I wouldn’t, because on this matter, I am being very careful as to how I proceed,” he said. 

Canouan gate ‘was very poorly handled’

The source said the situation with the erection of the gate that resulted in protests by Canouan residents last year over beach access “was very poorly handled. 

“First of all, there was absolutely no need to build that gate. And it was not just one. They did like three gates at the same time,” the source said, adding that the developer also put a gate at Mandarin Oriental Canouan, a five-star hotel on the island.

“And then they put another pole less than 20 meters away. There are two gates and one pole. It’s almost absurd. And they put one of the villa managers to be the project manager for that.”

The source pointed out that the gate was also erected outside of the boundaries of the resort. 

“Homeowners are very worried because all this issue created a lot of negativity with the local population even though homeowners had nothing to do with it,” the source said.

“The issue of the gate is a clear example of why the homeowners, not Pignataro, need to take over because this is the Community Association’s duty. He should not control the gate.”

The source said that in controlling the gate, Pignataro decides who comes into the property.

“If a homeowner wants to bring someone to clean their pool, they will not let them in. They have to bring in people to do work in the trunk of a car. Otherwise, they’re not gonna allow them to come in.”

The source contrasted the situation to what obtains in Mustique — another Grenadine island, regarded as the “playground of the rich and famous” — saying that the homeowners association is the backbone of Mustique. 

“It’s why Mustique has been so successful in their functioning. They’re renting villas, they’re selling and the value has appreciated significantly. In Canouan, he’s not allowing the homeowners to have a voice or to have a community association.

“And the clear example of that is that when we are trying, he’s taking the directors to court, instead of having a conversation.

“And he has failed as a developer. There has been no land sold, there have been no properties developed for years.”

The homeowners have set June 17 as a tentative date for the turnover meeting, pending the outcome of Friday’s court hearing.