Court yesterday said it could exercise its option to buy a luxury home.

The bank wants to purchase for $230,000 a Knapton Hill estate now estimated to be worth close to $1 million.

Executors of the estate of Mr. Walter Leonard Bickley, who owned the property and made the deal with the bank, are trying to block the sale.

Mr. Bickley, who first came to Bermuda from England in 1950, started in the ice cream business, invested in real estate, and later was a partner in the Outdoor Living Centre. He died in 1990 at age 82.

"Serenade,'' the home at the centre of the dispute, has housed Bermuda Commercial Bank managing directors under a lease arrangement since 1974.

Mr. Mark Diel, lawyer for Mr. Bickley's wife Mrs. Elizabeth Bickley, daughter Mrs. Elizabeth Schaefer, and son Mr. Ian Bickley, argued the bank did not have the power to enter into a lease for a residential house. Furthermore, the bank's purchase option was invalid, he argued.

Yesterday, acting Puisne Judge the Hon. Mr. Justice Meerabux rejected those arguments and ordered the sale to proceed.

Mr. Diel said he was considering an appeal and was granted a request that the sale not be forced before the six-week appeal period expired.

The bank, represented by lawyer Mr. Jan Woloniecki, gave notice that it was exercising its purchase option on February 19 of this year.

Mr. Bickley purchased Serenade in April, 1974 for $150,000. In June of that year, then Bermuda Commercial Bank managing director Mr. David Atkinson began negotiations with Mr. Bickley to lease Serenade and grant the bank a purchase option.

Negotiations were also under way between Mr. Atkinson and Mr. Bickley about a mortgage against the property.

In a statement of facts submitted when the case was heard on November 15 and 16, the parties agreed Mr. Bickley's "main concern was to dispose of the property at a selling price of $230,000''. That would allow him to repay an existing mortgage of about $100,000 and have funds left over for a separate property development.

Mr. Atkinson said Mr. Bickley was not interested in a simple lease because he wanted the cash. The bank took the same position because it wanted to buy the property as a home for its managing director, Mr. Justice Meerabux said in a 14-page judgment.

On September 11, 1974, the bank and Mr. Bickley entered into a ten-year lease with options to renew for up to 21 years. The lease gave the bank an option to purchase Serenade for $230,000 at any time during the term of the lease.

On the same day, the International Trust Company of Bermuda Ltd. granted Mr.

Bickley a $230,000 mortgage against Serenade. The mortgage provided for monthly interest equal to the monthly rent under the lease and said International Trust would not require repayment of the principal as long as the lease between Mr. Bickley and the Bermuda Commercial Bank remained in effect.

Mr. Diel argued that the Provident People's Bank Act 1968 -- a private Act of the legislature which incorporated the Bermuda Commercial Bank -- did not give the bank power to enter into a lease for real estate for a residential purpose.

That was true, Mr. Justice Meerabux said, but other statutes in force in 1974 like the Companies Act, 1923, the Companies Act, 1948, and the Banks Act, 1969, did give the bank the power.

Mr. Diel also argued that the mortgage and lease with purchase option scheme represented "a clog on the equity of redemption.'' In other words, it violated a doctrine that no contract made between a mortgagor and a mortgagee at the time of the mortgage could contain terms that would prevent the mortgagor from regaining the property if the debt was repaid.

But Mr. Justice Meerabux said there were two separate transactions, and no clause in the mortgage gave International Trust a purchase option on the house.