The owners of the ACE building may be forced to tear down a new two-storey extension after the Supreme Court yesterday declared the development illegal.

Environment Minister the Hon. Gerald Simons "misdirected himself in law and misapplied the law'' last August when he overturned the Development Applications Board's decision to refuse the extension, Puisne Judge the Hon.

Mr. Justice Meerabux concluded in a 33-page judgment released yesterday.

Bermudiana Road resident Mr. David Barber and his lawyer Mr. Alan Dunch now want Scarborough Property Holdings to tear down the two stories.

The extension is believed to have cost hundreds of thousands of dollars to build and is days away from completion.

A victorious Mr. Dunch said yesterday he wrote to the Planning Department indicating his client's wishes.

"We warned Scarborough when we lodged the appeal that if they built (the two floors) then they did so at their own peril,'' Mr. Dunch said.

"They proceeded in a contemptuous fashion when they went ahead and built the building while an appeal was pending. I have no sympathy whatsoever for them.'' Mr. Dunch said it had always been part of his submissions that if the minister's permission was found to be unlawful then the extension "should be removed and the site restored to its original condition''.

Scarborough boss Mr. John Patterson said he had not yet read the judge's decision and wanted to reserve comment on it.

However, he contended: "The award is against the minister not Scarborough. We had a planning permit and we did not go against the law.'' Scarborough is jointly owned by insurance companies ACE and BF&M.

The ACE building was completed five years ago and the two-floor extension was 99.9-percent complete, Mr. Patterson said.

Mr. Dunch contended Scarborough had made itself party to the appeal by making submissions to the court, therefore, was liable to tear down the new floors.

Among his client Mr. Barber's objections to the development were it invaded his privacy -- overlooking the backyard of his home "Jacaranda'', and it would generate traffic and noise.

The DAB had rejected Scarborough's application on the grounds it exceeded the maximum height permitted under the Bermuda Plan 1992, which was four stories.

The two-floor development boosted the rear part of ACE building to five stories.

The developers appealed to the Minister. And in August 1993, Mr. Simons overturned the decision and granted Scarborough permission for the extension.

Mr. Barber took his fight to Supreme Court.

Scarborough submitted during the hearing that the 1992 Development Plan was "a statement of planning policy and was not intended to operate as an unalterable blueprint for the future development of Bermuda''.

Company lawyer Mr. Andrew Martin argued the Minister was given "a very broad discretion'' in hearing appeals and the court was "not entitled to interfere with the way the minister carried out planning policy''.