Louis Bacon, left, and Peter Nygard

A battle over Clifton Bay, a postcard-perfect patch of turquoise waters off the western coast of the Bahamas, has raged for years between a billionaire hedge fund owner and a Canadian clothing mogul. It has now spilled into a New York courtroom in what one side hopes will finally settle the score.

Louis Bacon, the billionaire founder of hedge fund Moore Capital Management, took legal action last week by asking a US court to try to gain access to videotaped footage he believes will help him prove that Peter Nygard, founder of clothing manufacturer Nygard International and his Bahamian neighbour, has engaged in a smear campaign against him.

The backdrop is a long-running legal feud involving multiple lawsuits over whether Mr Nygard is, as Mr Bacon alleges, harming the environment around Clifton Bay, a beach made famous by James Bond movies, where both men have compounds.

Mr Nygard’s lawyer said he planned to file a counter lawsuit.

“This lawsuit is a continuation of Louis Bacon’s malicious campaign against Peter Nygard with the objective of obtaining Mr Nygard’s Bahamian property (Nygard Cay), through illegal means, and to wrongfully continue to damage Mr Nygard’s businesses and reputation,” the lawyer said in a statement.

The founder of the fashion line has previously said, according to a statement published by the Canadian Broadcasting Corporation, he supports the environment and that reports about his effort to rebuild have not been presented “accurately”.

The setting for the feud is the exclusive Lyford Cay community on Clifton Bay. In 1993 Mr Bacon bought a 150,000 sq ft estate in a gated community. His nextdoor neighbour is Mr Nygard, who also owns a large estate and has been a permanent resident of the Bahamas since 1986.

Mr Nygard has constructed a “Robinson Crusoe playground” with volcanic, smoking Mayan temples, a disco club and 20 themed cabanas where he has hosted celebrities, according to his website.

Their battle was seared following a 2009 fire at Mr Nygard’s property. Mr Nygard sought permits to redevelop the property but was rejected by the Bahamian government, according to court filings. Mr Bacon’s court filing in the New York case asserts that Mr Nygard believed Mr Bacon was behind the rejection and a critical CBC broadcast. My Nygard has filed a libel lawsuit against the CBC.

Mr Bacon, a self-described environmentalist, in March 2013 co-founded Save the Bays, a non-profit coalition made up of neighbours including Robert F Kennedy Jr and Nicholas Brady, a former US Treasury secretary, with a focus on Clifton Bay.

Two months later Save the Bays asked a Bahamian court to halt dredging of sand and other development activity to expand the property. The non-profit company filed a second lawsuit over a perceived lack of transparency over Mr Nygard’s development plans. A court in the Bahamas issued an injunction ceasing all work and enjoined the government from considering any future applications for Nygard Cay.

Mr Bacon alleges in the New York case that Mr Nygard has retaliated over the 2010 rejection of redevelopment permits by engaging in a smear campaign, including paying journalists to write stories on websites and the posting of videos on YouTube of manipulated news clips suggesting Mr Bacon had engaged in insider trading.

Mr Nygard responded to the Save the Bays lawsuits, in the statement posted by the CBC, saying: “The required environmental assessments have been completed and are in the hands of the government, including the most recent assessment completed in February 2014. These assessments confirm that there has never been any adverse environmental impact caused by Nygard activities.”

He called legal actions by Save the Bay “a complete farce and an improper manipulation of the public process to acquire Nygard Cay”.

Mr Bacon is trying to use US courts to obtain evidence relating to five defamation lawsuits pending in Bahamian courts, in which he is suing a number of defendants but not Mr Nygard, and the two lawsuits by Save the Bay.

His application to the New York court claims “smoking gun” evidence has emerged from a 28-year-old videographer hired by Nygard International to chronicle the magnate. Mr Bacon, through his legal team at Gibson Dunn & Crutcher, is asking the US judge to order the videos be turned over to him and his legal team.

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